Hail The Bankers in The UK Today

select for full details HBOS report: a damning indictment of failed bankers and regulators
The public interest will be served by casting the net wider and re-examining the actions of at least 10 former HBOS officials
By Nils Pratley 19 Nov, 2015
Why has it taken seven years for an official inquiry to reach the common sense verdict that the board and senior management of HBOS were ultimately to blame for the bank’s failure?

The short answer is that the HBOS board had a rival in the incompetence stakes in the form of the old Financial Services Authority. The regulator’s post-crash probe into the conduct of bank’s top individuals should have delivered a proper investigation back in 2009. Instead, the FSA – via a combination of timidity, confusion and overwork – flunked it.

Andrew Green QC, reviewing the FSA’s enforcement actions, used more legal language in his report but some of his revelations are astonishing. In March 2010, Green says, the FSA decided that the statutory threshold test for investigating former HBOS chief executive Andy Hornby had been met, but the FSA nevertheless decided not to investigate him. Why?

“On the basis of the available documents, it is not possible to determine who in fact took the decision, how it was taken, what were the factors taken into account, or for what precise reasons it was decided not to investigate,” says Green. He calls the decision-making process “highly unsatisfactory”. He’s being generous.

The result in 2010 was that only the actions of Peter Cummings, head of corporate lending, were investigated, resulting in a £500,000 fine and a ban from the City. Cummings called it “tokenism at its most sinister” and one can now sympathise.

The former trainee, who had worked his way through the ranks to become the so-called “banker to the stars,” made grotesque errors but it was always hard to believe that his gilded bosses – notably chairman Lord Stevenson, former chief executive James Crosby, still a knight at the time, and Hornby – should not have faced fuller investigation. It smelled suspiciously like the financial establishment closing ranks. It is still too soon to reach that conclusion but we now know, thanks to Green’s report, that the process that led to Cummings alone being investigated was “materially flawed”.

On 20 Nov 2015   From: Roger Backhouse, Orchard Road, Upper Poppleton, York.

DAVID Duffy may be worth his remarkably high pay as chief executive of Yorkshire Bank (The Yorkshire Post, November 17) but would it not be equally accurate to say that he was paid £1.34m for 17 weeks work rather than “earned” that sum? Many leading bankers were paid vast salaries only for their bank’s finances to come apart. Leading banking heads rarely roll while the long suffering British taxpayer steps in to save banks from collapse.

No one’s life depends on Mr Duffy, who is paid around 100 times more than a senior nurse or social worker, even more than their junior colleagues. We’d notice if they weren’t available but would we notice the absence of the apparently highly rated and doubtless hard working Mr Duffy?

Thanks to George Osborne’s pay freezes, the nurse or social worker will have had their pay rises severely limited below the inflation rate. And if a child dies whilst a social worker is involved they’re guaranteed tabloid Press harassing them, their relatives and friends for the sake of a “story”, the modern equivalent of burning a witch. But senior banking salaries remain stratospheric and largely out of the limelight when anything goes awry. Something wrong here, isn’t there?

select for full details 'Deficient' and 'inadequate' FSA failed to stop HBOS collapse
The Financial Services Authority was 'deficient' and 'inadequate' in its regulation of HBOS, which contributed to the collapse of the bank in 2008, according to a new report.
By Charles Walmsley 19 Nov, 2015
The report published today by the Financial Conduct Authority and the Prudential Regulation Authority said the old regulator, the FSA, failed to prevent the collapse of HBOS because it employed 'a deficient regulatory approach' which did not challenge the lender’s board of the bank.

The bank collapsed in 2008 when it was unable to meet its liquidity requirements after pursuing a strategy of issuing risky loans.

The FSA was the regulator at the time. It split into the FCA and PRA in 2013.

The regulator commissioned a report into the collapse of the bank in September 2012. However, the report’s publication was delayed by the process of Maxwellisation, whereby all parties mentioned in a report are given the chance to reply to the findings.

After years of delay the report has now been published and it is highly critical of the regulator’s supervisory approach towards HBOS.

It found the FSA did not step in early enough to stop the collapse of the bank.

It said the regulator did not want to criticise the bank's business model because it did not want to be seen to be influencing it.

'The FSA did not see its role as being to criticise a firm's business model in case it was perceived to be acting as a "shadow director",' the report said.

It said the FSA’s supervisory framework at the time was 'inadequate' as it did not devote enough resources to the regulation of large banks.

'This gave rise to a supervisory framework with inadequate resources devoted to the prudential regulation of large systematically important banks,' it said.

In a foreword to the report, PRA chief executive Andrew Bailey said: 'The FSA failed to establish an appropriate standard of safety and soundness.

select for full details HBOS Chiefs Blamed For £20bn 'Destruction'
Bankers and regulators share responsibility for the crisis which engulfed the UK mortgage lender in 2008, an official probe says.
By Mark Kleinman 19 Nov, 2015
The former bosses of HBOS have been blamed for catastrophic decision-making which triggered the bank's "destruction" and its need for a £20bn taxpayer bail-out during the 2008 financial crisis.

Confirming an exclusive report by Sky News, the banking and City watchdogs set out for the first time a detailed account of why HBOS failed, and said they would examine the case for enforcement action against a number of former executives and board directors.

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), whose inquiry has cost £7m, described HBOS as "at root a simple bank that nonetheless managed to create a big problem".

Their report painted a vivid picture of HBOS's uncontrolled expansion as the bank's balance sheet grew from £477bn in 2004 to £690bn in 2008.

That growth continued even after widening concerns about the state of financial markets and access to wholesale funding led to the run on Northern Rock in 2007.

The report criticised board members including Lord Stevenson, HBOS's former chairman, and James Crosby and Andy Hornby, who were successively its chief executive in the seven years before it collapsed.

Regulators said they had "failed to set an appropriate strategy, and also failed to challenge a flawed business model", and accused them of presiding over a bank that was "excessively vulnerable to an economic downturn and a dislocation in wholesale funding markets".

Andrew Bailey, the PRA chief executive, said it was "important both to provide a record of an event which required a major contribution by the public purse, and because it is a story of the failure of a bank that did not undertake complicated activity or so-called racy investment banking".

HBOS was rescued by Lloyds TSB in the autumn of 2008 at about the same time as it sought emergency funding from the Bank of England to remain afloat.

Since their merger created Lloyds Banking Group, just under 10% of which remains owned by taxpayers, tens of thousands of jobs have been axed and former HBOS shareholders have been hit by the absence of dividend payouts until Lloyds restored them this year.

Authorities left themselves exposed to fresh criticism, however, by refusing to set a date for the outcome of their assessment of whether bans would be sought against former HBOS employees.

"The PRA and FCA will conclude a review as to whether further enforcement action as early as possible next year," they said.

Andrew Tyrie, chair of the Commons Treasury Select Committee, said: "The FCA and PRA should get on with this immediately. Parliament will expect an answer from them within months, not years. This has gone on long enough, to put it mildly."

The regulators also confirmed that they were powerless to fine anyone deemed culpable for the HBOS crisis because the period covered by a statute of limitations has expired.

To date, only Peter Cummings, HBOS's former head of corporate banking, has been fined and banned for his role in the bank's downfall.

In a separate report, Andrew Green QC, also cited a number of other ex-HBOS executives who regulators might consider bringing enforcement proceedings against, including Mike Ellis, the former finance director, who currently serves as chairman of Skipton Building Society.

select for full details Iceland has jailed 26 bankers, why won't we?
This determination to hold people to account for actions that caused intense financial misery contrasts strongly with Britain.
By Ian Birrel 15 Nov, 2015
There are many reasons to admire Iceland, but here is another one: it has just sentenced five senior bankers and one prominent investor to prison for crimes relating to the economic meltdown in 2008.

And with these two separate rulings made last month in the Supreme Court and Reykjavik district court, the nation that gambled so heavily on the markets and lost so disastrously in the consequent crash has sent 26 financiers to jail for combined sentences of 74 years.

The authorities pursued bank bosses, chief executives, civil servants and corporate raiders for crimes ranging from insider trading to fraud, money laundering, misleading markets, breach of duties and lying to the authorities.

Others still await trial after this fishing nation with fewer people than Sunderland stupidly tried to take on the world’s financial titans.

Meanwhile the economy that collapsed so spectacularly has rebounded after letting banks go bust, imposing capital controls and protecting its own citizens over all other losers.Not all the convicted bankers ended up behind bars.

But this determination to hold people to account for actions that caused intense financial misery contrasts strongly with Britain, most of the rest of Europe and the United States. Yes, fines totalling £150bn have been imposed on the 20 biggest banks for transgressions such as market manipulation, money-laundering and mis-selling mortgages. Yet these costs fall on shareholders and, by hampering the banks’ ability to lend, the wider community - while the perpetrators carry on collecting their obscene bonuses.

No wonder electorates struggling with austerity feel angry. As we await the latest inquiry into the Iraq War, we should not forget Britain never bothered holding a proper inquiry into the financial meltdown that still heavily impacts on public finances.

There was the muted Vickers commission into banks, while next week sees the release of a major report into events at HBOS that led to a £20.5bn taxpayer bailout. Yet although the downturn was the most dramatic financial event for decades, we have not seen anything similar to the deep investigations and reforms unleashed in the United States.

select for full details HBOS's former bosses were 'let off' by early investigations, report finds
The men at the top of HBOS when it collapsed in 2008 were “let off” by previous investigations but could still face being banned from working in financial services.
By Nick Goodway 19 Nov, 2015
Top lawyer Andrew Green, in a report published alongside that of the City regulators, said former chief executive Andy Hornby and former chairman Lord Stevenson should be “the subject of an enforcement investigation with a view to prohibition proceedings”.

He heavily criticised the then regulator, the Financial Services Authority, for its failure to pursue the executives.

So far only Peter Cummings, head of corporate lending at HBOS, has suffered any punishment. He was fined £500,000 and banned from working in financial services.

Green said: “The scope of the FSA’s enforcement investigations in relation to the failure of HBOS was not reasonable. The decision-making process adopted by the FSA was materially flawed; and the FSA should have conducted an investigation, or series of investigations, wider in scope than merely into the conduct of Mr Cummings and the corporate division.”

“I do not consider that it was unreasonable for the FSA not to have investigated Mr Crosby from early 2009. Crosby had left HBOS in July 2006 and, when the FSA was deciding upon what enforcement action to take in early 2009, there was, as far as the FSA was aware, little if any information indicating potential personal culpability on the part of Crosby.”

The Bank of England said: “The Prudential Regulation Authority and the FCA will conclude a review as to whether further enforcement action should be taken as early as possible next year.”

HBOS, which traded under the brands Halifax and Bank of Scotland, had to be rescued in late 2008 via a government-engineered takeover by rival Lloyds, which subsequently needed a £20.5 billion bailout of its own.

select for full details The £7million bank farce: Reports into HBOS collapse 'is a slap in the face for taxpayers' as ten senior managers face lifetime bans
Two damning reports into HBOS's demise were finally published today. One says ex-senior managers were 'ultimately responsible' for collapse. They 'failed to set an appropriate strategy and grew the bank recklessly.' Second report provides a scathing assessment of now-disbanded FSA.
By James Salmon 19 Nov, 2015
A long-awaited review into the collapse of one of Britain’s biggest banks was last night described as a ‘slap in the face for taxpayers’.

More than seven years after the failure of Halifax Bank of Scotland, regulators published the results of a £7million inquiry into what went wrong and who was to blame. The bank’s former executives were accused of pursuing a ‘flawed and unbalanced strategy’ which culminated in the bank’s destruction.

Up to ten former executives face lifetime bans from the financial services industry, including James Crosby, Andy Hornby and Lord Stevenson – dubbed the HBOS Three. But last night furious MPs said a ban would be largely irrelevant as some of the key bosses at fault no longer work in the industry.

Bookmaker Gala Coral said it would stand by chief operating officer Mr Hornby, 48, chief executive of HBOS when it collapsed. He is set to collect a multimillion-pound windfall from a takeover by Ladbrokes. Former chairman Lord Stevenson, 70, has collected a string of positions, including a seat on Waterstones’ board, but no longer works in financial services while James Crosby, Mr Hornby’s predecessor, is largely retired, having been forced to forfeit a number of board roles. Mr Crosby was stripped of his knighthood at his own request following a report by MPs and peers into HBOS in 2013, which said he was the 'architect of the strategy that set the course for disaster'. It was also confirmed that ex-bosses will escape fines because regulators failed to act in the first place. Statutes of limitation meant the Financial Services Authority had only two years to launch an investigation after any evidence of wrongdoing came to light.

John Mann, a Labour member of the Treasury Select Committee, said: ‘This is a slap in the face for British taxpayers. It is extraordinary and totally unsatisfactory. The public will rightly be furious with this.’ The row erupted as the Financial Conduct Authority – which replaced the FSA – and the Bank of England’s Prudential Regulation Authority published their report on the downfall of HBOS. There were more damaging revelations in a 100-page report published simultaneously by top barrister Andrew Green.

HBOS was rescued by Lloyds in October 2008, in a deal brokered by former prime minister Gordon Brown.

Its toxic loans triggered the collapse of Lloyds itself – saved by a £20.5billion taxpayer bailout. Almost 50,000 people at the enlarged Lloyds Banking Group have since lost jobs.

The 400-page report by the FCA and the PRA focused on reckless lending before the financial crisis, and the ‘light touch’ approach of the bank’s regulators. The authors said the board pursued a ‘flawed and unbalanced strategy’ reliant on lending huge amounts of money, most of which was borrowed on fickle short-term money markets, which left the bank ‘extremely vulnerable’. The report said ‘ultimate responsibility for the failure of HBOS rests with the board’, adding that its members ‘lacked sufficient experience and knowledge of banking’. Nine of the 12 members did not have proper banking experience, including former actuary Mr Crosby and Mr Hornby, a former Asda executive.

select for full details Hurricane HBOS hits City - will former bosses be banned?
The much delayed report by QC Andrew Green into the collapse of HBOS in 2008 has finally been published. Hold on tight!
By Andrew Saunders 19 Nov, 2015
For those whose memories need jogging, HBOS was the bank that collapsed so spectacularly back in 2008, taking Lloyds Banking Group down with it on the way and costing a cool £20.5bn. It became the poster child of the financial crisis, and not in a good way. It used the wholesale capital markets to pursue what one whistleblower - former HBOS head of regulatory risk Paul Moore - has alleged was a ‘growth at all costs, pile it high, sell it cheap’, strategy. At its peak, he told the BBC this morning, HBOS was having to borrow more than one and a half times the annual cost of the NHS every year simply to refinance its loans.

The report was originally set to see the light of day two years ago (even the un-shameable Southeastern Trains might blush at such a delay) but had to wait so that all those involved could have a chance to see it – the same ‘Mazwellisation’ process that has delayed the Chilcot report into the Iraq War even longer. Cynics might point out that it also means that the FCA’s five years statute of limitations is behind us. Handy.

So will further action be taken? The report says that the current regulators should consider bans on the former HBOS execs, and that any decision should be taken by early ini the New Year.

Which leads us to the ticklish problem that many of those working for the new regulators - the FCA and PRCA - were also at the old FCA when HBOS went down. How embarrassing.

The problem here is age old – on the one hand a scandal like this touches so many big cheeses in government, finance and even the wider business community that there is a risk that the cure might wind up being worse than the disease.

On the other we have moral hazard – remember that? Organisations - and ultimately the people who run them – should be held accountable for their actions, or what’s to stop it all happening again.

How will the balance be struck here? It looks like we're going to have wait still longer to find out.

select for full details In 2011 Bob Diamond told the Commons the bankers’ time for remorse is over - no, it’s not!
A week after Mark Carney called for an end to ‘heads I win; tails you lose’ capitalism, Barclays finds itself back in the American dock, paying a fine of $150m for cheating its customers.
By Alex Brummer 18 Nov, 2015
In effect it used software built to protect the bank against the evil of ‘flash trading’ (the abuse of high-speed communications) to get the best deal for itself on the foreign exchange markets.

The most damaging aspect of this wilful piece of bad behaviour is that it took place in the period 2009-2014, long after the financial crisis. It shows the bank had done little to renew what the Bank of England likes to call its ‘social licence’.

The fine is hardly the welcome present that new Barclays chief executive Jes Staley, officially due to take the helm next month, can have wanted.

Still, it could have been worse. His old bank, JP Morgan Chase, alongside Royal Bank of Scotland, is being pursued by the American Justice Department on criminal charges over the alleged selling of flawed mortgage securities. Investigators are seeking to establish that the two banks knowingly ignored warnings from people within the company that they were packaging too many dodgy mortgages into investment offerings.

Put another way, they sold products which they knew would blow up. What is fascinating about these cases is that they are targeting so-far unnamed individuals at JP Morgan and RBS. In spite of JP Morgan’s stellar reputation, it has been the most heavily fined of the Wall Street banks since the financial crisis. So while shareholders have picked up the bill, the cost of the penalties has been taken against profits and no individuals have felt the hot breath of the law on their collars.

It now looks as if that may be about to change, with the Obama administration apparently determined to have some heads on totem poles before it leaves office in January 2017. The RBS and JP Morgan cases raise another important issue: that of internal whistleblowers. Today, after eight long years of waiting, investors in HBOS will finally be exposed to the management and regulatory failures that led to the collapse of the bank and its forced merger with Lloyds.

select for full details Why didn't watchdog ask vital questions about HBOS's dependence on short-term funding?
Amid the stupefying detail in the official reports into the demise of HBOS, among the issues which most resonates is the supine behaviour of the company’s board.
By Alex Brummer 19 Nov, 2015
As the challenger bank of its time, the combination of Britain’s dominant building society the Halifax and the Calvinist Bank of Scotland, the board of HBOS looked an exciting place to sit during the go-go Blair-Brown years. HBOS attracted to its board a glittering cast of business people, including former Pearson chairman Lord Stevenson, founder of Carphone Warehouse Sir Charles Dunstone and Richard Cousins, currently the chief executive of catering giant Compass. What is remarkable is how unchallenging the non-executives chose to be, as first James Crosby and then Andy Hornby pursued a breakneck expansion policy. They sought annual growth of 20 per cent as if they were running a discount retailer rather than a bank that was the custodian of the nation’s savers and mortgages. As any GCSE student of economics is taught, banks need to have adequate capital as a cushion in times of trouble. It is a disastrous mistake to borrow short and lend long. Yet many of the people at HBOS failed to ask vital questions about the dependence on short-term funding. When the financial system almost froze over in September 2008, the Bank of England had to step in with £24.5billion of cash to keep the ATMs loaded. One might have thought that any association with a bank as deeply flawed as HBOS would have disqualified directors and executives from working in the City, if not the whole of commerce, ever again. Remarkably, several of the key players are back in banking. The former group finance director Mike Ellis is currently chairman of the Skipton Building Society; the former head of corporate lending George Mitchell works for Intrinsic Mortgage Planning and the former boss of treasury Lindsay Mackay is a director of Alpha Bank in London

Post the financial crisis, the demand for experienced bankers has been strong as the Bank of England has insisted that boards be strengthened with people with hands-on knowledge of finance. That has provided a useful safety net for former HBOS insiders, several of whom look to have bounced back into lucrative jobs.

They are not alone. A number of the criticised regulators also have enjoyed comfortable landings.

Former FSA chief John Tiner is at Credit Suisse and enforcer Margaret Cole currently is chief counsel at auditors PwC.

In spite of serious mistakes they have passed seamlessly into the private sector.

Given the severity of many of the findings in the report it ought to be incumbent on employers to reassess their suitability to hold down high-profile City jobs.

Certainly, taxpayers who bailed out HBOS in its time of need and investors in it and its saviour Lloyds have reason to feel resentment. Why, they might ask, have people been reintegrated back into the financial sector, despite the costly errors? Experienced directors, executives and advisers who failed to put the brakes on unhinged expansion, should not have escaped unscathed from the mess.

select for full details How they brought down the Halifax:
HBOS bosses face lifetime ban.
By Yorkshire Post 19 Nov, 2015
UP TO 10 former HBOS executives could be banned from ever working in financial services again following a damning report into the failure and collapse of the former Halifax Bank owner.

The most high profile casualty would be former HBOS finance director Mike Ellis, who is now the chairman of Skipton Building Society.

The report also targeted Andy Hornby, HBOS’s Scarborough-born former boss, and its chairman, Lord Stevenson, who both work outside the banking sector now

The Bank of England and Financial Conduct Authority report blames top executives for the bank’s failure.

It is also highly critical of the of the former regulator, the Financial Services Authority (FSA).

HBOS whistleblower Paul Moore spoke to the Yorkshire Post just minutes after he was able to leave the Bank of England after reviewing the report.

He said the findings have severe consequences for the bank’s former directors and the functioning of the then Financial Services Authority, and also point to the need for a detailed investigation into the bank’s auditing and accounting.

He said: “Some of the evidence, even flabbergasted me. This now requires a detailed investigation with convictions.”

He said he was shocked to read in the report that between 2008 and 2011, the bank suffered multi-billion pound losses.

Barry Sheerman, Labour MP for Huddersfield, said: “It’s been eight years now since the banking sector plunged the country into a financial crisis, and almost nobody from the sector has been properly held to account.

“HBOS’s dismal leadership led to many of the bank’s customers, shareholders and employees losing their money and their livelihood, including many of my constituents in Huddersfield. I fear we have yet to learn the lessons of this sorry story, but I hope this report alongside the trailblazing campaigning of the HBOS whistleblower Paul Moore goes some way to restoring integrity in the banking sector.”

select for full details Bad bankers are like shoplifters, says George Osborne
It's wrong that people who steal from shops are jailed, but bad bankers are not held to account.
By Peter Spence 11 Nov, 2015
Bankers who received taxpayer money during the financial crisis are not unlike shoplifters, Chancellor George Osborne has said.

Speaking at the Bank of England, he said that at the time of the financial crisis, and in the years that followed, there were no laws in place to allow regulators and lawmakers to punish offenders in the financial services sector or bring criminal charges against them.

"Some criminal charges have been brought, but not as many as would have been the case if the laws were better."

Mr Osborne compared the scandals that have plagued the financial services industry since the crisis to other forms of law breaking. "If you go and shoplift at the local WH Smiths you go to prison," he said.

"But if you’re the market trader on the trading floor of a big investment bank, and you rip off people to the tunes of millions of pounds, there are no criminal offences to deal with you."

The Chancellor said that "there was a lot of totally understandable anger" at bankers, as they were in part responsible for "the biggest single economic crash of our lifetimes".

"The idea that you can just ... move on is, I think, a bit optimistic," he added.

Sir Howard Davies, chairman of the Royal Bank of Scotland, agreed that the reputation of parts of the industry is still in tatters. “People on the whole would prefer, in a wine bar, to say proudly that they are a banker, rather than mumble or imply that they run a brothel or something more respectable and useful. Yes, they are very concerned,” he said in a panel discussion at the same event. “One shouldn’t exaggerate – a lot of the people work in the front line dealing with deposits and loans, and that business has gone on and it is a perfectly good, normal business. “But the people involved in the trading activities and running the bank, are very conscious that banking did lose its way in the run up to the crisis, and have found it quite difficult to re-find that way in the period since.” Mr Osborne's comments came as Mark Carney, the Bank of England Governor, said that there was still progress to be made to end the problem of "Too Big To Fail", which has meant that the taxpayer has footed the bill for banking sector losses.

select for full details HBOS report: 10 executives could face ban
Clive Adamson, former director of supervision at the FSA, told Mr Green that "the most culpable people were let off".
By Brian Milligan 19 Nov, 2015
So far the only person to have been banned is Peter Cummings, who was previously the head of corporate lending at HBOS.

In 2012, he was fined £500,000, and banned from senior positions in banking.

No one else will face fines, as too much time has passed since the events took place.

Mr Green said the FSA was "misguided" when it took the decision not to take action against Andy Hornby, HBOS chief executive from 2006 to 2009.

Mr Hornby is currently the chief operating officer at betting firm Gala Coral. Following publication of the report, Gala Coral said Mr Hornby had been a key member of management for five years.

"During this time he has played a central role in the transformation of the business and has earned the continuing support of our colleagues, management and shareholders," it said.

Other former HBOS executives in the frame include Lord Stevenson, who is a non-executive director at the bookshop Waterstones, and Mike Ellis, the former group finance director at HBOS and now chairman of the Skipton Building Society.

Lindsay Mackay, the head of HBOS's Treasury division from 2004, could also be banned. He is currently a director of Alpha Bank.

James Crosby, HBOS chief executive from 2001 to 2006, has retired. He gave up his knighthood in 2009, and surrendered part of his pension.

Eight former non-executive directors of HBOS - who were criticised in the report - said they disagreed with its findings.

The eight, including Lord Stevenson and Carphone Warehouse founder Sir Charles Dunstone, said the report had downplayed the "unforeseeable" effects of the financial crisis.

"The report does not contain evidence that would justify any further enforcement action against executives," they said in a joint statement.

'Deficient approach'

The Bank of England report says that when the then regulator, the FSA, investigated HBOS it relied too much on the bank's senior management.

Overall it said the FSA's approach was "deficient". The FSA was replaced by the FCA in April 2013.

select for full details HBOS whistleblower slams 'out of control' strategy ahead of FCA report
The sacked whistleblower at HBOS, Paul Moore, has blamed the bank’s former executives and the City’s watchdog for its near collapse in 2008
By Nick Goodway 19 Nov, 2015
Moore said the bank’s strategy in the run up to the financial crisis had been “growth at all costs, stack ‘em high, sell ‘em cheap, go at breakneck speed.”

The report from the Bank of England and Financial Conduct Authority has taken seven years to produce.

That means that former chief executives James Crosby and Andy Hornby and former chairman Lord Stevenson can no longer be fined for their roles in the failure of the bank which had to be taken over by Lloyds which was then bailed-out by the taxpayer for £20 billion.

Moore, who was HBOS’s chief regulatory risk officer, was fired by Crosby in 2004 after he warned the board of the bank’s risky sales strategy. His evidence to MPs in 2009 led to Crosby’s resignation as deputy chairman of the Financial Services Authority.

Four years later Crosby gave back his knighthood after he, Hornby and Stevenson were heavily criticised by the Parliamentary Commission on Banking Standards.

Moore said: “I was asked to check whether the focus on sales and marketing had got out of control. It had. I told them. They fired me.”

Moore was also highly critical of the FSA today.

He said: “It doesn’t take a genius, or even a child if you’re a regulator, to add up on the back of a fag packet what the wholesale funding requirements were of all the banks and to prevent a crisis taking place and take away the punch bowl. They didn’t do it.” He told the BBC: “HBOS had to borrow more than one and two thirds times the cost of the National Health Service every year. One year HBOS borrowed more money on the wholesale markets than the Italian government.”

Thursday sees the publication of the main 500 page report from the regulators and a separate report by Andrew Green QC into how and why the FSA fined and disciplined only one HBOS director.

Peter Cummings, head of corporate lending, was fined £500,000 and given a lifetime ban from working in any senior role in financial services three years ago.

Moore said: “It’s a toxic nexus between wealth and power, which prevents elite and rich people being held to account.” Two years ago Andrew Tyrie, the MP who chaired the Commission on Banking Standards, said there had been “a colossal failure of leadership” at HBOS. The delay to the report, which means those involved have now passed the statute of limitations, was caused by a year of “Maxwellisation” which saw 35 individuals make submissions on how they were dealt with in it.

select for full details Learning to trust bankers again is the very worst thing we could do
Nosegays are bunches of flowers that posh people used to carry to fend off the smell of commoners when travelling the streets
By Giles Fraser 12 Nov, 2015
In a former life, it was a standard part of my kit when I used to dress up as chaplain to one of the sheriffs of the City of London, now the outgoing Lord Mayor. And nosegays will still be carried on Saturday’s Lord Mayor’s Day, when the mayors are rotated and the incoming one travels up to Westminster to swear loyalty to the crown.

This ceremony, now celebrating its 800th anniversary, was a part of the overall settlement of 1215 – the year of Magna Carta – when a deal was struck that the City could be granted the independence of having its own mayoral authority as long as that authority was subservient to the crown. In a constitutional monarchy, that settlement can be reasonably reinterpreted to mean that the City has relative freedom and independence, as long as it acknowledges its subservience to the common good as represented by the monarch. Or, to stretch it a bit more: markets are made for man, not man for markets.

On Wednesday, the Bank of England threw open its doors in an unprecedented gesture of transparency. With not a nosegay in sight, the governor of the Bank, Canadian Mark Carney, broke with centuries of well-guarded privacy and invited us commoners into the heart of the financial establishment, opening his institution to interrogation from those members of the public who had succeeded in getting a ticket through a public ballot. Even George Osborne was carried away by this spirit of openness, giving a speech about how he understood all the public anger at bankers, and then taking questions from the floor.

The purpose of all this touchy-feely openness? To address the widespread worry that the City has lost its social licence – that, even seven years after the banking crisis, we still don’t trust them. And without this trust, they don’t really have a social licence to operate. So we have massively raised capital requirements, they now say. No more too big to fail. We have ringfenced the socially useful high street banks from the risky casino capitalism of the investment banks, they say. We have passed laws to send cheating bankers to prison. And now we talk a lot more about morality. So please trust us again.

So, should we? The short answer is no. And I say that not because I think bankers are some special sort of baddie, constitutionally different from you or me. But rather because I think they are exactly like you and me – and thus subject to the same pull of greed that we all are. With all that money sloshing about, the real moral hazard of the financial services industry is deep in the marrow of the profession. Which is why suspicion should always be the default approach. Clever, highly incentivised people will always outfox the careful and considered pace of the regulators – especially when technology, with smartphones and big data, is continually opening up new forms of banking, and thus new ways to get around the existing legislation. And those of us who were old soldiers of Occupy ought not to keep preparing for past battles. Whatever the next battle looks like, we can be sure it will look totally different to the last one.

But one thing remains true: the more people trust the bankers, the more we should worry. For, as history demonstrates, it is precisely when we drop our critical vigilance that the banks are given the social licence to invent ingenious new ways of ripping us off. Remember how high the social licence had become in the run up to the 2007-08 crisis. Let’s not be that gullible again.

But credit where it is due. Dropping the nosegay approach was a good idea. And Mark Carney’s desire to break out of the closed feedback loop of City insiders is much to be commended. But in my parish, just a mile or so from the City, the growth industry is still food banks. And until that changes, you won’t find me hugging a banker or praising their social usefulness.

select for full details Former HBOS non-executive directors including then-chairman Lord Stevenson and Sir Charles Dunstone slam FCA report
Former non-executive directors of HBOS have put out a statement condemning a report by the Financial Conduct and Prudential Regulation Authorities today, saying they disagree with a number of the conclusions
By Emma Haslett 19 Nov, 2015
In a statement from law firm Ashurst, former non-execs including Lord Stevenson, the bank's chairman between 2005 and 2008, said the report "downplays the unforeseen and unforeseeable effect of the financial crisis on HBOS". The report, published this morning, suggested Stevenson, now a non-executive director at Waterstones, and other senior managers were ultimately responsible for its downfall. Stevenson could now face a wider investigation by the FCA, with the potential for a lifetime ban from the City. The statement, on behalf of other non-exec directors including Carphone Warehouse founder Sir Charles Dunstone, Sir Ron Garrick, Anthony Hobson, Coline McConville, John Mack, Kate Nealon and Sir Brian Ivory, added that the report "acknowledges that its judgements have been reached with the benefit of hindsight. The report does not contain evidence that would justify any further enforcement action against executives". "Equally, [the non-executives] understand the justified anger about what happened. The former chairman and chief executive resigned, apologised, waived contractual entitlements and lost their investments in HBOS. "Their only wish now is that current and future bank boards learn to avoid the mistakes that they and others undoubtedly made."

select for full details Ten bankers charged over Euro rate rigging
Ten more bankers have been charged over rate-rigging, the Serious Fraud Office has announced.
By Express and Star 13 Nov, 2015
The accused, six from Deutsche Bank and four from Barclays, are the first to face criminal proceedings as a result of the SFO's investigation into the alleged manipulation of the Euro Interbank Offered Rate (Euribor).

Deutsche Bank employees Christian Bittar, Achim Kraemer, Andreas Hauschild, Joerg Vogt, Ardalan Gharagozlou and Kai-Uwe Kappauf, and Colin Bermingham, Carlo Palombo, Philippe Moryoussef and Sisse Bohart from Barclays, face charges of conspiracy to defraud.

They are due to appear at Westminster Magistrates' Court on January 11.

The SFO said criminal proceedings would be "issued against other individuals in due course".

Euribor is the rate at which Euro zone banks borrow funds from one another.

A number of bankers have already been charged with manipulating the Libor rate. Libor, the London Interbank Offered Rate, is the rate that leading banks in London borrow funds from each other.

In August, Tom Hayes became the first person to be convicted of rate rigging by a British jury and was sentenced at Southwark Crown Court to 14 years in prison.

Both Barclays and Deutsche Bank declined to comment on today's announcement by the SFO.

select for full details We Can't Blame The Bankers For The HBOS Collapse: There Weren't Any Bankers There!
The bank went bust the old fashioned way: it lent too much money to people who couldn’t pay it back.
By Tim Worstall 20 Nov, 2015
The Bank of England has just published the long awaited report into the collapse of Halifax Bank of Scotland, more formally known as HBOS after their merger. And the really interesting thing about this report, together with the others into that great crash, are that in the UK experience all of this was absolutely nothing at all to do with investment banking, casino capitalism, securitised mortgages or any of the other things that people tend to blame it all upon. More impressively, we can’t even blame this on the bankers: because to a reasonable approximation there weren’t any bankers at the company, not at the top at least. It’s not even a story of inadequate regulation: there was plenty of law to cover what was going on, it just wasn’t used. That is, a story perhaps of bad regulators, but not an absence of them nor regulatory powers.

HBOS just didn’t do any of the things that people blame the crash in general upon. There was, to a reasonable approximation, no investment bank there, no involvement in securitised loans like MBS, nothing in the CDS or CDO book, no high frequency trading. The bank went bust the old fashioned way: it lent too much money to people who couldn’t pay it back.

And that’s simply it.

The three great failures of the time were as follows. Northern Rock, which suffered a wholesale bank run. This stuff happens in fractional reserve banking and while their strategy was at risk of this it wasn’t an absurdly awful strategy for them to follow. Their loan book, which the government took over, has just been sold at a profit for example. Perhaps they should have got liquidity assistance but they weren’t systemic so they didn’t and that’s that then.

The second was RBS, and they went bust simply because they grossly overpaid for ABN Amro. Yes, there were subsidiary issues as well, but that’s the main over arching one.

And now we’ve the third, HBOS, which went bust as banks have been going bust for millennia. Simply lending to people who don’t pay the cash back. Lloyds got into horrible trouble, entirely true, but that’s because they were armtwisted into taking over HBOS to stop it entirely collapsing into a pile of smoking rubble. If the government had supported HBOS, instead of getting Lloyds to do it and then having to support Lloyds then Lloyds would not have run into trouble.

But note what this means: it was nothing to do with the investment banking side of anything. Nothing to do with traders chasing bonuses, nothing to do with securitised loans, nothing to do with casino capitalism at all. And yet all of the work to prevent this happening again is on the regulation of the bonuses of traders who had nothing to do with it, on the securitisation of loans, similarly bereft of responsibility.

select for full details HBOS collapse: KPMG may face inquiry over its role in the lender’s collapse
Report details how accountancy giant failed to raise alarm over quality of failed bank’s loan book
By Ben Chu 20 Nov, 2015
The “big four” auditing firm KPMG has found itself under renewed pressure over its role in signing off HBOS’s books in the years before the bank collapsed.

The Bank of England/Financial Conduct Authority report did not specifically evaluate KPMG’s audit, but it did detail how the accountancy giant failed to raise the alarm over the quality of the bank’s loan book, even when it was on the verge of collapse.

“It’s clear from this report that the audit process was an important part of the story of HBOS’s failure,” said Andrew Tyrie, chair of the Treasury Select Committee and the last Parliamentary Commission on Banking Standards.

Mr Tyrie added that he would be writing to the Financial Reporting Council to demand an investigation. A previous FRC investigation concluded there were no grounds for such as probe.

“They will need to consider afresh... that there were no grounds for an investigation of KPMG [and] relevant senior KPMG people,” said Mr Tyrie. He added: “It is surprising that the FRC didn’t conclude, and a long time ago, that this work was needed – not least to provide greater public confidence about bank audits after the catastrophe of 2008.”

In a statement, the FRC reiterated that its previous investigations had not produced any “reasonable grounds to suspect misconduct” by KPMG. But it added that it would review the latest report “to ascertain whether it contains any relevant new information”.

“The evidence in this report demonstrates not just carelessness by KPMG but a reckless disregard for their duty,” the HBOS whistleblower Paul Moore told The Independent.

He said KPMG should have told investors just before the bank’s April 2008 £4bn rights issue that HBOS was only surviving due to special liquidity from the Bank of England. “They never disclosed it to the market. That is a deliberate misrepresentation of a material fact.”

Mr Moore, former head of regulatory risk at HBOS, was dismissed by the bank in 2004. He claims he was sacked by the former HBOS chief executive James Crosby after he warmed about its excessive risk taking and mis-sellling.

His complaints were investigated at the time by KPMG, under instruction by the Financial Services Authority. KPMG concluded HBOS had appropriate risk controls. KPMG also ruled that Mr Moore had lost his job because of a personality clash with Mr Crosby, not because of his warnings.

Bad bankers compared to shoplifters by Osborne
George Osborne compared City traders who rigged the markets to shoplifters yesterday as he challenged banks to regain the public’s trust.
By Philip Aldrick 12 Nov, 2015

The chancellor said that outrage at bankers who were bailed out after triggering the worst financial crisis since Victorian times was “totally understandable”, and that the industry “has to prove to the public that things have really changed”.

select for full details HBOS timeline: the countdown to collapse
As the long-awaited report into the troubled emergency takeover of HBOS by Lloyds is published, we look back over the bank’s turbulent 14-year history
By Jill Treanor 19 Nov, 2015
May 2001     Halifax and Bank of Scotland merge to create HBOS, a “new force in banking”.

January 2004     Mike Ellis, the then finance director, tells the board the Financial Services Authority (FSA) is concerned the bank is an “accident waiting to happen”. This subsequently emerges in the parliamentary commission on banking standards (PCBS) report in 2013.

Late 2004     According to the PCBS, a so-called “Arrow” review by the FSA found the risk profile of the bank had improved.

December 2005     HBOS issues an upbeat trading statement.

January 2006     James Crosby resigns as chief executive and Andy Hornby is named as his successor.

January 2006     HBOS makes big push into the Republic of Ireland.

June 2007     HBOS’s share of new mortgage lending halves to 8%, its lowest level for seven years. Pricing errors are blamed.

August 2007     Dividend raised by biggest amount since HBOS was created, as half-year profits rise by 13% to nearly £3bn.

February 2008     HBOS reports full-year profits for 2007 down 4% to £5.4bn.

select for full details March 2008     HBOS shares plunge in dramatic day on the stock market amid rumours about its financial health. City regulators launch an investigation into the share price movements.

April 2008     The bank launches a £4bn cash call to bolster its capital. Some investors question the need for the extra resources. “Ours is a strategy for all weather, good or bad,” chairman Lord Stevenson tells shareholders.

July 2008     The rights issue flops, and the big City firms underwriting it are left with all but 8% of the shares.

August 2008     Profits plunge 70% and HBOS warns house prices could tumble 18% in next 18 months.

September 2008     Lehman Brothers collapses in the US and HBOS gets caught up in the turmoil. Lloyds TSB makes £12bn takeover offer, which the FSA says would “enhance finance stability”.

October 2008     Government announces bailout of the banking system.

November 2008     Hornby, who had initially been sidelined in the rescue takeover, offered £60,000 a month consultancy role with the enlarged Lloyds Banking Group, nicknamed the Bank for Britain.

December 2008     Profits warning as bad debts in HBOS’s corporate division hit £3.3bn.

January 2009     Deal with Lloyds completes.

February 2009     Lord Stevenson, former chairman of HBOS, and Hornby apologise at the Treasury select committee.

November 2009     Bank of England admits that HBOS was given a secret lifeline during the 2008 crisis, peaking at £25.4bn on 13 December 2008, which was repaid on 16 January 2009.

select for full details Things are softening up for the bankers. Did we forget so soon?
By James Moore 23 Oct, 2015
It isn’t hard to identify the winners and the losers from the Competition & Markets Authority’s provisional findings into the current account and small-business banking markets.

The reactions of various interested parties tell you all you need to know. How about the British Bankers’ Association? It says the CMA’s interim proposals “build on existing measures by high-street banks to deliver new innovative ways of banking” and hails the “pragmatic suggestions to increase awareness of (account) switching”.

But as for the British Chambers of Commerce? The CMA “pulled its punches”. Business will be “disappointed”. That was also the adjective used by Andrew Tyrie, the chairman of the Treasury Committee, who thinks the consumer ought be made aware of how “free” in credit banking is a myth.

Meanwhile the CMA tells everyone willing to listen that its interim report is absolutely, positively, not a cop out.

The only thing these findings are not is surprising. They are perfectly in tune with everything else that has been going on in the regulation of banking since the General Election. Martin Wheatley, the tough as nails boss of the Financial Conduct Authority? Ousted. The “presumption of responsibility” that would have required bankers to prove they had taken reasonable steps to prevent wrongdoing? Dropped in favour of a nebulous “duty of responsibility”.

Meanwhile, nearly every bank in Britain is applying for “transitional waivers” that they hope will allow them to get out of the requirement to ring-fence their retail banks from the wilder, and riskier, fields of investment and corporate banking. Despite the fact that the rules won’t come fully into force until 2019 and that they were trailed way back in 2011.

What still does surprise (a bit) is how short our memories have become. We are just seven years past a banking-led financial tsunami that very nearly destroyed this country’s economy, and I don’t use that term lightly. Today’s political leaders shrug their shoulders as the steel industry melts down but their predecessors deployed billions of pounds of taxpayers’ money to bail out banking, amid fears that we would be back to stone age barter if they didn’t.

“Never again” was the cry at the time, and small wonder. There were promises of new rules to make sure of it too. Ministers’ feet were held to the fire by a succession of ugly scandals, left stinking in the sunlight when the flood waters of crisis had subsided.

These are with us still. Investigations are ongoing into precious-metal price-fixing. In the past few days, a French bank – Credit Agricole – paid nearly $800m to US authorities to settle a sanctions busting investigation. Some of the payments it tried to hide went through its London office.

Still banks drag their feet on PPI.

And yet this appalling behaviour now seems to generate merely a resigned shrug. Oh what, banks again? A similar process has been underway in the US, despite its mega-fines, with lobbyists watering down its Dodd-Frank reforms, highlighted by US Senator Elizabeth Warren.

All the while the masters of the financial universe are getting more comfortable. We may have cause to regret that.

select for full details Why did the watchdog chase just one banker over HBOS collapse?
Financial Services Authority should have probed former HBOS chief Andy Hornby "at a minimum", says damning new report
By Marion Dakers 19 Nov, 2015
The financial regulator was unreasonably narrow-minded when it investigated the collapse of HBOS, according to a new report that opens the door for fresh enforcement action against Andy Hornby, Lord Stevenson and other former executives at the failed bank.

The Financial Services Authority, which was said to be “stretched almost to breaking point” by funding constraints, chose to pursue only one former HBOS executive after the bank’s failure, according to the report by Andrew Green, the barrister who was asked to re-examine the watchdog’s response to the 2008 collapse last year.

Mr Green’s report was published alongside a broader report on the failure of HBOS written by the Prudential Regulation Authority and the Financial Conduct Authority, the two regulators that replaced the FSA in 2013.

These watchdogs will decide “as early as possible next year” whether to bring new enforcement action against up to ten people involved in HBOS’s decline. The bank was taken over by Lloyds Banking Group in September 2008, only to almost sink its would-be rescuer with portfolios of bad loans, leading to a taxpayer bailout a month later. So far, only former corporate head Peter Cummings has been censured by the regulator, with a lifetime ban and £500,000 penalty imposed in 2012. While other bankers involved could now be prohibited from working in finance in future, it is too late to bring disciplinary proceedings against them for misconduct, the new report pointed out.

Mr Green said the regulator gave “no proper consideration” to investigating former chief executive Andy Hornby, former chairman Lord Stevenson or any other senior staff, with various parts of the FSA passing the buck on whether or not to begin a probe.

select for full details “The FSA, at a minimum, should also have investigated Mr Hornby from early 2009 (i.e. in addition to Mr Cummings), and the failure to do so was not reasonable,” he wrote.

Mr Green made his findings after interviewing 15 former FSA staffers. While some believed that it was right to start with Mr Cummings as “the most culpable” former executive, others were aghast when the investigations, codenamed “Project Havana”, began and ended with action against him.

Clive Adamson, former head of supervision at the regulator, has said that “the people most culpable were let off”.

Hector Sants, chief executive of the FSA from 2007 to 2012, said the organisation was “stretched almost to breaking point in terms of its resources in this period”.

The decision to focus on Mr Cummings was probably made on January 9, 2009, yet no minutes from this meeting were found and none of the four participants could recall how they reached this conclusion, Mr Green said.

“No report interviewee suggested that this was a ‘rogue trader’ type situation in which it could confidently be said from the outset that one man had brought down the bank. This was not, therefore, a situation in which it was safe to focus all attention on one person,” the report said.

One interviewee suggested that there might be no need to investigate Mr Hornby, who is now chief operating officer at the gambling group Gala Coral, as he was not going to resurface in the world of banking. “It seemed highly unlikely to us that having ruined one bank, or [been] in charge of a bank which had collapsed, that he would have been approved to do the same thing, to take the same role again,” said an unnamed enforcement manager.

select for full details Factbox: UK's HBOS - a 'simple bank that created a big problem'
FSA executive management led by its CEO John Tiner had a deficient approach to supervision and failed to spot risks or intervene in time. FSA board oversight, led by chairman Callum McCarthy, was insufficient
By Reuters 19 Nov, 2015
The Bank of England's Prudential Regulation Authority (PRA) and Britain's Financial Conduct Authority (FCA) published a report on Thursday into why HBOS bank failed in October 2008 during the global financial crisis.

The bank, Britain's biggest mortgage lender, had to be taken over by Lloyds, which itself then needed a £20 billion taxpayer bailout.

A separate report by independent lawyer Andrew Green looked at the enforcement actions taken by the then regulator, the Financial Services Authority (FSA) after the failure.

Seven former senior HBOS executives and board members still hold roles in Britain's financial industry which require regulatory approval.

The reports, runnning to more than 500 pages in total, cost £7 million to compile.


- Boards must be responsible for ensuring a bank's business model is sustainable with safety and soundness embedded in its culture.

- Boards must have an appropriate mix of experience to challenge executives.

- Senior managers at banks should identify threats to the business and notify regulators in an open way.

- Regulators must be ready to intervene and force a bank to change its business model, free from undue influence.

- A bank's home regulator must understand the scope of local oversight of overseas branches and understand the international business.

- FCA and PRA board members from industry must manage any perceived or actual conflicts of interest.

- The PRA and FCA said they will conclude a review as to whether further enforcement action should be taken, as early as possible in 2016.

select for full details Fannie and Freddie are Back, Bigger and Badder Than Ever
By Bethany McLean 20 Jul, 2015
AFTER the financial crisis of 2008, there was one thing that almost everyone agreed on. The government-sponsored mortgage giants, Fannie Mae and Freddie Mac, had to go. While shareholders and executives reaped the profits from Fannie and Freddie in good times, taxpayers were stuck with the bill in a crisis. President Obama described their dysfunctional business model as “Heads we win, tails you lose.” But here we are, seven years after the crisis, and nothing has changed.

Fannie Mae and Freddie Mac were meant to make it easier for Americans to buy their own homes. By buying up mortgages issued by other lenders, they enabled the lenders to make more loans. Fannie and Freddie could then package the payments that Americans made on their home mortgages into securities to sell to investors, from big bond funds to foreign central banks. In this way, a saver in China financed the purchase of a home in Kansas.

In many ways, the system worked beautifully. But Fannie and Freddie accrued tremendous power and wealth because of the primacy of housing at the center of the American dream, combined with the perception that these loans had the full backing of the United States government. They abused that perception. Executives paid themselves lavish salaries, and the companies, particularly Fannie, relentlessly lobbied Congress to keep their advantages and dodge regulations.

In the 2008 crisis, when it looked as if Fannie and Freddie might go bankrupt, Henry M. Paulson Jr., then the Treasury secretary, argued that their fall would cause economic catastrophe. Foreign investors, stuck with their securities, would panic, and the mortgage market would shut down. So Fannie and Freddie were put into something called conservatorship, and are now government controlled, supported by a line of credit from the Treasury.

Conservatorship was supposed to be temporary — a “time out,” according to Mr. Paulson. We were going to stabilize the companies’ finances, reduce their importance to the mortgage market, and figure out a better system. But nothing happened. In fact, the situation has gotten even more precarious. In the years since the crisis, private lenders, for the most part, have been willing to make mortgages if they can immediately sell them to government agencies, mainly Fannie and Freddie. In other words, without Fannie and Freddie, there wouldn’t be much of a mortgage market.

To make things worse, the government decided to “sweep” almost all the duo’s profits into its own coffers, to be used as a slush fund for general government expenses. As Treasury Secretary Jacob J. Lew said in congressional testimony this spring, “As a practical matter it’s what has helped us reduce our overall deficit.” If there is another downturn in the real estate market and Fannie and Freddie suffer losses on their some $5 trillion in outstanding securities, taxpayers will again have to foot the bill. Jim Parrott, a senior adviser with the National Economic Council in the Obama administration and now a fellow at the Urban Institute, wrote that the current system was “the worst of all worlds: It attracts too little private capital, provides too little mortgage credit, and still poses too much risk to the taxpayer.”

There has been one serious attempt to get rid of Fannie and Freddie, a bipartisan bill sponsored by Senators Bob Corker (Republican of Tennessee) and Mark Warner (Democrat of Virginia) that did not make it out of the Senate.

But is it really practical to kill Fannie and Freddie? We as a society want much of what they provide, which is relatively consistent access, through good times and bad, for a wide section of society, to a 30-year fixed-rate mortgage. Critics argued that the Corker-Warner plan would essentially turn the mortgage market over to the big banks, and lead to fewer loans at higher rates.

At a time of economic uncertainty, when income inequality is a major issue, it is also not a great thing for social cohesion to require those at the lower end of the income scale to start paying far higher rates for their mortgages than those at the upper end, which most analysts agree would be the case if purely private capital financed the mortgage market.

select for full details Greek debt crisis: Meet the Goldman Sachs banker who got rich getting Greece into the euro
Antigone Loudiadis has been richly rewarded for her dealmaking prowess and now sits atop one of Europe’s fastest growing insurance companies.
By Jim Armitage 11 Jul, 2015
If you thought the Goldman Sachs banker who did the deal to get Greece into the euro might have been chased out of the City of London, think again.

Antigone Loudiadis, more widely known as “Addy”, has been richly rewarded by the bank for her dealmaking prowess and now sits atop one of Europe’s fastest growing insurance companies, Rothesay Life.

The 52-year-old, who lives with her family in a vast stucco house in west London, was one of the brightest stars in Goldman’s Fleet Street headquarters.

While she lists her nationality as Greek, her education was as English as can be. Schooled at Cheltenham Ladies’ College, she went on to Oxford University before joining JPMorgan, and then Goldman, gaining partner status in 2000.

Colleagues describe her as “fiercely clever”, although by some accounts, she was simply fierce. It is said some of her staff would pretend to be on the phone when she walked past them in the office to avoid her infamous rollockings.

Although her Continental twang remains hard to place, her fluency in Greek and strong connections in the country were instrumental in winning the lucrative mandate to create the financial deals that would flatter the country’s debts.

Christoforos Sardelis, former boss of Greece’s Debt Management Agency who worked on the trades with her, told Bloomberg she was “very professional – a little bit aggressive as is everyone at Goldman Sachs”.

But she was trusted by the government which, it should be remembered, was far more right wing than the Syriza party.

select for full details Lloyds chief Antonio Horta-Osorio says sorry as he pays the price for £117m PPI fine
Lloyds Banking Group boss Antonio Horta-Osorio has been forced to apologise to the company’s customers as he agreed to give up part of his multi-million pound bonus.
By Jamie Dunkley 5 June, 2015

The state-backed lender was hit with a record £117 million fine by the City regulator for mishandling thousands of payment protection insurance complaints between March 2012 and May 2013.

Lloyds said it had decided not to pay senior management £2.65 million worth of bonuses covering the period because of this, with Horta-Osorio, who picked up £11.5 million in pay last year, set to lose out on about £350,000.

Today’s fine will be felt widely across the group with a total of £30 million of bonuses being cut.

The Financial Conduct Authority said some customers who had mis-selling complaints rejected by the bank were told their complaint had been “fully investigated” when in fact this was not the case.

“The size of the fine today reflects the fact that so many complaints were mishandled by Lloyds,” said Georgina Philippou, FCA acting director of enforcement and market oversight.

“Customers who had already been treated unfairly once by being mis-sold PPI were treated unfairly a second time and denied the redress they were owed.”

Lloyds was handling up to 60,000 PPI-related claims a week in 2012, with 7000 people processing the complaints.

It has since agreed to review up to 1.2 million complaints and has set aside £710 million to cover potential payouts.

Horta-Osorio said: “When we began the remediation programme, it was thought this would cost the entire industry around £4.5 billion. To date the industry has set aside over £26 billion for PPI redress with the consequent impact on operational complexity and the significant administrative resources required.

“Whilst our intentions were right, we made mistakes in our handling of some PPI complaints. I am very sorry for this. We have been working hard with the FCA to ensure all customers receive appropriate redress. That process is now substantially complete.”

select for full details TUC: Workers Are £5,000 Worse Off Post Crash
UK workers have been left almost £5,000 a year worse off due to poor productivity levels following the 2008 financial crisis.
By SKY NEWS 25 June, 2015

a report by the TUC has found that if average earnings had grown at the same rate as in the years before the 2008 financial crisis, UK workers would be almost £5,000 a year better off.

The trade union organisation said eight years of economic under-performance had left productivity 16% below its pre-recession trend.

It said low productivity had affected wage rises by an average of £95 a week - almost £5,000 a year.

In its report the TUC also pointed to “weak” growth in business investment over the period.

As part of its pre-Budget statement, the TUC urged the Government to take action to boost productivity, and to pull back from any plans to cut spending.

TUC general secretary Frances O'Grady said: "The Chancellor can say what he likes in the Budget - the history books already record him as the man who delivered the slowest recovery in modern history.

"The Government's failure to get productivity growing again has hit workers in the pocket, leaving them £100 a week worse off.”

She added: "It's time the Government stopped blaming others for its failure to mend the economy and took responsibility for delivering high productivity growth that everyone shares in.

"A new round of extreme cuts will do nothing to increase productivity and will harm growth and wages.

"We need strong, sustainable growth which can only be delivered with a major programme of investment in skills, infrastructure, innovation and high-quality public services.

Ms O’Grady added that when productivity growth was restored, the Government had to ensure workers received their fair share through higher wages and decent working conditions.

“Britain's working people are the true wealth creators and they deserve better than the crumbs from the boardroom table," she insisted.

select for full details These repeat offenders are trying the patience of their most loyal customers
To paraphrase Oscar Wilde - once is misfortune, twice is carelessness.
By Claire McNeilly 18 June, 2015

What words do we use now when it comes to the perennial computer glitch repeat offender, the Ulster Bank?

It's the fifth time since June 2012 that so-called "technical failures" have robbed customers of access to their own money.

Yet again salaries haven't been paid in, benefit payments are missing and direct debits have gone awry.

Some Ulster Bank customers haven't been able to pay bills and have expressed concern about being blacklisted with credit agencies.

The timing of this latest glitch couldn't have been worse - or more ironic - coming as it did a day after Ross McEwan, chief executive officer of Ulster Bank's parent firm Royal Bank of Scotland, told this newspaper he was confident all IT issues had been resolved. Not so, it seems - and customers have now been warned it could be the weekend before their accounts are back to normal.

Of course, other banks have suffered similar woes, but, for some reason, it's Ulster Bank that keeps hitting the headlines.

Problems first emerged three years ago - on June 19, 2012 - when a software update went wrong.

That led to a catastrophic computer meltdown that left millions of Ulster Bank customers unable to withdraw cash or view an up-to-date account balance.

Almost nine months later, there were two other problems: firstly, on March 6, when clients couldn't access their accounts or withdraw money and, then again, on March 28, when they were unable to use mobile banking for hours.

Customers were subjected to even more misery on December 2 that year, after an IT problem meant they couldn't access hole in the wall machines, use cards or access online banking.

Then, last April, computer problems on Easter Monday meant cash machine withdrawals were taken from some accounts twice.

The bank's beleaguered resumé to date was thrown into sharp focus yesterday when customers complained that -yet again - they weren't given any information from Ulster Bank about the problem when it arose.

Could that be a glitch too far for many of their most loyal account holders?

select for full details Lloyds Bank chief tells rivals to stop treating customers badly
Antonio Horta-Osorio says banks should stop complaining about new regulations and focus on customers.
By Tim Wallace 18 June, 2015

Britain’s banks should stop complaining about new regulations, Lloyds Banking Group’s chief executive has said, urging them instead to target the root cause of the red tape onslaught - bad treatment of customers.

Chief executive Antonio Horta-Osorio said politicians and regulators will only stop piling pressure on banks when they have convinced watchdogs and customers that the sector is behaving itself.

“The regulatory burden will only stop growing once the public and regulators trust banks to manage the sector in a responsible manner,” he told the British Bankers’ Association’s annual conference on Thursday.

But Mr Horta-Osorio also warned he does not expect this to happen soon: “Clearing up our reputation will take time and there will be challenges along the way.”

The former Santander UK boss also said that his rivals should accept that the retail banking ring-fence is inevitable, and implement the changes instead of objecting to the reforms.

The ring-fence splits retail banking from investment banking, and represents a major cost to banks with large operations in both sectors.

Lloyds is barely affected by the ring-fence, while Barclays and HSBC face a serious challenge from the changes.

Former Barclays chairman Sir David Walker has spoken against the ring-fence, and HSBC has cited the incoming rules as one reason it is considering moving its headquarters out of the UK.

However, speaking at the same event, the chairman of the Financial Conduct Authority said that retail banks have "got it at last".

John Griffith-Jones said Britain's high street banks now "really understand how to treat customers properly" and that substantial cultural change is sweeping through the sector.

select for full details Bank of England Governor Mark Carney gets tough on rogue bankers with plans for stronger jail sentences
Rogue bankers could face up to ten years behind bars under new plans set out today by Bank of England governor Mark Carney.
By Gareth Vipers 10 June, 2015

Mr Carney said the "age of irresponsibility” was over as he published the final report of the Fair and Effective Markets Review (FEMR), which was commissioned last year in the wake of a series of City banking scandals.

The review calls for UK criminal sanctions for market abuse to be extended to a wider range of areas and the lengthening of the maximum sentence available from seven to ten years.

Mr Carney said if unchecked, markets were "prone to instability, excess and abuse".

Speaking this evening at his annual Mansion House speech, he said: "For the best in the business, this won't be new. This is just how you run your business. But for others, who free ride on your reputations: the age of irresponsibility is over."

He also blamed poor infrastructure for allowing the US subprime mortgage crisis to "light a powder keg under UK markets, triggering the worst recession in our lifetimes".

The governor said failings in market structures, standards, systems and incentives skewed to short-term returns, coupled with a "culture of impunity" in parts of the market had contributed to an "ethical drift".

Mr Carney also acknowledged the failings of central banks.

"Unethical behaviour went unchecked, proliferated and eventually became the norm," he said.

"Too many participants felt neither responsible for the system nor recognised the full impact of their actions. For too many, the City stopped at its gates, though its influence extended far beyond."

It comes in the wake of a series of banking scandals such as the manipulation of benchmark lending rate Libor and foreign exchange markets.

Mr Carney said fines of $150 billion (£97 billion) levied on global banks had translated to more than $3 trillion (£1.9 trillion) of reduced lending capacity to the real economy.

select for full details A U S T R A L I A
Younger banking customers demand stronger protection from identity theft
younger customers are getting nervous about online identity theft and want their banks to introduce more sophisticated authentication procedures.
By James Eyers 16 June, 2015

As the proliferation of smartphones revolutionises banking, Telstra says younger customers are getting nervous about online identity theft and want their banks to introduce more sophisticated authentication procedures to safeguard personal information.

Rocky Scopelliti, Telstra's global industry executive for banking, finance and insurance, said 2014 was a landmark year for mobile devices being used to access financial services.

"But importantly, in a mobile-first world, people are looking for greater degrees of security," he said.

In a report called "Mobile Identity – The fusion of financial services, mobility and identity", Telstra found more consumers than ever were being exposed to identify theft. One-third of Generation X and Y said they had been compromised, 40 per cent blamed their bank and, of those, 65 per cent said they were likely to leave their bank as a result.

On Monday, the Australian Payments Clearing Association said fraud on payment cards continued to increase in the online environment. In 2014, fraud on cards and cheques increased from 16.2¢ to 20.8¢ per $1000 spent.

Mr Scopelliti said if banks employed biometrics and other "second-factor authentication", customers would feel a greater degree of security and become more "sticky", or less likely to switch banks.

The findings of the report, prepared with the assistance of Roy Morgan, support the commercial offerings of Telstra. The telco has a security practice that works with financial institutions at network and enterprise levels and also has a venture capital arm with small equity stakes in various authentication companies, including Kony Solutions, TeleSign, Zimperium, and DocuSign.

Telstra has been working with National Australian Bank on second-factor authentication via SMS, for which it receives a fee for sending. It has also developed voice biometric identification that is run over NAB's customers using telephone banking.

"The trust paradigm has shifted away from having to prove who you are through various questions that might be compromised to being recognised for who you are, and biometrics is the means of doing that," Mr Scopelliti said.

select for full details Backlash against JPMorgan boss Jamie Dimon after he branded investors as 'lazy'
The JPMorgan boss Jamie Dimon has been blasted as “removed from reality” and “insulting” after he branded his own investors “lazy” for voting against his multimillion-dollar pay deal.
By Ben CHU 29 May, 2015

At a conference in New York on Wednesday, the chief executive of the giant Wall Street bank said stockholders who had followed the recommendations of two influential professional advisory services and rejected Mr Dimon’s $20m (£13m) pay package last week were “irresponsible” and “not good investors”.

Luke Hildyard, deputy director of the High Pay Centre think-tank in the UK, said the “lazy” shareholders were the ones who voted in favour of Mr Dimon’s pay deal. “He must be totally removed from reality if he thinks closer scrutiny of lavish executive pay packages will result in higher levels of approval for top pay – rather than higher levels of condemnation” he said. “There will be many active and engaged shareholders who feel extremely insulted by Mr Dimon’s suggestions of lack of professionalism,” said Sarah Wilson, chief executive of the Manifest proxy voting agency.

A spokesman for Pensions & Investment Research Consultants (Pirc), which itself advised clients to vote against Mr Dimon’s pay, drew attention to the regulatory fines paid by the bank in recent years: “Given JPMorgan has attracted around $40bn of fines since 2008, it is legitimate for shareholders to question whether they are getting value for money from the huge pay packages executives want them to approve.”

Thirty-eight per cent of JP Morgan shareholders rejected Mr Dimon’s pay package at the bank’s annual meeting on 19 May. ISS, the largest of the shareholder advisory firms, had urged a “no” vote on the grounds that the board had not linked Mr Dimon’s remuneration to performance and that 40 per cent of his pay was in cash. Glass Lewis, another advisory firm, had also urged a “no” vote.

“God knows how any of you can place your vote based on ISS or Glass Lewis,” Mr Dimon told the conference. “If you do that, you are just irresponsible, I am sorry. And you probably aren’t a very good investor either. I know some of you here do it because you are very lazy.” ISS declined to comment on Mr Dimon’s remarks; Glass Lewis could not be reached.

Another concern for investment advisers is that Mr Dimon occupies the roles of both chief executive and chairman at JP Morgan. Ms Wilson, of Manifest, said the blending of the two roles was a “red-line issue [for corporate governance] going back a quarter of a century at least”. She also suggested Mr Dimon’s latest outburst suggests he is out of touch with shareholders. ”Does he understand what they do or is he just listening to what his advisers are paid to tell him?” she asked.

Last week 36 per cent of shareholders also rejected the JP Morgan board’s wishes and voted in favour of installing an independent chairman after Mr Dimon retires.

Advisory firms were eager to rebut Mr Dimon’s suggestion that asset managers simply vote in the way consultants tell them to on matters of pay and governance. “Asset owners make the decisions; proxy advisers only make recommendations,” said a Pirc spokesman.

However, Mr Dimon is not without high-profile supporters among the shareholders. In January 2014 Warren Buffet suggested Mr Dimon is not paid enough. “If I owned JP Morgan Chase, he [Mr Dimon] would be running it and he would be making more money than the directors are paying him,” he said.

select for full details UBS fined $541 million over FX rigging and Libor in first of fresh wave of bank penalties
UBS has paid a $545 million fine for rigging both interest rate and foreign exchange markets and pleaded guilty to both offences.
By Nick Goodway 20 May, 2015

UBS has paid a $545 million fine for rigging both interest rate and foreign exchange markets and pleaded guilty to both offences.

In a complicated deal with the US Department of Justice the Swiss banking giant avoided criminal prosecution over forex rigging but had a previous non-prosecution deal over Libor fixing swept aside.

The deal came on a day when five banks were set to receive fines totalling as much as $6 billion largely for rigging foreign exchange markets.

By far the largest fine was that expected to be levied against Barclays which had already set aside £2 billion for it and which chose not to join in a mass settlement by banks last November.

By doing that, Barclays risked losing the normal 30% discount offered by the Financial Conduct Authority to institutions which agree to settle cases quickly.

Other banks faced with new fines were Royal Bank of Scotland, which paid a total of $634 million in November, Citigroup ($1 billion) and JP Morgan ($1 billion).

UBS had also paid out $799 million to UK and US regulators in forex fines last November.

But because of those forex failings it has now had to plead guilty to a specimen charge of Libor rigging and been put on probation by the Department of Justice for the next three years and fined $203 million

At the same time it is paying $342 million to the US Federal Reserve for “unsafe and unsound” practices in its forex business

UBS had previously received a degree of immunity because it was the first bank to alert the DoJ to Libor rigging.

Barclays also had a similar non-prosecute deal with the Department of Justice which could also be torn up.

select for full details 'I'm on a pilgrimage to save last bank in my parish'
HSBC axing branches as it shrinks high street presence - much to anger of customers.
By Jeff Prestridge 28 June, 2015

HSBC says it will decide by the end of the year whether it keeps its headquarters in this country or moves to another part of the world – Hong Kong or Canada.

But there is no procrastinating over the future of some longstanding branches. They are being axed in their dozens as the bank shrinks its high street presence – much to the anger of customers.

HSBC, which badged itself for many years as the 'world's local bank', is now contemplating reverting in the UK to the Midland brand it did away with 15 years ago.

It confirmed to The Mail on Sunday that 22 of its 1,057 branches have been put on notice that they will shut in the next three months. This is on top of the 27 that have already been axed this year.

The closures are countrywide and in some instances will leave communities without a banking presence or relying on a cash machine or post office for access to banking facilities.

Campaigners says the closures – and those of rivals Barclays and Royal Bank of Scotland – drive a coach and horses through new guidelines introduced by the Coalition just prior to the Election.

Derek French, a longstanding campaigner against closures and an advocate of shared branches where individual banks agree to offer services under one roof, says the new guidelines are 'bad for communities, bad for the public and bad for the banks'.

He adds: 'The banks are having a field day closing branches now that the Election is out of the way.' He says more than 400 will be closed this year by the time the countdown for the New Year begins.

One community losing its last remaining bank branch is Askern in South Yorkshire. Its HSBC branch shuts for good in early September and will leave the community's 6,000 residents to rely upon the post office for banking services.

select for full details Scandal-hit RBS splurges £350,000 on Wimbledon junket
and just days after the bailed out bank was sold off for a loss of £7billion.

By Mark Wood 27 June, 2015

Bigwigs at Royal Bank of Scotland are blowing £350,000 worth of taxpayers’ money on a lavish Wimbledon freebie – just days after the Government announced the bank will be sold off for a massive loss.

Top executives of the bailed-out bank and their VIP guests will be feasting on gourmet food, champagne and fine wines throughout the tournament.

They will also get prized tickets for top matches on Centre Court and Court One, which start tomorrow with Novak Djokovic beginning the defence of his title and Andy Murray in action on Tuesday.

The incredible fortnight-long junket is going ahead despite Chancellor George Osborne revealing that the taxpayers’ 80 per cent share of the bank will be sold off for a loss of £7 billion.

The bank is also reeling from an embarrassing computer bungle which meant 600,000 customers had payments into their accounts delayed

select for full details Co-operative Bank could face fines from regulators
Bank reveals it will start talks with FCA and Bank of England in July over scale of fines and punishment.
By Jill Treanor 23 June, 2015

The scandal which enveloped the Co-operative Bank was reawakened on Tuesday when the bank revealed it was facing fines from City regulators over the events that led to its near collapse two years ago.

The bank is now just 20% owned by the Co-operative Group of supermarkets and funeral homes after an emergency fundraising was required to plug a £1.5bn shortfall uncovered in 2013. Control passed to hedge funds and other private investors after the rescue.

On Tuesday, the bank said it would begin settlement talks next month with the Financial Conduct Authority and the Bank of England concerning events between 2008 and 2013.

“The outcome of any settlement discussions is currently uncertain both in the details of any findings and any potential financial penalty,” the bank said.

No details of the scale of any fines have been discussed with the FCA or the Bank of England’s regulation arm, the Prudential Regulation Authority. The regulators have powers to fine institutions and individuals, who could also be banned from working in the City.

“FCA and PRA have recently indicated that their preliminary view is that they are minded to make findings against the bank covering certain decisions, events and processes over the period from mid-2008 to end-2013. Based on their current view, the FCA and PRA have indicated they intend to commence formal settlement discussions in July 2015,” the bank said.

The problems inside the Co-op Bank led to a series of a parliamentary hearings and official reports by the bank and the wider Co-op Group into what went wrong.

A report by Sir Christopher Kelly, a former top civil servant, published in April last year pointed to poor management, bad lending, a flawed culture and an overambitious drive for growth in the years up to the discovery of the capital shortfall. He also concluded that the bank should never have merged with the Britannia Building Society in 2009, just as the banking crisis was talking hold.

The PRA declined to comment on the Co-op’s statement but in January last year the regulator revealed it had started an investigation into the bank and the “role of former senior managers”. Those individuals have not been named.

select for full details Bankers seek ways round bonus clawbacks
Bankers seeking to shield themselves from new rules allowing a decade’s worth of bonuses to be clawed back have been inundating lawyers with questions about putting assets beyond their employers’ reach.
By Laura Noonan 26 June, 2015

Earlier this week, the UK’s Prudential Regulation Authority and Financial Conduct Authority said they were planning to let banks to take back bonuses from senior managers for up to 10 years in the event of misconduct or risk management failures — and for up to seven years if staff were “material risk takers”. Both watchdogs declined to comment specifically on the enforceability of the rules, but have indicated they will have the same status as other clauses in bankers’ employment contracts when they are written in

Some rules remain to be worked out, such as how to clawback bonuses from bankers who change jobs and have their bonuses “bought out” by new employers. Nevertheless, the regulators insist the clawback powers will apply to all bonuses for performance periods beginning on or after January 1.

Already, though, bankers have been visiting lawyers to find ways protect their assets from any potential future clawback.

The UK head of one investment bank said the clawback rules were of far greater concern to him and his peers than the prospect of being jailed for banks’ failings, under the regulators’ other new crackdown, called the Senior Managers’ Regime.

“What we worry about is being able to properly control activity,” the banker said. “You become liable for everything delegated under your areas of activity . . . You’re putting all your assets at risk.”

A second senior UK banker said most people would “lose their house” if forced to repay seven years of bonuses, since they simply would not have enough cash readily available.

select for full details Why bankers' greed needs to be controlled
Other industries haven't threatened civilisation with financial collapse, which is why the conduct of investment bankers needs to be regulated.
By Peter Guy 28 June, 2015

Bankers felt that I unjustly vilified them alongside Donald Trump in last week's column. They cried that greed exists everywhere and simple-minded critics did not understand that only a small group of rogue bankers instigated the crash and the illegal acts that continue to plague banks. Unfortunately, too few of them seriously realise that as a professional group, their near criminal negligence - blinded by greed - nearly destroyed the global economy. Greed used to be good. Now it has to be controlled.

Other industries haven't threatened civilisation with financial collapse yet. Trillions of dollars were lost and spent on saving the financial system. The intransigence of banking culture is responsible for its inability to evolve a collective, moral compass for conduct risk. Answering the simple question: "Is this the right thing to do?" is at the heart of defining ethical conduct and returning banks to behaving more like a social function rather than an exclusive assembly line for personal gain. And policing culture is a daily struggle.

Along with the rest of the seven deadly sins, greed will always plague human nature. You can't change the way people think, but maybe you can change the way they behave in a banking environment. While regulators are trying to strip out as many lucrative, but risky activities out of banks they have found that banking culture is resistant to reform.

The only way ethics will be consistently understood and applied throughout a bank is when complete generational change occurs where all investment bankers have started their careers after the financial crisis and the pre-crisis tales of unfettered profits and flexible morality are consigned to history.

Until that happens, influential regulators such as Mark Carney, governor of the Bank of England and chairman of the Financial Stability Board, are proposing different ways of paying and regulating banker conduct. He recently vowed to end "ethical drift and the age of irresponsibility in the financial sector".

Financial sector pay has become a battleground of fierce and highly politicised recrimination. No one knows if investment bankers will be paid more or less in the future. But, today many people think they are overpaid. "The top 25 hedge fund managers made more than all the kindergarten teachers in the country," declared President Barack Obama during a discussion of poverty where he proposed to hike their taxes after calling them "society's lottery winners".

Delayed bonus payments, bonuses mostly paid in the form of bank stock rather than cash and clawbacks that require bankers to hand back previous bonus payments under certain conditions, are just some of the onerous terms imposed. Trying to impose some sort of long-term partnership risk on bankers to justify their partnership-like remuneration will either change the type of people banks attract or drive away talent.

For the first time, investment banks have to worry if they can attract top talent. Now tech giants are able to pay better and offer a more compelling social and business vision than any bank. There are 30

select for full details That’s why the country’s in such a state: too many bankers
Britain’s inequality, poor productivity and lack of investment can all be laid at the door of a bloated financial sector.
By Heather Stewart 21 June, 2015

When banking goes bad, everyone suffers: that is a lesson taxpayers up and down Britain have learned the hard way over the past seven years or so. But the latest evidence suggests that even when it’s not collapsing into the arms of the state, a large finance sector is a debilitating drain on an economy.

Catherine L Mann, twinkly-eyed chief economist for the Organisation for Economic Co-operation and Development, brought a harsh message to the heart of Europe’s great financial centre last week: too much finance is bad for you.

In 2009, Adair Turner, then chairman of the Financial Services Authority, caught the public mood in the aftermath of the crisis that had ripped through the world’s financial markets when he called much of the activity carried out in the City of London and Canary Wharf “socially useless”.

The OECD agrees. The thinktank has made a concerted effort to keep fomenting unorthodox economic debate in the wake of the crisis – despite secretary general Angel Gurría’s vocal enthusiasm for George Osborne’s very orthodox austerity programme. Sifting through 50 years of data, its experts found that, in general, the larger a country’s banking sector, the more slowly the economy grows and the worse inequality becomes.

These findings echo recent research from the International Monetary Fund, which found that enlarging the financial sector is critically important for developing countries – if businesses can’t get loans and households don’t have bank accounts, economic progress is all but impossible. But beyond a certain point, too much “financialisation”, as the economists call it, can be counterproductive.

So not only do its cadre of highly paid workers (who earn up to 40% more than those in comparable jobs in other sectors, the OECD found) widen inequality by their very existence, they also make investment decisions that exacerbate the imbalances that have long been a deep-seated problem for Britain’s economy.

So even when they’re not trying to rig Libor, con customers or facilitate tax avoidance, it seems finance’s finest minds are not all that great at what we might have hoped was their raison d’être – putting capital to its best use.

Mann proffered a range of specific policy solutions: tackling top pay by cracking down on bonuses; removing the tax advantages that can make risky leveraged takeovers more attractive than equity investments; and tougher measures to rein in the biggest banks, which despite regulators’ efforts still benefit, she says, from an implicit state subsidy because they are too big to fail.

But perhaps the most important insight in the OECD work is that – as Karel Williams and colleagues at Manchester’s Centre for Research on Socio-Cultural Change have long argued – the sheer size of Britain’s banking sector fundamentally distorts its economic model, stoking what is now universally known as the “housing crisis” while failing to allocate sufficient capital to productive investment.

Britain says to introduce new banker rules imminently
New rules making senior bankers in Britain accountable for their actions will be introduced soon and applied broadly to help quell public anger towards the sector, British financial services minister Andrea Leadsom said.
By Huw Jones 5 Feb, 2015

Leadsom wants to push ahead, having only a few weeks left in office before UK lawmakers go to the polls in May in what will be one of the most unpredictable elections in years.

Lawmakers called for the new rules, known as the senior persons regime, after few bankers were punished following taxpayer bailouts of UK lenders in the 2007-09 financial crisis.

Bankers' job responsibilities would be explicitly laid out and any failure to meet them could lead to intervention by regulators.

"It's imminent," Leadsom said in an interview on Wednesday evening in parliament.

"My view is that I want it to happen as quickly as possible as I think a key part of rebuilding trust in banking has to be that... individuals within banks are seen to be accountable."

Bankers warn the change will make recruitment harder, but Leadsom said the reform was not about "finding scapegoats" and should not be delayed because some don't like accountability.

"It's perfectly possible an individual might want to decide they don't want to be in that role anymore and so we need to take that into account. It won't be overnight," Leadsom said, indicating transitional arrangements.

Britain's regulators have indicated differing views on which bankers should come under the net.

"It's essential for me that we make the scope broad and we bring it in as soon as possible. There is no doubt that there is still rage amongst the public about the fact that there is a sense the bankers brought the economy to its knees and got away with it," said Leadsom, a former banker herself.

select for full details HSBC boss apologises to MPs for 'unacceptable practices'
Chief executive Stuart Gulliver said practices at bank's Swiss subsidiary had caused "damage to trust and confidence" in company.
By Dan Kay 25 Feb, 2015

HSBC chief executive Stuart Gulliver has apologised to MPs for "unacceptable" practices at the bank's Swiss subsidiary which he said had caused "damage to trust and confidence" in the company.

Mr Gulliver's apology came as he and HSBC chairman Douglas Flint were grilled by MPs on the Treasury Select Committee over what committee chair Andrew Tyrie said were "extraordinary" revelations about tax-avoidance activities linked to the Geneva branch in the mid-2000s.

The HSBC chief executive also defended his personal decision to be paid by the bank via a Panamanian company with an account in the Swiss private bank, insisting that the arrangement was not designed to avoid tax, but to protect his privacy against other members of staff who were able to view employees' accounts via the company computer system.

Mr Gulliver acknowledged that the arrangements looked "puzzling" to outsiders, but insisted: "There was no tax advantage or purpose whatsoever."

He said he was a Hong Kong resident and intended to return there after completing his assignment in the UK, but had paid UK tax on his worldwide earnings from HSBC, company dividends and sales of shares.

Mr Gulliver - who has worked for HSBC for 35 years and became chief executive in 2011 - told the committee: "I would like to put on the record an apology from both myself and Douglas for the unacceptable events that took place at our private bank in Switzerland in the mid-2000s. It is an apology we would like to make to you, our customers, our shareholders and the public at large.

"It clearly was unacceptable. We very much regret this, and it has damaged HSBC's reputation."

Asked precisely what he was apologising for, Mr Gulliver said: "The lack of controls and practices which now - judged with the benefit of hindsight - we would not be at all comfortable with if they were happening today, and which have clearly resulted in damage to trust and confidence in HSBC and created further reputational damage to our firm and have therefore hurt clients, customers, shareholders, our staff and people at large."

select for full details RBS boss admits bank's £421m bonus payouts were 'outrageous'
Royal Bank of Scotland's boss has admitted the lender's £421 million bonus payments were "outrageous" after a seventh straight year of losses.
By Evening Standard 26 Feb, 2015

Ross McEwan said the bonus pool was down significantly on previous years but conceded that the public were right to be angry about the figure.

The bank racked up another £3.5 billion in annual losses today, taking the running total to nearly £50 billion since it was bailed out in 2008.

However, Mr McEwan said the company, which is still 80% owned by the taxpayer, had made significant progress in becoming "stronger and simpler".

He confirmed he will not take a £1 million "role-based" incentive, which is paid on top of salaries by some banks, and said the company's overall bonus pool had been cut by 21%.

However, he told BBC Radio 4's Today programme people were "quite right" to regard the sum of money the bank was handing out as "outrageous".

"Yes, and to be quite honest they are right," he said.

"It's not something I am going to change or can change today. What I can do is focus on this business and you are starting to see the progress we have made after one year.

"The underlying profits of this business are up. The capital is up, the costs are down. We are focusing on rebuilding the trust of customers."

He added: "Our bonus pool is significantly down over the last five years, it is down on last year. But what is really important is that these same people are the ones that you and I want to actually reform this bank and get it back to being a great bank that can get the money back for the UK."

Mr McEwan went on: "I understand the issue, but I need to be in a position to pay fair pay for people to do these jobs. There are some fairly technical jobs that we need to get right."

RBS also confirmed that Sir Howard Davies, the former head of the now defunct Financial Services Authority, will be its chairman from September. He replaces Sir Philip Hampton, who is set to join GlaxoSmithKline.

In a letter to Sir Howard, Chancellor George Osborne called on the new chairman to ensure the bank's business is "conducted to the very highest ethical standards".

He wrote: "Given the extraordinary support it has enjoyed in the past from taxpayers, I know you recognise that RBS must remain a backmarker on pay and continue to show responsibility and restraint."

Since its rescue from the brink of collapse in 2008, RBS has focused on offloading many of its foreign and investment banking assets to become a more UK-focused bank centred on retail and commercial banking.

RBS said the latest loss was attributable to a £4 billion write-down on the value of its US arm Citizens, having recently cut its stake in the business.

Operating profits were £3.5 billion - the highest since 2010 - as RBS said it had made significant progress towards building a bank that is "stronger, simpler and better for both customers and shareholders".

Other one-off items included £2.2 billion of conduct and litigation charges, including £320 million in the fourth quarter relating to the rigging of foreign exchange markets and a further £400 million to cover compensation for

select for full details Bankers set to enjoy £5BILLION in bonuses including £2.2bn for scandal-hit HSBC and £900m for banks bailed out by the taxpayer
 HSBC bankers to be awarded £2.2bn in bonuses despite tax controversy
  Claims the bank's Swiss arm routinely helped wealthy customers dodge tax
 Bailed out banks RBS and Lloyds also set to give £900million in payouts
 Barclays is expected to pay £2billion in bonuses, taking total to £5billion
 Campaigners say the bonuses will 'rub salt in the wound' of taxpayers

By Ollie Gillman 20 Feb, 2015

Bankers are set to be awarded £5billion in bonuses, including £2.2billion for staff at scandal-hit HSBC.

The vast sum is expected to be paid out to bankers at HSBC despite it being embroiled in a tax dodging row.

And Royal Bank of Scotland, bailed out by the taxpayer after the financial crash, is likely to hand its staff £500million in bonuses.

Lloyds, which was also bailed out by the Government to the tune of nearly £20billion, is expected to pay its bankers £375million in bonuses, the Mirror reported.

Meanwhile Barclays is expected to pay its staff around £2billion, taking the estimated total in bonuses at the Big Four banks to almost £5billion, despite the banking industry being mired in scandal.

It is claimed that HSBC's Swiss arm helped wealthy customers evade tax, while its Geneva offices were raided earlier this week as part of an 'aggravated money laundering' investigation.

select for full details Co-op campaigners attack £5m pay for bank boss Niall Booker
Booker, who could receive £4.97m this year, urged to stay true to bank’s ethical roots and give up his bonus
By Jill Treanor 18 May, 2015

The £5m pay deal for the boss of the Co-operative Bank is under fire from campaigners who are urging the loss-making bank to take a stand against extravagant bonuses.

Save Our Bank, which claims to have 10,000 members, has written an open to letter to the bank calling on Niall Booker, the chief executive, to acknowledge he is running a bank with its roots in the co-operative sector and give up his bonus.

Booker, who joined in May 2013 when the bank on was the brink of collapse, could receive up to £5m under a new pay deal announced in March. The deal, intended to keep him in place until 31 December 2016, could see Booker receive £4.97m this year and £4.5m in 2016. His basic salary is £1.3m.

Welcoming the bank’s ethical policies, the Save Our Bank campaigners said the bank’s customers “simply expect you to take a stand against such extravagant pay packages”.

Booker was part of a team assembled by Euan Sutherland, who quit the Co-operative Group in March 2014 after details of his £6.6m pay deal over two years was leaked to the Observer. The group, which owns supermarkets and funeral homes, relinquished its 100% ownership of the bank last year and now has just a 20% stake, following a £2bn fundraising that was largely backed by hedge funds.

Save Our Bank published comparative figures for other top bankers, including Ross McEwan at RBS – who is expected to be paid £2.7m this year – and HSBC’s Stuart Gulliver, who was paid £7.6m in 2014. The Lloyds Banking Group boss Antonio Horta-Osorio was paid £11.5m.

McEwan also rejected £1m of top-up payments he could have received under the bank’s scheme to sidestep the EU cap on bonuses. In the letter, the Save Our Bank campaigners said: “We ask the bank to set out full details of the CEO’s pay structure, and to explain how it considers this to be fair, responsible and ethical.”

select for full details Banks fined £3.7bn for rigging foreign exchange markets
Barclays, Royal Bank of Scotland, JPMorgan, UBS, Bank of America and Citigroup hit with huge currency manipulation penalties by UK and US authorities.
By James Titcomb 20 May, 2015

Six banks have been fined $5.7bn (£3.6bn) by authorities in America and the UK for rigging foreign exchange markets.

Barclays, Royal Bank of Scotland, JPMorgan, UBS, Citigroup and Bank of America were handed the sum, the biggest combined bank settlement in history, on Wednesday afternoon. Separate fines and settlements announced at the same time took the total bill on the day above $6bn.

The new sum now brings the total bill for the foreign exchange scandal, one of the most expensive in banking history, to around $10bn. Barclays, RBS, JPMorgan and Citigroup are pleading guilty to criminal charges, while UBS has pleading guilty to Libor rigging, since the manipulation violated previous agreements.

Traders at the banks used electronic chatrooms, describing themselves as "The Cartel", to manipulate currency benchmarks, making large profits at the expense of customers.

Barclays is firing eight employees as part of their settlements, it said.

It comes six months after RBS, HSBC, JPMorgan, UBS, Citigroup and Bank of America were fined $4.3bn (£2.8bn) for currency rigging.

Barclays was fined £284.4m by the Financial Conduct Authority, the biggest fine in UK history, while the rest of the penalties came from US regulators.

The Federal Reserve fined the banks $1.8bn and the Department of Justice $2.5bn. Meanwhile, Barclays will pay $400m to the Commodity Futures Trading Commission and $485m, to New York's Department of Financial Services.

Barclays paid $2.3bn, by far the biggest bill, since it did not settle with the FCA or CFTC last year, and is uniquely regulated by the DFS. The New York regulator said that traders had used language such as "if you aint cheating, you aint trying" when manipulating currency benchmarks .

"Put simply, Barclays employees helped rig the foreign exchange market," said Ben Lawsky, New York's superintendent of Financial Services. "They engaged in a brazen ‘heads I win, tails you lose’ scheme to rip off their clients."

Despite the fine, Barclays shares rose 3pc after the announcement, and RBS's rose 2pc. Both banks apologised profusely for the failings, and said they were working to put them right.

"The misconduct at the core of these investigations is wholly incompatible with Barclays' purpose and values and we deeply regret that it occurred," said Barclays chief executive Antony Jenkins.

Ross McEwan, the head of RBS, said: "The serious misconduct that lies at the heart of today’s announcements has no place in the bank that I am building. "Pleading guilty for such wrongdoing is another stark reminder of how badly this bank lost its way and how important it is for us to regain trust."

select for full details UBS to Pay Over $500 Million in Fines for Manipulating Currencies and Libor
The Swiss bank UBS said on Wednesday that it would pay more than $500 million in fines to the authorities in the United States for its role in the manipulation of currency markets and benchmark interest rates.
By Chad Bray 20 May, 2015

UBS said it would not face a criminal charge over currency misconduct but would be required to separately plead guilty to a criminal charge for its prior conduct over the manipulation of the interest rates, including the London interbank offered rate, or Libor, after the Justice Department tore up a 2012 nonprosecution agreement.

The agreement with UBS resolves a series of investigations by the Justice Department and other authorities in the United States, including banking regulators in Connecticut, into manipulation of currencies.

The Justice Department is expected to soon announce additional agreements with Barclays, JPMorgan Chase, Citigroup and the Royal Bank of Scotland, in which those banks will collectively pay several billion dollars in penalties and plead guilty to criminal antitrust violations for rigging the price of currencies.

“The conduct of a small number of employees was unacceptable and we have taken appropriate disciplinary actions,” Axel A. Weber, the UBS chairman, and Sergio P. Ermotti, the UBS chief executive, said in a news release.

“We made significant investments to strengthen our control framework and compliance programs,” they said. “We self-detected this matter and reported it to the U.S. Department of Justice and other authorities. Our actions demonstrate our determination to pursue a policy of zero tolerance for misconduct and a desire to promote the right culture in our industry.”

UBS was among a group of the world’s largest banks that paid a combined $4.25 billion in November to settle with British and Swiss regulators and the Commodity Futures Trading Commission of the United States for their role in manipulating foreign currency markets.

As part of its latest agreement with the American authorities, UBS will pay a penalty of $342 million to the Federal Reserve related to the foreign currency investigation, but will receive conditional immunity from prosecution by the Justice Department’s antitrust division. UBS said this reflected its role as the firm that first reported potential misconduct to the Justice Department.

select for full details How criminal charges became another day at the office for banks
On Wednesday, four of the world's largest banks - JP Morgan, Barclays, Citigroup and Royal Bank of Scotland - pleaded guilty to criminal charges in the US relating to the rigging of currency markets.
By Howard Mustoe 21 May, 2015

The four, and Switzerland's UBS, which pleaded guilty to a different charge, agreed to pay $5.7bn (£3.6bn) in fines.

It is rare for a company to be found guilty of criminal behaviour. For some bank watchers this move represents a problem for regulators: aside from more fines, little else has changed, and they may have just played their best card.

Two years ago, the then US Attorney General Eric Holder opined that criminal charges against large banks could threaten the global economy. But now?

"Now it's a non-event. We have trivialised the criminal penalties, so I don't know what's left," says Cornelius Hurley, director of the Boston University Centre for Finance, Law & Policy.

"It used to be that the fear of a criminal penalty was you might lose your banking licence. That it would be a death knell. That's been removed - nobody has lost their licence," he adds. "Somehow there has to be a fear factor."

Getting banks that have admitted criminal behaviour to change their ways is now a task for their clients, who may want to review who changes money for them, he says.

"Why continue doing business with a bank that's just pleaded guilty to a crime and tried to screw you?"

While a larger punishment than a criminal penalty is difficult to conceive of, there are other tricks up the sleeves of the authorities.

For Prof Simon Johnson, of the MIT Sloan School of Management and previously chief economist at the IMF, the next step regulators could take is an anti-competition probe.

"The key thing here is market power," he says. "The people fixing foreign exchange called themselves 'the cartel'. Cartels only operate when there's a relatively small number of players, so I think that there are major anti-trust issues here. "The banks claim there were only a few rogue individuals but the rogue individuals only had the ability to do it because there is implicit market power in the concentration of the foreign exchange market."

select for full details Investors fail to fret over guilty banks
Share price drops were marginal and in some cases even had a spike.
By Hugh Son and Elizabeth Dexheimer 28 Mar, 2015

Investors yawned at the news Wednesday that five of the world’s biggest banks, including JPMorgan Chase & Co and Citigroup, agreed to plead guilty in a currency rigging probe. They’re among six banks that will pay $5.8 billion (Dh21.3 billion) in fines.

Barely more than a year ago, criminal charges against major US banks were considered unthinkable, with lawyers and analysts viewing felony convictions as a death sentence and a threat to the financial system. Now, by granting waivers allowing lenders to keep operating even after a felony plea, the government has managed to punish firms while protecting them from fatal consequences.

“This is the first time you had Citigroup, JPMorgan or any US bank plead guilty essentially to criminal conduct — this is a bad day for American finance,” Mike Mayo, an analyst at CLSA, said in a televised interview with Bloomberg. “Having said that, this is more backward-looking than forward-looking.”

JPMorgan and Citigroup each slid 0.8 per cent in New York trading, while Bank of America, which paid $205 million in fines, fell 0.2 per cent. European firms that pleaded guilty rose, with Barclays climbing 3.4 per cent, UBS Group increasing 3 per cent and Royal Bank of Scotland Group up 1.8 per cent.

“It’s a bit weird, isn’t it?” Christopher Wheeler, a London-based analyst at Atlantic Equities, said in a telephone interview. “$5.8 billion and yet everybody is shrugging their shoulders.”

Little precedent

Last year, the Justice Department turned up the heat on non-US firms by requiring Paris-based BNP Paribas and Credit Suisse Group’s main bank unit to plead guilty to felonies. That raised questions about when and if US prosecutors would go after a domestic bank.

Before Wednesday, there was little precedent of healthy US lenders being convicted of crimes. Two other firms that did plead guilty to felonies — the Bank of Credit and Commerce International in 1992 and Washington’s Riggs Bank in 2005 — had already been wiped out.

For all the muted response to Wednesday’s news, Donaldson Capital Management’s Greg Donaldson expressed concern that criminal charges may now become routine. “Once you cross that line and admit you’ve done something bad, you open up Pandora’s box,” said Donaldson, chairman of the firm that manages about $1.1 billion. “This settlement just moved the goalpost.”

If convictions become too commonplace, the government may have to pursue even tougher penalties. Last year, Federal Reserve Bank of New York President William Dudley warned firms that they risk being “dramatically downsized” unless they stop breaking the law.

select for full details Barclays and RBS among banks fined $5.7bn over foreign exchange market rigging
Barclays and the Royal Bank of Scotland were among six banks to be fined a total of $5.7 billion (£3.8 billion) by British and US regulators over allegations that they rigged the $5.3 trillion-a-day foreign exchange market.
By Clare Hutchison 20 May, 2015

The settlement, which also involved US banks JP Morgan, Bank of America and Citi, as well as Switzerland’s UBS, means banks have handed authorities around $10 billion to deal with the scandal.

Barclays, Citi, JPMorgan and RBS also all pleaded guilty to a US antitrust violation.

The affair follows a series of scandals, including the fixing of benchmark interest rate Libor, that have severely damaged the public's perception of the banking industry.

FX traders were said to have come together in chatrooms with names like "The Cartel" or "The Bandits Club" to organise methods to influence the value of major currencies in the hope of inflating their profits.

"If you aint cheating, you aint trying,” one Barclays trader said in a chatroom.

Clients - anyone from hedge funds betting on the market or companies engaging in a major overseas transaction - could have been affected by the activity.

"This sort of practice strikes at the heart of business ethics and is yet another blow to the integrity of the banks. Our pension funds invest billions of pounds in the financial markets and if they are being cheated in this way it affects every one of us," said Mark Taylor, Dean of Warwick Business School and a former foreign exchange trader.

Barclays, which opted out of a mass settlement last year that saw six banks agree to pay a total of £2.6 billion in fines, was fined the largest amount at £1.53 billion.

That included City watchdog the Financial Conduct Authority's largest ever financial penalty of £284.4 million.

The FCA said the British bank had failed "to control business practices in its foreign exchange (FX) business in London".

It said the failings occurred "throughout Barclays’ London voice trading FX business, extending beyond G10 spot FX trading into emerging markets spot FX trading, options and sales, undermining confidence in the UK financial system and putting its integrity at risk".

select for full details Banks brace for more foreign exchange rigging pain as civil lawsuits come forth
Class-action cases expected to follow vast fines for manipulating currency benchmarks.
By James Titcomb 23 May, 2015

Banks are bracing for hundreds of millions of pounds in new claims for foreign exchange manipulation from class-action lawsuits triggered by last week’s vast market rigging fines.

Barclays, Royal Bank of Scotland and four other banks were ordered on Wednesday to pay $6bn (£3.84bn) by UK and US authorities.

The Barclays penalty represents the biggest bank fine in British history.

The regulators, detailing how traders gathered in chatrooms using monikers such as “The Cartel” and “Coiled cobra” to rig the $5.3 trillion-a-day currency market, also forced the banks to plead guilty to criminal charges.

Lawyers say that the fines, as well as an investigation from the European Commission, could be a springboard to damaging civil litigation in the UK and Europe.

Some lawyers believe settlements could ultimately exceed the fines handed out by regulators, although the total bill will depend on how claimants assess the scale of damages they have suffered.

Traders at the banks colluded to manipulate currency benchmarks used to peg foreign exchange orders from corporate clients, meaning they made huge profits while clients were ripped off.

Several class-action lawsuits have been filed and settled in the US, with banks paying out hundreds of millions in compensation.

Citigroup, one of the six banks to be fined last week, said on Wednesday that it had agreed $394m of payments to settle private cases in the US, and RBS said it had reached a deal, without revealing how much it will pay.

US laws make it easier to arrange such cases, but firms in the UK are now canvassing support for action on this side of the Atlantic.

Law firm Hausfeld, which has been involved in several class action cases in the US and has secured settlements worth $800m, is drumming up support from institutions in the UK and Europe. It says court cases are expected on the continent in the coming months.

select for full details FCA to test if bankers are 'fit and proper' each year
A new rule book for the UK banking sector will see the Financial Conduct Authority (FCA) carry out an annual MOT of thousands of staff to ensure they are fit and proper to perform their duties.
By Ian Allison 16 Mar, 2015

The new rules will be announced later today in a speech by FCA chief executive Martin Wheatley, prior to a period of consultation. The rules are expected to come into force around March next year. The story was first reported by Sky News.

The new regime is without doubt a reaction to the slew of scandals and impropriety to blight the banking sector in recent years. It has also emerged out of recommendations made by the Parliamentary Commission on Banking Standards in its report of 2013.

In a consultation document last year, the FCA said: "The (Banking Reform) Act has introduced... the requirement for firms to certify certain employees as being fit and proper to perform certain functions.

"This originated from the PCBS's recommendation that a 'licensing regime' be introduced to address concerns that the existing Approved Persons Regime brought too narrow a set of individuals within the scope of regulation, and that firms took insufficient responsibility for the fitness and propriety of their staff."

The Prudential Regulation Authority (PRA), which sits within the Bank of England, has also issued a new rulebook which will shift responsibility for failings at banks squarely upon the shoulders of senior managers, rather than deflecting the onus for some decision making towards non-executive directors.

The PRA will also announce details of new banking strictures, covering staff working at UK branches of overseas firms.

select for full details Northern Ireland's banks rapped over 'shoddy' service in report
Northern Ireland's banks have come under fire over lending, IT systems and branch closures as part of a long-awaited government report into the industry.
By John Mulgrew 16 March, 2015

And it says banks need to do more to help the recovery of the economy here.

A 43-page report from the Northern Ireland Affairs Committee comes after its long-running inquiry was set up in July 2013 to take a forensic look at the banking industry, following the financial crash in 2008.

Among its conclusions, it highlights "reckless high-risk attitude of many banks" before the financial crisis, and that the industry has now "swung too far back in the opposite direction" in terms of lending.

And some of Northern Ireland's banks "have shown relatively little concern for their customers by pursuing plans to close local branches", particularly in rural areas, the report says. It adds banks' IT systems are "not fit for purpose". That was prompted by a huge Ulster Bank outage in June 2012, which left thousands of customers unable to access their accounts.

The report also raises concerns about an "over-concentration" in the Northern Ireland banking market, with calls for banks to "improve their services to their customers".

But while it says there remains "some cause for concern" in the property market, Northern Ireland's economy has shown "definite signs of recovery".

Ulster Bank, Danske Bank, Bank of Ireland and First Trust parent bank Allied Irish Banks (AIB) each posted profits in their last accounts.

The report also states there has been "significant progress" made in transparency within the banking sector. In response, Irene Graham of the British Bankers' Association said: "Banks in Northern Ireland want to be transparent about the support they give to customers.

The Emperor's New Clothes

Excellent documentary, say : 4 / 5.
By Rich Cline 23 Apr, 2015

Political documentaries tend to get the blood boiling, and this is no exception, as it keeps us entertained with a lucid exploration of just how our governments have failed us economically.

The central topic is income inequality, and having a riotous figure like Russell Brand front and centre brings the issues home in a clear, infuriating way.

Director Michael Winterbottom does a terrific job reining Brand in, keeping him on-point and making sure the details are clearly presented. Right from the start Brand says that there's nothing in this film we don't already know. But he's connecting the dots in ways that the media certainly isn't willing to do, because they're part of the problem. Indeed, as he works with a classroom of young students, he proves that even a child can understand that our system simply isn't fair: the rich are getting richer, but the poor are struggling more than ever as the gap between them grows out of all proportion. Instead of tackling this problem, the politicians simply deflect it, blaming something as essentially irrelevant as immigration while neglecting a fundamental human value we all teach our children: sharing.

PPI Scandal to 'Last Years'
The Payment Protection Insurance (PPI) scandal will last for years to come, according to the chief financial ombudsman.
By Jonathan Davies 6 Jan, 2015

Caroline Wayman said there are still around 4,000 complaints per week about banks and credit card companies that mis-sold PPI.

At the end of 2012, that figure was closer to 12,000.

"Although numbers are slowly declining, it will be years before we can truly say this mis-selling scandal is over," said Ms Wayman.

Banks alone have paid out £22bn in compensation since the scandal began. Ms Wayman said that the Financial Ombudsman has dealt with 1.25m complaints, but that doesn't include complaints made directly to banks or credit card companies.

Recruitment drive

The Financial Ombudsman said it will hire 200 new adjudicators and ombudsmen after already having doubled in-size to 4,000 staff in order to cope with PPI complaints.

Metro Bank says over 500,000 customer accounts opened since 2010
New British lender Metro Bank said over 500,000 customer accounts had been opened at the bank, with customer deposits more than doubling over the past year and total lending rising by 90 percent.
By Reuters 22 Apr, 2015

The bank, which opened for business in 2010 as Britain's first new high street lender for more than a century, said deposits rose to 3.4 billion pounds in the first quarter, up 109 percent year-on-year. Total loans grew to 1.8 billion pounds.

The bank made a loss of 8.5 million pounds in the quarter, compared with a 10.6 million loss in the same quarter the year before.

(Reporting by Matt Scuffham, editing by Sinead Cruise)

select for full details In boon for bitcoin, UK to regulate digital currency exchanges
Britain took a significant step towards becoming a global bitcoin hub on Wednesday as the government announced it would regulate digital currencies for the first time by applying anti-money laundering rules to exchanges.
By Jemima Kelly 19 Mar, 2015

Already the centre of the $5-trillion-a-day market for traditional currencies, the UK is fast emerging as a centre for digital currencies too, cementing its place as European's financial technology, or "FinTech", capital.

In a report published alongside finance minister George Osborne's annual budget statement, Britain's Treasury said the new regulation would support innovation and prevent criminal use of digital currencies. The proposals will be consulted on early in the next parliament.

Tom Robinson, co-founder of Elliptic, the world's first bitcoin insurance vault in London, and a board member of the UK Digital Currency Association, said the new regulation effectively served as a "stamp of approval" from the government.

"It provides enough oversight to provide legitimacy without stifling innovation," he said. "I think it is a good balance between on the one hand the U.S. and specifically New York, which I think have gone too far, and what a lot of countries are doing which is just completely ignoring it."

The potential for digital currencies to be used for illicit financial transactions has led many to steer well clear of the them. They were dubbed the "Wild West" of finance by U.S. regulators last year, since they are not backed by a central bank or government like conventional money.

The so-called "cryptocurrencies" are also prone to wild swings in value and can be a target for hackers. Last year Mt. Gox, a Tokyo-based bitcoin exchange, was forced to file for bankruptcy after hackers stole an estimated $650 million (434 million pounds)worth of customer bitcoins.

But bitcoin's supporters are numerous, and say that the technology behind it could be revolutionary. Last week Reuters revealed that International Business Machines Corp is considering adopting the technology to create a digital cash and payment system for major currencies.

Even the Bank of England has got behind bitcoin, despite last year warning that digital currencies may be at increasing risk of fraud and could damage Britain's economy if they find widespread use.

In a discussion paper in February, the Bank of England said digital currencies showed "considerable promise" and that it was possible to transfer value securely without a trusted third party. The bank also raised the question of whether central banks should themselves issue digital currencies.

Along with the Treasury document on Wednesday, the government also released a report from its Office for Science on the future of FinTech more broadly. "Digital currencies such as bitcoin have the potential to replace traditional currency and, by extension, the need for central banking and regulatory systems," the paper said.

select for full details Banker Svetlana Lokhova wins £3.1m payout over colleagues' drug lies and bullying after 'crazy Miss Cokehead' nickname
A woman banker in the London office of a Russian bank has been awarded £3.1 million after being driven to mental collapse by a campaign of harassment and unfounded drug slurs.
By Paul Cheston 8 Apr, 2015

An employment tribunal found that Cambridge graduate Svetlana Lokhova had been a victim of harassment, victimisation and discrimination amounting to constructive dismissal.

The tribunal last October ruled in her favour after hearing that colleagues at Sberbank CIB had referred to her as “Ms Bonkers” and that she had been falsely accused of being a cocaine addict. She then suffered even more agony when the false allegation that she was a drug user was put to her in evidence at the tribunal liability hearing.

Now, announcing its award of damages the bank must pay Ms Lokhova, the tribunal has said it increased the pay-out to reflect this “deliberate” attempt to bully her.

The tribunal stated: “That allegation is completely without foundation and should never have been put to her in cross examination at the liability hearing.

“It was a deliberate, planned and unnecessary misuse of these proceedings, designed to put pressure on her and cause damage to her given that it was no doubt widely publicised.”

The fresh allegation “so incensed and appalled” 33-year-old Ms Lokhova that she took a drug test during the course of the hearing, which was negative.

The tribunal last year also stated that her main tormentor David Longmuir, a former manager at Sberbank CIB (UK) Ltd, should have been fired from the bank for gross misconduct.

He was found to have sent a host of emails and made remarks behind her back that were “offensive and derogatory and often personal in nature”.

The tribunal in its judgment on damages went on to note that far from being sacked, Mr Longmuir did not leave the bank until a year after Ms Lokhova resigned - and received a $250,000 pay-off (around £168,000).

“It would seem the bank’s treatment of misconduct varies according to what sort of misconduct it is,” it said.

The tribunal ruled it was his comments that had led to Ms Lokhova’s health collapsing from “mild symptoms to chronic and long-term symptoms”.

OPINION: I'm fed up with these greedy and incompetent bankers
By Essex Chronicle | Posted: April 01, 2015
APRIL 1960 and at 21-years-old, I had achieved my major ambition: I began working in management at Shepperton Studios, then Britain's largest independent film studio.
Almost immediately, I had a financial problem. Until that April, I had been paid for any work that fortuitously came my way with a weekly pay packet, but now I was to be paid a monthly salary.
The problem was I had no bank account in which to have my salary paid. Worse, I had never had a chequebook. People like me had Post Office savings accounts – chequebooks and banks were for the rich.
Indeed, I had never been inside a bank let alone had a bank account. The studio cashier patiently pointed me in the direction of the studio's bank in Shepperton village with an introduction to Mr Rowlands, manager of the National Provincial Bank branch.
Mr Rowlands was happy to open an account for me, but as this would be my very first account with a bank I had to have a guarantor for the privilege.
My father was back in England on holiday from his work in Nigeria and agreed to do the deed. Unfortunately, he was returning to Nigeria almost immediately, so Mr Rowlands agreed to open the account with my father as guarantor the following Sunday morning in Mr Rowlands' flat above the bank – an exciting 'Brief Encounter'.
I am ashamed to admit that I had to ask the studio cashier to show me how to write a cheque. Stay with me on this. Fast forward to the 1970s. I was invited to a small business meeting in Bromley, Kent, which was also attended by some of the local bank managers, touting for business. During a conversation with a local NatWest manager, I mentioned how concerned I was that bank managers and especially NatWest managers, did not seem to stay in post that long before being shunted to another branch – more a case of musical bank branches. His reply floored me; he confirmed that I was right and that it was company policy to ensure that a manager did not get too close to his customers.
Poor Mr Rowlands. Opening a new account after hours and compounding the matter by doing it in the bank's flat, just how close to me, as his customer, was that? Had Mr Rowlands been CRB checked? Of course not; Mr Rowlands was a bank manager, in the style of Mr Mainwaring in Dad's Army, a pillar of local society.
Fast-forward to the 1980s. Bank managers were put out to grass, or worse, removed from the decision-making front line. They were replaced by upwardly mobile young (ish) account managers, one of whom at the branch would be responsible for you and your account, but not necessarily in that order.
At the time, my business account was with Barclays Bank. Over ten years of banking with Barclays, I fielded ten different Account Managers, each of whom would ring me up once every year to arrange a meeting to discuss my 'banking requirements'.
After the third year of this hassle, I refused to go to any meetings and spent the next seven years telling each new manager that if they didn't know my requirements by then, they were of no further use to me.
I remember a cute little Barclay's Bank in Writtle; it did not last very long once the banking New Order came into play. Disgracefully, two major building societies, Halifax and Abbey National, jumped on the banking gravy train where Greed was Good and adopted the worst of the banking rip offs; it was easier to get a £50,000 loan rather than a piddling £5,000 one.
Worse, in order to get any loan required a third-degree interview with the bank then a wait while your inquisitor made a telephone call to head office and a faceless employee who knew nothing about you but knew everything about credit rating.
I moved my account to the Nationwide building society where its staff were accountable to its members and not to shareholders; it has stayed there ever since.
I wonder sometimes what, exactly, do banking staff actually do apart from taking in money and occasionally paying some of it out as they seem incapable of making any decision without reference to head office.
Now, in the 21st century, banks have sunk so low, trumpeting their obscene profits, paying multi-million pound rewards for failure and, worst of all, through their greed and incompetence, almost bringing our country to its knees with their financial chicanery.

select for full details Banks accused of being 'fundamentally corrupt' after they sold useless card insurance to two million customers
  11 firms including Lloyds, RBS, Barclays and HSBC to pay compensation
  Issue centres around 'card security' policies for when stolen cards used
  But banks have to refund fraudulent payments to theft victims anyway
  MP John Mann: 'In any other walk of life they'd go straight to prison'

By James Salmon 28 Jan, 2015

The UK’s biggest banks were last night accused of being ‘fundamentally corrupt’ after selling worthless insurance to up to two million customers.

The victims included vulnerable customers who had contacted their bank after their credit card had been lost or stolen.

They were then duped into paying for insurance to protect themselves against fraudulent transactions made on their replacement card.

But the insurance was useless as banks are legally obliged to refund fraudulent payments to customers anyway.

Typically the policies were sold when people contacted their banks for help over lost or stolen credit cards.

Yesterday the City watchdog announced 11 lenders and credit card firms, including Lloyds, Royal Bank of Scotland, Barclays, HSBC and Santander, would have to pay compensation for the latest scandal to shame the High Street.

Last night MPs expressed exasperation at the banks’ latest transgressions.

Lord Thurso, a former member of the Parliamentary Commission on Banking Standards, said: ‘You wonder when banks will learn their lessons and stop selling dodgy products.

‘This is yet another mis-selling scandal which underlines the conclusions we came to in the banking commission that the sales practices used by banks were fundamentally corrupt.’

Alok Sharma, a Conservative member of the Treasury Committee, said: ‘This is another awful example of banks mis-selling products. If the sector ever hopes to restore public trust, it needs to pull out all remaining skeletons from the cupboard.’

And Labour MP John Mann said: ‘This sounds like fraud. If this was any other walk of life they’d all be heading straight to prison. It’s very strange that banks haven’t even been fined for this.’

select for full details Where successful London bankers go for the Bank Holiday weekend
The Cotswolds are alive with bankers renovating 2nd homes
By Serena Andrews 1 May, 2015

If you’re a banker in London, this weekend marks the first May Bank holiday. Sandwiched between Easter and Whitsun and falling before the summer season, it’s an opportunity to catch your breath, recharge, relax, and spend time with like-minded people who might even be good for your career.

Where will the bankers be? That depends upon their genre. Sporty, and they’ll be out golfing or watching the boxing match. Socialites? Throwing parties. Here’s my list of places you can go to find bankers de-stressing. Go along too if you want to network, or simply mention that you were in attendance too back in the office on Tuesday.

select for full details Top banker tells inquiry his earnings were 'unjustifiable'
The former head of Allied Irish Banks has claimed it was unjustifiable for him to take home millionaire pay packets in the years before the bank needed a €21bn taxpayer bailout.
By Breaking News 29 Apr, 2015

Eugene Sheehy, who earned more than €7m during his time at the helm, told the Oireachtas banking inquiry that all top bankers’ earnings from the time were unacceptable.

“The numbers are very high, not justifiable in any way,” he said.

“I would say they are not justifiable. Period. No matter what time you are looking at. There’s no way you could tell anybody in the street those were acceptable levels of pay. That’s a fact.”

Mr Sheehy apologised for the devastating impact AIB’s €21bn bailout wreaked on Ireland but initially rejected claims of reckless lending by his old bank.

As the Oireachtas banking inquiry delved deeper into the contacts and negotiations that led to the cataclysmic €440bn blanket bank guarantee scheme of September 30, 2008, Mr Sheehy outlined his role in the corridors of Government Buildings.

The AIB chief had contacted coalition bosses to ask if he could take part in the talks and he was invited in for six hours but dismissed from the decision-making room on four occasions before leaving at 3.30am.

“When we saw the guarantee document the next morning we could not see why Anglo Irish Bank and Irish Nationwide were included,” Mr Sheehy said.

Mr Sheehy proposed a four bank guarantee, preferring it to be in place for two years, and suggested the toxic Anglo and Irish Nationwide would be let go bust.

He flatly rejected minutes on a Department of Finance memo that he warned AIB was at risk of bankruptcy.

“There was absolutely no issue about AIB’s solvency at the time,” he said.

Mr Sheehy also dealt with the idea floated by the late finance minister Brian Lenihan in November 2008 – known as Project Omega – that AIB would take over Anglo.

That was less than two months after the speculators’ bank was guaranteed by the Government against the advice of AIB.

“We were asked by the minister to seriously consider taking over Anglo. If the minister asks you, you do look at something,” the former banker said.

But Mr Sheehy revealed the plan was never put to the AIB board. The former chief executive’s earnings peaked in 2006 at €2.4m, which included a bonus of €1.3m, but he insisted he played no part in determining bankers’ pay packets while in charge.

select for full details Ulster Bank chief is highest paid banker in Ireland after 66% wage rise
Ulster Bank chief executive Jim Brown saw his overall pay package jump by 66pc last year as the bank returned to profit for the first time since the financial crisis.
By Nick Webb 26 Apr, 2015

Brown's remuneration, which included salary, pension and other benefits, touched €1.63m (£1.16m) up from €979,000 a year earlier.

He is now by far the highest-paid chief executive of a high street bank in Ireland, as AIB's outgoing chief executive David Duffy had his salary capped at €500,000 and Bank of Ireland's Richie Boucher earned €843,000 last year (after waiving a €118,000 portion of his wage). PTSB chief executive Jeremy Masding is paid closer to €400,000.

This is well shy of some of the salaries paid to bankers during the boom. Last week former AIB head of Irish operations Donal Forde told the Banking Inquiry that his €1.4m salary was "silly" and "inordinate".

The Ulster Bank CEO and his executive team shared a total pay of €3.37m last year an increase of 46pc on 2013, when they received €2.3m.

"Performance-related bonuses are awarded on the basis of measuring annual performance against certain specified financial targets, which include both corporate performance objectives and key strategic objectives," according to the bank.

"The executive directors may also participate in the RBS executive share option and Sharesave schemes," banks added. "The highest paid director did not exercise any share options during the year."

Ulster Bank returned to profit last year, returning a €752m operating profit, compared with a €2.23bn adjusted loss in 2013. The turnaround in the bank's fortune coincided with an uplift in property assets, which the banks had written down sharply in the downturn.

It was also boosted by the improvement in the general economy, which lifted demand for financial products.

The future of Ulster Bank in Ireland had been under considerable scrutiny last year as its parent RBS battled to fixed up its balance sheet and shed non-core assets. However, following a lengthy strategic review RBS committed to keeping and growing Ulster Bank in the Republic.

select for full details Crooked banker plundered £450,000 from Halifax customer accounts, including dead friend
Greedy Aseeb Younis, 25, stole cash and then spent it on shopping spree with other criminals.
By Ross McCarthy 16 Apr, 2015

A crooked banker has been jailed for four years jail after plundering £450,000 from customer accounts in just five months - including that of a dead friend.

Aseeb Younis, 25, hijacked multiple accounts at his Halifax branch in Acocks Green and used the stolen money to fund shopping sprees with other criminals.

The banker, of St Oswalds Road, Small Heath, had previously admitted three charges of fraud when he appeared at Birmingham Crown Court.

Jonathan Barker, prosecuting, said Younis had been employed as a banking consultant and had access to the computerised banking system.

He targeted a number of customers he knew, including Brian Mason who had died in December 2012.

Judge Mary Stacey said of Mr Mason: “He was meant to be a friend. You acted with outrageous opportunism in opening a new bank account in his name and ordering new bank cards.”

The money was siphoned off between January and May 2013 and the fraud came to light after an internal investigation.

The scam was carried out in two ways, the first involving Younis applying fraudulent interest credit on customer accounts which had the effect of generating funds which could be withdrawn and spent.

The other way involved him manipulating the banking system so that 17 accounts became “incredibly” overdrawn, leading to “temporary limitless spending.”

The court heard Younis had also been working with a team of people who were “shopping as fast as they could in a short space of time before the bank realised that an account had become massively overdrawn.”

Swiss Banker in Custody After Testifying Before Greek Prosecutors
Swiss banker Jean-Claude Oswald was detained pending trial after testifying on Wednesday before two Greek prosecutors on separate cases involving money laundering and kickbacks in armament procurement contracts.
By A Makris 9 Apr, 2015

Oswald, a former officer of Dresdner and BNP Paribas banks, testified before corruption prosecutors Nikos Tsironis and Vassiliki Brati. He is also named in a third case involving money laundering over a contract between Greek telecoms giant OTE and German-based Siemens as well as a contract on submarines for the Hellenic Navy.

The banker was arrested in the United Arab Emirates on an international warrant and has denied charges, saying he was unaware the money he was asked to deposit in Swiss and other banks on behalf of Greek clients came from illegal activities.

In his testimony before Tsironis over armaments procured from German-based Wegmann, Oswald appeared to have promised he will look for and turn over a list of his Greek clients to investigators, although he noted that a company official serving under him, Fanis Lyginos, also a defendant in the case, had better contact with them.

According to Greek media, he said he was not interested in the origin of payments deposited in banks and that the Swiss banking system has “loose rules” about its clients in order to provide services they cannot find in other countries.

Why bankers refused to be interviewed by Russell Brand
The British Bankers' Association said they chose not to feature in Brand's film The Emperor's New Clothes because the campaigner had encouraged an 'orgy of banker bashing'.
By James Gill 29 Apr, 2015

Bankers refused to answer Russell Brand's questions about the 2008 financial crisis because they were concerned he wanted to encourage "an orgy of banker bashing".

A spokesman for the British Bankers' Association (BBA), which represents over 200 banking institutions, said that while they were approached to appear in Brand's new political documentary The Emperor's New Clothes, they turned the offer down because they believed they would not be given a "fair and balanced interview".

The documentary explores the 2008 financial crisis and was made by Brand and director Michael Winterbottom. The British filmmaker said that they contacted all the major UK banks offering them to take part, but were turned down by all of them.

"We contacted all the banks and asked to talk to people on camera," Winterbottom said. "All the banks refused, because they know that what they’ve done is indefensible. If you think about it, how often do you see a leading banker being interviewed about things? Almost never. We contacted all the individual banks, we contacted the British Bankers’ Association that represents the banks. Even they refused to talk to us."

But Paul Stephenson, Executive Director of External Affairs, said that comments from Brand put them off appearing in the film.

"What I explained to Michael was, while they were calling us asking if we wanted to be interviewed, Russell Brand was calling for an 'orgy of banker bashing'. We were somewhat reluctant because we weren’t sure it would be a fair and balanced interview," Stephenson said.

"Our job is to go and give the other side, and put the case for the banking industry in the UK, and we do that on BBC, ITV News whenever we can," he continued. "But when someone is coming from such an ideological standpoint and is literally quoted in the paper that day saying 'we want to have an orgy of banker bashing', that gives quite a clear steer. I would imagine that is what drove the nervousness of most of the major banks as well."

In the film, Brand is seen attempting to gain access to the offices of RBS, an act that was branded a "publicity stunt" back in December by a City worker in a tongue-in-cheek blog post.

select for full details Banker bashing wins votes but real culprits go unpunished
British banks are an easy target for politicians but are these attacks puting the entire financial services industry at risk?
By Andrew Critchlow 1 March, 2015

What is it with Britain’s favourite sport of banker-bashing? The latest attack came from the Liberal Democrats this weekend. The junior partner in the Coalition Government now wants to hit the nation’s lenders with an additional £1bn per year tax grab that will be used to eliminate the deficit.

If the Chancellor, George Osborne, won’t add the measure to this month’s Budget, it will form part of the party’s manifesto during the election.

According to the Treasury Secretary, Danny Alexander, banks were to blame for causing the financial crisis and they should continue to pay the price. I agree that someone has to take responsibility for the events which led up to the financial capitulation in 2008, but I entirely disagree that this has to be solely the burden of banks.

In fact, blaming the nation’s lenders – arguably one of Britain’s biggest commercial success stories of the post-war period – is a grotesque political lie. If blame is still to be apportioned for the crisis, then it should rest squarely with the Labour Party, which governed at the time and, dare I say it, the individuals who bought houses they could not afford, or racked up huge credit card debts they could not possibly repay. In the run-up to the General Election, Britain’s politicians remain dangerously obsessed with playing the nihilistic game of bashing banks. However, after five years on the pitch they are now in danger of entirely killing off the industry which they have worked so hard to vilify. Once the likes of Mr Alexander and Labour leader Ed Miliband have finished exacting their revenge on the banks perhaps then they will seek answers from the real culprits behind the crisis: Gordon Brown and Tony Blair.

select for full details Banking inquiry as illuminating as an unwashed spud
Billed as one of the showcase weeks of the Oireachtas banking inquiry, the process failed to deliver. Jean Claude Trichet picked his way through the path of Oireachtas inquiry questions with the footwork of a mountain goat

By 3 May, 2015

Few punches were landed as the former ECB governor delivered a pretty strong performance. Having the questions in advance definitely made it easier.

This was also a week when the first banking heavyweights took to the stand. The approach taken in the sessions was predictable. It focussed on how much money people like Eugene Sheehy and Brian Goggin were paid at AIB and Bank of Ireland, and then followed up with detailed questioning about where they were on the night of the bank guarantee.

We learned little about how such highly paid and experienced bankers could race their banks at such speed towards a cliff. Surely the purpose of the inquiry is to understand how this happened?

It took Bank of Ireland 200 years to build up a loan book of €100bn and just the following four years to turn it into €200bn. Property lending at AIB increased by €76bn between 2002 and 2008. Total exposure to property went from 18pc of loans to 37pc of loans with an extra €22bn of loans for land and development.

How could that level of risk have been allowed to happen and what were the processes within the bank that encouraged, facilitated and drove that? We are left with no real sense of how that happened.

The pattern is simply that Sheehy and Goggin say: "I called it wrong. I am sorry and take responsibility for that. But no, I wasn't overpaid. I got what everybody else was getting."

And that's it. About as illuminating as an unwashed spud.

Eugene Sheehy was a career banker. Yet, he plunged AIB into spending €216m on a Bulgarian property bank, not in 2005 or 2006, but in 2008 - eight months after the credit crunch began. The bank was later sold for €100,000. After the guarantee in 2008, Sheehy said he would rather "die than raise equity". In February 2009, after the State's first injection of €3.5bn into AIB, Sheehy told a newspaper: "By and large, I think the State got a pretty good deal." The State's €3.5bn injection "puts us in a position where we can absorb a lot of pain". The bill later came to €20bn. This wasn't simply getting it wrong, it was inhabiting a parallel universe.

select for full details Ex-HSBC boss Stephen Green: the ethical banker with questions to answer
Banker who became priest, Cameron government minister and peer has never been grilled over the goings-on at Geneva subsidiary.
By Juliette Garside, David Leigh, James Ball and David Pegg 9 Feb, 2015

Stephen Green, who was boss of HSBC during the period covered by the leaked Swiss files, emerged from the global financial crisis with a reputation as the City of London’s ethical banker.

It was an image he actively encouraged. An ordained Church of England minister, Lord Green published a book in 2009 entitled Good Value: Reflections on Money, Morality and an Uncertain World. It preached that business leaders should behave not just legally but ethically, going beyond “what you can get away with”.

Today, Green faces awkward questions over the culture of lax controls and failures in compliance at HSBC’s Swiss bank. The Geneva subsidiary that routinely allowed clients to withdraw very large sums of cash and that colluded with some to conceal undeclared “black” accounts was created on Green’s watch.

The son of a Brighton lawyer, Green began his 28-year career at what was then Hongkong and Shanghai Banking Corporation in 1982. By 1998 he had been singled out for promotion by Sir John Bond, the chairman whose leadership set HSBC on the path to becoming Europe’s largest bank. Green was appointed to the board of HSBC group that year, running investment banking, asset management and crucially, private banking. He retained oversight of the private bank until becoming chief executive.

A year later, HSBC bought the Republic National Bank of New York, the business that was merged with other HSBC units to become the new Swiss operation. From 2005, Green was afforded an even closer look at the inner workings of the Geneva business as chair of its supervisory company, HSBC Private Banking Holdings (Suisse) SA.

But he has so far refused to answer questions on the scandal, telling the Guardian: “As a matter of principle, I will not comment on the business of HSBC, past or present.”

The principles Green extolled in his book proposed a different approach to corporate good behaviour. “For companies, where does this responsibility begin?” he asked. “With their boards, of course. There is no other task they have which is more important. It is their job – and one which by its nature will never be complete – to promote and nurture a culture of ethical and purposeful business

Green was chief executive of HSBC group from 2003 until being appointed its chairman in 2006. At David Cameron’s invitation he left to join the House of Lords at the end of 2010, donning ermine as Lord Green of Hurstpierpoint and becoming minister for trade and investment.

Green, who became a Church of England priest in 1988, voluntarily gave up his HSBC bonus during the banking crisis, but after long years at the bank he also amassed a £19m pension pot – large even by City standards.

Despite being richly rewarded for his role, Green has never been grilled over the goings-on in Geneva. On the contrary, he left the private sector to a chorus of praise after steering HSBC safely through the global financial meltdown.

Unlike the Royal Bank of Scotland and Lloyds Banking Group, HSBC was not forced to turn to British taxpayers for help. As one of the world’s strongest banks, it remained a rare provider of liquidity to the markets and, when in need of cash – a chunky £12.5bn of it – investors were more than happy to stump up.

“In Stephen we will be appointing a minister with a long career as a leading international banker,” business secretary Vince Cable trumpeted when Green joined his department in 2011, “one of the few to emerge with credit from the recent financial crisis, and somebody who has set out a powerful philosophy for ethical business.”

A source close to Cable said Green’s appointment as trade minister had been made by Cameron. Contacted by the Guardian on Monday as to his view on his former junior ministerin the light of the HSBC revelations, Cable said: “We simply don’t know at present if Lord Green was aware of or condoned these practices.”

select for full details Who’d be a senior banker now that bonus season has begun?
Bank pay policies are always a fraught subject at election time. This week, several chief executives will have to stand up and defend them
By The Guardian 22 Feb, 2015

bankers had always feared this year’s bonus round would be toxic, given the proximity of the general election. They know all too well that politicians can wreak havoc, remembering Stephen Hester’s position three years ago. The then boss of Royal Bank of Scotland was forced to turn down his £1m bonus after Labour forced a Westminster vote on the subject.

Imagine their trepidation on the eve of this year’s bonus bonanza. Beyond the usual mudslinging the bankers would have been preparing for, brickbats are already being thrown following the revelations about the way HSBC’s Swiss private bank helped customers avoid tax. The leak of the bank account details of 100,000 customers – hacked in 2008 – opened old wounds about the tax status of party donors and the appointment of HSBC’s former chairman Stephen Green to the Lords to become a trade minister in 2011.

Add that to the penalties imposed on banks during the past 12 months for wrongdoing – a £2.6bn collective fine for rigging foreign exchange markets, a fine on Lloyds for manipulating the price it had to pay for its bailout, and Royal Bank of Scotland’s punishment for an IT failure in 2012 – and it could be an explosive week for bankers.

HSBC is the first off the block on Monday. Who would want to be Stuart Gulliver, with his annual pay deal usually around £8m, preparing to face a barrage of questions about the past antics of his bankers in Switzerland? Expect him to get his apologies in quickly.

On Thursday it is the turn of António Horta-Osório, the boss of Lloyds, who will be on his feet to present to the City. The Portuguese banker will hope to have a good news story to tell, an announcement about the resumption of a dividend to shareholders for the first time since the 2008 bailout. What could possibly go wrong? Horta-Osório looks likely to be in line for a pay deal north of £10m. Even alongside good news, that could be a hard sell.

six years on from the near collapse of the banking system, bankers have only themselves to blame for this febrile atmosphere. Home loan rates might be low, helping homeowners with flexible-rate mortgages, but average wage growth has been modest. Learning that bankers like Gulliver need an extra £1.7m a year to rub along on because of the EU cap on bonuses does not help attitudes, regardless of the flaws of the EU’s restrictions.

Nor does the litany of errors that can be stacked against the banks. However much the bosses attempt to blame problems on “legacy” issues, the reputational damage is done – and growing.

More “conduct issues” – as they are now being called – are on the way: RBS is preparing for a multibillion-pound settlement with the US authorities over the way it packaged up sub-prime mortgage bonds before the crisis, and Barclays still awaits its fine for rigging foreign exchange markets.

At least it should ensure that the memories of the crisis do not fade so fast that politicians and the public are lulled into believing that the system has been fixed.

Politicians – despite all their own mistakes – owe it to the electorate to hold bankers to account.

select for full details Bankers and convicts among 2,300 Irish 'right to be forgotten' requests
Bankers, wealthy drug offenders and others wishing to scrub their reported misdeeds from the internet are among 2,300 Irish 'Right To Be Forgotten' requests from Google since a new European law was introduced last May.
By Adrian Weckler 30 Apr, 2015

The 2,300 requests relate to 7,150 different website or social media links that are returned in a Google search for individuals' names, according to new figures from the search giant.

However, less than a third (29pc) of such Irish requests to remove the undesired links are successful, Google says.

This is substantially below the average European delisting rate of 41.4pc and remains below the UK removal rate of 37.7pc.

Links to 22 articles published by the Irish Independent and sister publications have been removed so far this year by Google under the system.

These include a court report covering the arrest and conviction of a wealthy individual for allowing his Dublin home to be used for drug offences in 2013.

They also include an employment appeals tribunal report about a banker sacked for sharing a confidential password that gave access to billions in client funds.

According to the Irish Data Protection Commissioner, Helen Dixon, 30 appeals have been filed to the Office of Data Protection by people unhappy with the outcome of Google's decision on their removal requests.

Ms Dixon said that "quite a number of them have been resolved".

"In a number of cases, having analysed the complaint, we have concurred with Google and understood the reasons why they refused the delisting," she said. "In a number of other cases, we have disagreed and have set out our views to Google. They have then been resolved to the data subject's satisfaction," Ms Dixon added.

select for full details HSBC banker chatted about ‘favor’ for a client’s son
HSBC bankers got a client’s son a job on Wall Street and then openly discussed how that favor would land them a lucrative deal, The Post has learned.
By Kevin Dugan 3 Jan, 2015

The attempted quid pro quo, discussed openly in a chatroom by senior banker Robert Domanko, is a clear no-no on Wall Street, a securities lawyer, briefed on the 2013 conversation, said.

Domanko, in the chatroom talk, asked his traders to slightly sweeten an offer so it would be closer to a rival bid — and that the bank only needed to come close to that rival bid, not match it — to get the deal, a transcript of the chat reveals.

HSBC was in the catbird’s seat because it had gotten the son of an executive at the client’s firm a Wall Street internship, the transcript shows.

HSBC, the largest European bank by assets, has had a history of shady dealings around the world during the last few years — including rigging interest rates, manipulating currency markets and laundering money for drug cartels.

The missteps have results in the bank paying billions in fines.

In the 2013 chat, Domanko, who heads HSBC’s institutional equity derivatives business, pushed his subordinates to improve the price of a deal by a few basis points, or 0.01 percentage points, according to a transcript of the conversation obtained by The Post.

After one banker asks why they should give the client a better deal, Domanko spills the beans in an Instant Bloomberg chatroom.

“to look competitive …maybe he gives it to us if we are close but not the best price..jenn spent 2months helping the clients son get an internship,” he wrote in the chatroom on Dec. 16, 2013.

select for full details Hand over the emails sent by disgraced banker Fred Goodwin during financial crisis, judge tells RBS
Royal Bank of Scotland and disgraced former boss Fred Goodwin have been blasted by a High Court judge for resisting demands to hand over private emails sent during the financial crisis as part of a £5billion lawsuit.
By James Salmon 26 March, 2015

About 100 institutions and 12,500 private investors are suing the bank and four former executives, after buying into a £12billion share sale as the bank tried to raise cash to survive in 2008.

Spearheaded by the RBoS Shareholders Action Group, they claim the lender concealed the dire state of its finances and misled investors. The defendants are former chief executive Goodwin, former chairman Sir Tom McKillop, former investment banking boss Johnny Cameron and former finance chief Guy Whittaker.

They were ordered in December by Justice Hildyard to disclose the contents of private email accounts, personal mobile phone records and personal computers they held between March 1 2007 and February 28 2009, by April 1.

RBS also has until April 17 to hand over correspondence with its advisers during the rights issue – Goldman Sachs, Merrill Lynch and ABN Amro.

But Justice Hildyard said in a damning ruling that the defendants – represented by law firm Herbert Smith Freehills – have exaggerated how expensive and long it would take to provide the required information. He revealed it would take 18 days and cost £55,000.

He said that there was also a ‘danger’ that the defendants relied on the fact they will not have to take the stand until December 2016, to ‘justify slippage’.

Robert Thompson, a member of the action group, said the private emails will provide a ‘treasure trove of evidence’.

HSBC chairman says new banker accountability rules are reasonable
New rules being rolled out to make bankers more accountable were "entirely reasonable" given the pain Britain suffered in the financial crisis, HSBC Chairman Douglas Flint said on Tuesday.
By Huw Jones 24 March, 2015

The new "senior managers' regime" will make top bankers directly accountable for rule breaches on their patch from 2016, but it has been criticised by some bankers and financial lawyers for going too far and hard to apply in practice.

The rules reverse the "burden of proof", meaning that bankers will have to demonstrate they took reasonable steps to stop rule-breaking otherwise they would be presumed to be responsible for the breaches.

Bankers could also be jailed if their reckless behaviour resulted in the bank going under, though this specific charge would have to meet the usual threshold of proof in a court.

It was included after lawmakers were frustrated that no bankers were jailed after UK taxpayers had to shore up a string of lenders in the 2007-09 financial crisis.

"It's reasonable given the pain that has been suffered in the last financial crisis that the public feel that in those very narrow circumstances there is redress under the law," Flint said.

Some banks have said the rules could impair London's ability to compete with rival financial centres.

PSNI credit union hired bent banker Colum Lewis Canning
A top banker convicted of stealing £100,000 from a wealthy client was brought in by the PSNI's credit union as an advisor while under police investigation, the Belfast Telegraph has learned.
By Deborah McAleese 12 March, 2015

Former Ulster Bank manager Colum Lewis Canning was charged and later convicted of stealing the money from the bank account of a millionaire customer. While awaiting trial for theft last year he was asked to carry out work in an advisory capacity for the Harp and Crown Credit Union, which is for serving and former police officers. It is understood his assistance was requested by the Harp and Crown's secretary John Montgomery, a private detective and former RUC officer. Canning's advisory role within the credit union was terminated when a senior official became aware of his pending trial. The revelations have raised serious questions over the credit union's vetting policy for employees and those who work in an advisory capacity. The Harp and Crown has insisted that once its board of directors became aware of the allegations against Canning the "relationship" with him was brought to an end.

select for full details Labour plans to extend bankers' bonus clawback to 10 years
Bankers who are guilty of misconduct would have to pay back bonuses received up to 10 years ago, under banking reforms outlined by the Labour Party.
By BBC NEWS 13 Feb, 2015

The current "clawback" period for bankers' bonuses is currently seven years, but shadow chancellor Ed Balls said that was "too weak".

Extending the period would ensure bankers who were guilty of misconduct would "pay a price", he added.

The Tories dismissed the plans, saying nobody will trust a word Mr Balls says.

The proposal was outlined ahead of the publication of Labour's banking reform paper, which will set out its economic plan and the measures a future Labour government would take.

'Misbehaviour and misconduct'

Under previous rules, bankers' bonuses were often deferred for a period of three to five years, during which time the bonus could be clawed back if necessary.

However, the Bank of England extended the period to seven years at the beginning of the year, saying misconduct such as the rigging interest rates or reckless risk-taking can take longer to emerge.

But Mr Balls said Labour wanted to extend the clawback period further.

He said recent allegations around HSBC's Swiss banking arm about clients being help to avoid paying tax showed that "wrongdoing can take years to uncover". "When people have done the wrong thing in banking - we agree with the governor of the Bank of England - that the bonuses should be repaid, in fact we're saying that clawback should go back 10 years," he added.

select for full details Can Anglo-Irish banker David Drumm get a fair trial in Ireland?
The expert opinion in the US appears to be that Drumm, perhaps the most wanted man in Ireland and the scapegoat for the entire banking crisis that almost brought the country down, may avoid extradition.
By Niall O'Dowd 23 Jan, 2015

The Irish government is now seeking his extradition after Drumm, who is now living and working in the US, failed to win a bankruptcy proceeding in Boston. Two of Drumm's senior associates from Anglo Irish Bank were recently convicted in Dublin of fraudulently lending money to investors who would then use that money to buy Anglo Irish shares.

However, both men received only community service sentences. Justice Martin Nolan determined that the government regulator deserved a huge amount of the blame for the illegal scheme because he was aware of it, but did nothing to stop the transaction.

Drumm may well have grounds for claiming he would not get a fair trial in Ireland including comments from Justice Nolan in that trial of of the two Anglo executives. As he handed down the sentences for the two men Justice Nolan stated that “Drumm was the instigator and author of the scheme” for which they were being tried. A defense attorney for one of the two men described the trial as being “Hamlet without the prince.”

Do such comments, coming from prominent sources, show a presumption of guilt? And will that be enough to prove to a US extradition judge that Drumm is not capable of receiving a fair trial?

The other issue is that the presiding judge found he could not sentence the two Anglo Irish associates to prison time as the government’s own financial regulator had approved their scheme.

“I find it incredible that the red light did not go off in the regulator’s office,” Judge Nolan stated, placing a large proportion of the blame there.

US law is also clear that a person can only be extradited based on the alleged crime also having a corresponding crime in the US. In this case there is no specific law in the US barring a company loaning money to shareholders to buy its stock.

While the specifics of the extradition warrant from Ireland remain unknown, there is little doubt given the outcome of the case in Dublin that there will be considerable difficulty pinning the tail on the scapegoat.

As to the possibility of deportation rather than extradition, Drumm’s work visa is an E2 investor’s visa and while it expires in May there can be no grounds to remove it, says a top immigration lawyer, unless Drumm has been convicted of a crime.

select for full details Enda and co still let bankers profit at public’s expense
Sight of fatcat financiers giving the two fingers to our elected representatives was sickening
By Pat Flanagan 1 May, 2015

Any lingering doubts it is the banks and not our Government which runs the country were well and truly dispelled this week.

The sight of fatcat financiers giving the two fingers to our elected representatives and refusing to pass on interest rate reductions to struggling mortgage holders was sickening.

But that’s the way it is and the way it’s going to be because that’s the way our Government wants it.

On Wednesday we had the unseemly spectacle of Bank of Ireland and Ulster Bank bosses openly defying the Coalition’s pleas to reduce their variable interest rate to customers.

Even after a brush with death Bank of Ireland chief Richie Boucher was in no mood to help those battling debt.

But that’s what we’ve come to expect from a man who is only concerned about the bottom line and who has vowed to hound those in mortgage arrears to the grave.

On Thursday the Taoiseach said it is not acceptable lenders don’t pass on interest rate cuts to customers yet he and his Government has accepted it for the past four years.

The reason the banks can shaft people is because they know that’s the way the Coalition really wants it as beneath all the bluster Fine Gael and Labour are on their side.

Exactly two years ago Finance Minister Michael Noonan said he had no desire to interfere in the interest rates charged by lenders to mortgage holders.

He claimed the financial institutions must be allowed to operate independently in order to make a profit for the taxpayer.

In May 2013, he said: “We want the banks to be profitable again, to protect the investment the Irish taxpayer has put in.”

So while it may be Richie Rich who screws his customers it is Michael Noonan who supplied the screwdriver.

More than 200 years ago Thomas Jefferson spoke of the dangers of banks and bankers and if he’d been in Dublin yesterday he’d tell us we should have listened to his warnings.

There were reports of a huge rat being captured in Tipperary on Thursday but there was an even bigger one on the podium in the Royal Hospital in Kilmainham.

Compared to the slimeball that is Jean-Claude Trichet, the likes of Richie Boucher are mere balls of financial fluff.

As bankers try to regain our trust, enter the self-serving chancers
By Will Hutton 5 Apr, 2015

I sometimes ask people who they think are the worst British businessmen of the last couple of decades. This is ongoing research for a book I have in mind – working title: Not-very-eminent Elizabethans – on the people behind the bad deals and ill-thought-through decisions that have laid British business so low.

One consistent nomination for worst ever British businessman is the disgraced Fred Goodwin, the accountant whose dreams of grandeur and increasingly toxic deals took RBS to bankruptcy.

Business should be more careful about trust: once gone, as the bankers have learned, its recovery can be near impossible. Last week, Colette Bowe completed the board of the Banking Standards Board, which she chairs. Financed by the industry, its job is to promote “high standards of behaviour and competence “ in this crucial industry, and so help to restore trust after the multiple disasters that have beset it.

BSB members include the bishop of Birmingham, David Urquhart, moral philosopher Onora O’Neill, the director of the Institute of Fiscal Studies, Paul Johnson and the former head of the TUC, Brendan Barber.

British banking knows it has a long road back; listening to, and acting on, the recommendations of the BSB will be fundamental to the task – and its board members must necessarily have independent standing and moral authority that too many business and banking leaders now lack.

Top bankers call for culture change for financial planning
Three of Australia’s most senior banking figures are calling for a change of culture to fix the scandal-ridden financial planning industry.
By The Australian 28 Apr, 2015

The scandal has rocked the big banks, with apologies from their heads, calls for a royal commission and massive payouts under way.

Australia’s most senior banker, Reserve Bank governor Glenn Stevens says trustworthiness of planners appears to have eroded while incentives paid to them have grown.

“Finance depended on trust, and where trust had been damaged, repair was needed,” Mr Stevens told a banking summit in Sydney today.

“Without, in any way, wanting to pass judgment on any particular case, root causes seem to include distorted incentives coupled with an erosion of a culture that placed great store on acting in a trustworthy way.”

Commonwealth Bank (CBA) chief executive Ian Narev said banks should hire advisers who are more focused on the customer, rather than bonuses and commissions.

select for full details
6 London postcodes that show you’ve made it in banking, and the bankers who live there
If you’re a banker and you live in London you probably don’t want to live in Lewisham, Edmonton, Enfield or anywhere much beyond zone two unless it’s Richmond (zone 4) or Chiswick (zone 3). So, where should you reside when you’re not in the office? Which London postcodes say you’ve arrived as an investment banker in the City? If you want something that spells unequivocal success, it’s these:
By Serena Andrews 17 Apr, 2015

1. SW1X: Knightsbridge
Knightsbridge is for bankers who love everything that is expensive, even without great value for money. Sloane Street, Harrods and Harvey Nic’s are all on your doorstep. You’ll need to love having a flash postcode and will prefer location over space and value. One young banker I know has a studio flat, just so he can say he lives in Knightsbridge, even though he could get a 3 bedroom just a few streets away in a less expensive post-code. These bankers love shopping and labels, owning car collections, and everything that shines.

2. W8: Kensington
Thanks to the oligarchs, W8, in Kensington, is now the most expensive post-code in the UK. W8 is ideally located between Kensington Gardens and Holland Park. It’s ideal for dog-walkers and for nannies walking dogs and babies. There are shops on High Street Kensington for whole food Shopping. It is close enough to South Kensington, Chelsea and Notting Hill for restaurants and schools. W8 is the Switzerland of West London: the place for wealthy peace-keepers between posh Chelsea and grungy Notting Hill.

3. SW3: Chelsea
Chelsea attracts posh Bankers who believe that Chelsea is still in its ‘Sloaney Poney’ heyday. If you live here, you’ll need to be groomed and manicured (whether you’re a man or woman) and you’ll need to like picture-perfect streets and neighborhoods. You won’t leave the house without make-up or head-to-toe Chanel or Ralph Lauren. Most restaurants are white-tablecoth and fine dining. The stucco-fronted, white Victorian houses all appear flawless and Walton street enchants with its nursery baby shops, art stores and trendy bars. King’s Road and Sloane Square are at the heart of Chelsea, with shops abounding and John Lewis around the corner.

4. SW7: South Kensington
South Kensington is the ‘French Mecca.’ All French expatriates fight each other for a spot at the Lycee Francais Charles de Gaulle, which provides very good education at half the price of the British Independent schools. If you’re a French banker who hasn’t quite made it, you might end up sending your children to the satellite schools in Fulham, Clapham or Hanwell. Sometimes, walking around South Kensington feels more like walking in le Marais in Paris or in Via Mont Napoleone in Milan. South Kensington is also very popular for the Italian Banker expatriates. There was even an Italian Rom-com film entitled ‘South Kensington’ directed by Carlo Vanzina in 2001, starring Sienna Miller in her first ever screen role.

5. W11: Notting Hill
If you’re a banker who thinks you’re slightly cooler and edgier than your posh Chelsea neighbours, Notting Hill fits the bill. Everything is a bit grungier up in Notting Hill: the streets, the restaurants, the shops and the people. If you’re a banker who’s a fashionista or artist at heart, you’ll prefer Notting Hill over the rest. Notting Hill is for independent-thinkers rather than label-obsessives. Sienna Miller’s store Twenty8Twelve is still going strong on Westbourne Grove whereas Ralph Lauren shut down only after a few years open. There are large communal gardens, which are coveted by the garden lovers.

6. NW8: St. John’s Wood
If you’re an American banker, a move to St. John’s Wood is part of the rite of passage into Parenthood. The American School situated in St. John’s Wood has a larger-than-average campus with excellent facilities that are sometimes lacking in some of the other British independent schools. St. John’s Wood is close to Regent’s Park and the London Zoo, which will keep your kids entertained on sunny days. The houses here are wider than in some of the other post-codes, which will stop you complaining about the smallness and narrowness of London dwellings.

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