Banks braced for huge EU fines over Libor rate-rigging scandal

UK's RBS believed to be among at least six banks facing record fines for manipulating European and Asian interest rates

The interest rate-rigging scandal that has damaged the reputation of the banking sector looks likely to be reignited as Brussels is expected to impose multimillion-pound fines on a number of major firms for manipulating crucial benchmarks.

The action by Joaquín Almunia, the EU competition commissioner, will pile further pressure on Royal Bank of Scotland, the bailed-out bank already dealing with the fallout from a major systems meltdownthat left millions of customers without access to cash and allegations – which it denies – of mistreating its small business customers.

The 81% taxpayer-owned bank is reported to be among at least six major players in the financial markets, including Deutsche Bank in Germany and Citigroup in the US, caught up in the cartel investigation. The EU is said to be ready to impose record-breaking fines for alleged collusion for rigging key benchmark rates.

Brussels is thought to have focused on yen Libor, based on Japanese interest rates and priced out of London; Euribor, the Brussels equivalent to Libor; and the Tokyo rate known as Tibor. Almunia has been in discussions with banks for weeks and the resulting penalty is expected to surpass the record €1.5bn (£1.24bn) imposed on a cartel.

Each cartel could face combined fines of as much as €800m, although it was unclear on Tuesday nightwhat the exact penalties would be and how the sums would be divided. Penaltiesfor breaches of antitrust rules can theoretically be as much as 10% of turnover.

The fines are the latest to be levied on banks and financial firms for manipulating key benchmark rates. Five firms have already been fined by market regulators on both sides of Atlantic in an ongoing investigation into the manpulation of the rates, used to set interest rates on loans granted around the world.

Barclays was fined £290m in June 2012 in a move that led to the resignation of its chairman, Sir Marcus Agius, chief executive, Bob Diamond, and other senior managers. Other banks who have since been fined by US or UK regulators RBS, UBS of Switzerland and the Dutch bank Rabobank. The money broker Icap has also been fined and the FCA's investigations are ongoing.

The Libor investigation has sparked interest in a number of other benchmarks used to price financial products, particularly the foreign exchange markets, which are now being investigated by a number of regulators around the world, including the UK's Financial Conduct Authority.

Reuters reported that UBS had alerted the European Commission to the yen interest rate manipulation and would not be penalised. The Financial Times said Barclays would avoid a fine for Euribor rigging for similar reasons.

Between six and ten banks are reported to befacing fines, including Citigroup, which would be the first US bank to become embroiled in such high-profile penalties for manipulation of key rates.

Deutsche Bank and RBS will be penalised for rigging the benchmark eurozone interest rates known as Euribor. French bank Société Générale is also part of the group facing sanctions for alleged Euribor rigging, according to Reuters.

The news agency said HSBC and the French bank Crédit Agricole had not reached a settlement, while the FT said the US bank JPMorgan had also failed to do. They may face fines later.

Reuters said Barclays, Deutsche Bank, Société Générale, RBS, JPMorgan and Citigroup declined to comment and HSBC and Crédit Agricole were not immediately available to comment.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

Barclays assisting with investigation into currency market manipulation

Regulators request foreign exchange activity information from Barclays in investigation that could match scale of Libor scandal

Barclays is involved in the new investigation by global regulators into the potential manipulation of the £3tn-a-day currency markets, in a fresh setback for the bank as it attempts to clean up its reputation in the wake of the Libor rigging scandal.

As it published its third quarter financial results, Barclays disclosed that it has received official requests for information about its foreign exchange activities. Barclays is joining a number of other banks – including Royal Bank of Scotland, Deutsche Bank and UBS – in co-operating with the authorities and also shedding light on the nature of the investigation by regulators in the UK, the US and Asia.

RBS said it was already reviewing its processes in the foreign exchange markets.

Barclays also confirmed it is continuing to contest a £50m penalty from the Financial Conduct Authority for behaving recklessly in the way it raised funds from Qatar to avoid a taxpayer bailout in 2008.

The foreign exchange investigations are at an early stage and could be on the scale of the Libor scandal. Barclays was the first bank to be fined for rigging the key interest-rate benchmark, in June 2012, and was handed a fine of £290m. That led to the departure of its chief executive,Bob Diamond, and the promotion of Antony Jenkins, who has since embarked on a strategy to restore the reputation of the bank through his so-called transform programme.

Jenkins used the results to outline a vision for more technology at the bank – which, it is suggested, could lead to 40,000 job cuts – and said that he was embarking on a new review of the bank's 75 business lines to gauge the riskiness of the operations.

Last month the bank was forced to tap shareholders for £6bn to bolster its financial strength. Jenkins said the new finance director Tushar Morzaria, who joined a fortnight ago, would reassess each business line to assess how much capital they are using.

He refused to elaborate on the bank's legal disclosure that regulators are investigating foreign exchange trading "including possible attempts to manipulate certain benchmark currency exchange rates or engage in other activities that would benefit their trading positions".

The bank said: "The investigations appear to involve multiple market participants in various countries. Barclays has received enquiries from certain of these authorities related to their particular investigations, is reviewing its foreign exchange trading covering a several-year period through August 2013 and is co-operating with the relevant authorities in their investigations."

The investigations emerged after reports of allegations that traders at major banks were putting in client orders before a 60-second window when benchmarks run by WM/Reuters – and used by fund managers to value their investments – are set.

Jenkins said his new team – as well as a new finance director, he has a new retail head and new bosses of the investment bank – needed to "push harder" in the final quarter of the year and into 2014.

After being forced into the cash call by the Bank of England, Jenkins said the bank was continuing to "reassess the balance sheet for further leverage reduction opportunities consistent with preserving our strong franchises, supporting lending to the UK economy".

When he took the helm he had originally assessed 75 business lines in terms of reputation risks and said he would withdraw from some businesses. The investment bank – the traditional powerhouse of the business and once known as Barclays Capital – took a hit to income as a result and also suffered a fall in its fixed-income trading. Third quarter profits in the investment bank fell 53% to £463m, although the bank did not disclose any reduction caused by shutting down the controversial tax planning department known as structured capital markets.

Overall, in the third quarter, profits fell to £1.4bn from £1.9bn as losses in continental Europe widened. In the first nine months of the year Barclays's profits rose to £2.8bn from £962m, although this included the cost of buying back its own debt. The shares rose 3.5% to 274p in early trading.

Barclays is in discussions with its shareholders about ways to avoid an EU cap on bonuses being introduced by the EU at the start of next year by introducing a new allowance for its highest paid staff. It said the closely-watched compensation to income ratio at its investment bank – measuring what proportion of its income it was paying out to its staff – had risen to 41% from 40% and remains above its target of 35%.

Article Source : http://www.guardian.co.uk
Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

RBS releases documents over alleged currency manipulation

FCA scrutinising allegations of large banks' abuse of currency benchmark potentially involving a former RBS trader

Royal Bank of Scotland has handed the City regulator messages sent by one of its former traders in the latest twist in an investigation into potential manipulation of currency rates.

The Financial Conduct Authority (FCA) began an investigation into the £3tn-a-day foreign exchange market in June following allegations that traders at major banks had found ways to manipulate a closely followed currency benchmark.

Swiss regulators have also begun to scrutinise the foreign exchange markets, regarded as among the most liquid in the world, sparking speculation that a number of major banks are facing questions about the way they traded leading currencies.

"It's a fact that foreign exchange manipulation was committed," Swiss finance minister Eveline Widmer-Schlumpf said.

The investigations are the latest attempts to clamp down on potential abuses of financial benchmarks, first highlighted by the Libor rigging scandal in June 2012 when Barclays was fined £290m for manipulating the key interest rate. RBS has also been fined for Libor rigging, as has Swiss bank UBS and more recently the broking firm Icap run by former Conservative party treasurer Michael Spencer.

The potential involvement of a former RBS trader in currency manipulation was reported by the Bloomberg news agency, which had first reported the potential for abuse of a currency benchmark operated by WM/Reuters and used by fund managers to value their investments. Traders at major banks were said to be putting in client orders ahead of a 60-second window when the rate is set by the benchmark. The benchmark rates are published hourly for 160 currencies and half-hourly for the 21 biggest currencies, including sterling, which are set by calculating the median price of trades taking place during the 60 seconds.

RBS would not comment on the Bloomberg report that it had handed the regulator instant messages sent to and from a currency trader who no longer works for the bank. The trader had left before any questions were raised about potential manipulation of benchmarks.

The FCA, which also would not comment, is said to be asking for information from Deutsche Bank, Citigroup and other banks in relation to the currency markets. The regulator is gathering information but has not begun a formal investigation; it is not yet clear if any firms are under any investigation that could lead to fines or other sanctions.

As well as interest rates and currencies, energy markets are also being investigated. The FCA began to look at gas prices after the Guardian reported that the £300bn wholesale gas price was potentially being manipulated while the European commission has also raided the offices of major energy companies amid allegations that oil prices were rigged for a decade.

Article Source : http://www.guardian.co.uk

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then  its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook