Argentina’s heavy hand now puts squeeze on banks 6 Jul 2012 Fresh from nationalizing YPF, President Cristina Fernandez now wants to strong-arm banks into subsidizing loans to businesses. The move shouldn’t have too big an impact on bank profits, but it marks an escalation in her war on private enterprise which may spread further.
Review: Financial whodunit clues into bankers 6 Jul 2012 Imagine Goldman had merged with Lehman, stuffed it with surprise amounts of dreck as Merrill did to BofA and then Dick Fuld confessed to killing Lloyd Blankfein. A story like that underpins journalist John Gapper’s debut novel. The mystery is fun but also not entirely frivolous.
Libor adds another worry for U.S. mega-bank owners 5 Jul 2012 So far only Barclays has been accused of wrongdoing in the unfolding scandal. But shareholders now must add an arcane interest rate to an already long list of risks. That’s going to make it more difficult for JPMorgan, Citigroup and BofA to trade above book value any time soon.
Euro bank supervision could stir up hornets’ nest 5 Jul 2012 The last EU summit promised to break the vicious circle between banks and sovereigns; create a single supervisory mechanism for the industry involving the ECB; and let the ESM recapitalise banks. Grand statements so far. Filling in the details will require multiple battles.
Bankia probe will help Spanish banking cleanup 5 Jul 2012 The High Court has opened a case against 33 former board members of Bankia suspected of falsifying accounts and misleading investors. An investigation - which had been resisted by the current government - was long overdue. It may lead to more probes elsewhere.
Barclays can’t easily divorce BarCap 5 Jul 2012 Now that Bob Diamond has quit as CEO, one option for the UK bank might be to offload the investment bank he built up. But a standalone Barclays Capital would suffer by comparison with peers. Diamond’s successor will have little option but to slowly unpick his legacy over time.
What if Barclays hadn’t lowered Libor submissions? 4 Jul 2012 The bank certainly reduced its vulnerability by submitting lower rates mid-crisis. What would honesty have cost? Would Barclays have secured funds from Middle East investors, avoided nationalisation and protected bonuses? No one knows, but the timeline is suggestive.
Diamond should exit Barclays with decorum not cash 4 Jul 2012 The UK bank’s new ex-CEO could collect as much as 30 mln stg after his forced resignation. The lawyers and the board can argue about entitlements and ethics, but in the long term Diamond might well be better off financially if he agrees to leave empty handed.
Barclays lobs grenade at Bank of England 3 Jul 2012 The UK bank’s filing to lawmakers on Libor rigging raises awkward questions for the central bank - especially for Paul Tucker, the presumed next governor. He must now explain whether he implicitly endorsed lowering Libor submissions, and whether the government gave the nod.
Diamond’s exit leaves Barclays at a crossroads 3 Jul 2012 The UK bank’s CEO has resigned. In replacing him, the board faces a critical strategic decision. Picking an investment banker would be less disruptive. Going for a retail banker may show that Barclays thinks the universal model is past its sell-by date.
UK bank probe could lift lid on political ties 3 Jul 2012 The government and the opposition are already arguing over the nature of an inquiry into banking standards after the Libor scandal. It could embarrass both: the Conservatives because of their close ties with the City; Labour because it was in power when the rigging took place.
Libor lying is defensible in a crisis 2 Jul 2012 Barclays’ deception on Libor rates during the financial crisis failed the test of St Augustine, who said it was better to be raped or murdered than utter the least falsehood. But his standard may be too high. There is a good case sometimes to play loose with financial truth.
Counterpoint: Libor lying is indefensible 2 Jul 2012 Does fiddling with the numbers ease panic? No. Because honest measures are the basis of trust in all transactions and alarming readings help prompt curative action. Mistrust feeds fear and paralysis. Restoring trust is the key to healing.
Barclays’ buck shouldn’t stop with Agius 2 Jul 2012 The bank chairman’s resignation is appropriate because he didn’t act as a strong counterweight to CEO Bob Diamond. But the CEO was responsible for the culture at Barclays Capital, where the interest rate rigging took place, as well as other lapses which have made him a liability.
Banker backlash will go on and on 2 Jul 2012 The Libor rigging scandal is just the latest example of immoral or risky behaviour that has brought the industry into disrepute. The fact that bankers are still overpaid and need further bailouts at a time when Western economies are struggling makes the public’s blood boil.
Deteriorating asset quality strains Indian banks 2 Jul 2012 As India’s growth fades, its lenders are developing bad habits. Debt restructuring has increased 156 percent in a year. And Indian banks have the lowest bad debt reserves in the Asia-Pacific region. Without an improvement, the pressure to fudge the numbers will only increase.
Libor rigging looks like victimless crime 29 Jun 2012 Barclays’ deception is bad for the banking industry, but the artificial quotes probably didn’t significantly distort borrowing costs or the economy. There may have been big losers in this scandal, but they aren’t likely to be found too far afield from other banks’ trading desks.
Bob Diamond can easily afford his bonus sacrifice 29 Jun 2012 The Barclays boss is waiving his annual bonus for 2012, at a potential cost of 3.4 mln stg. His total pay is a moving target, but at most the bonus sacrifice will torch around half the overall package. Factor in previous awards and the scale of the sop is even smaller.
UK mis-selling case adds to anti-bank frenzy 29 Jun 2012 Britain’s regulator has slapped lenders for flogging interest rate hedges to unsophisticated small businesses. Compensation claims will be another drag on earnings, while new business will be squeezed. Amid the furore over rigging interbank rates, it’s another reputational blow.
Barclays’ board should replace Bob Diamond 28 Jun 2012 A $450 mln regulatory fine, on top of rows over tax and bonuses, has tarnished the CEO’s track record and undermined efforts to revamp the UK bank. Diamond has many strengths and his shoes will be hard to fill. But as long as he is in charge, Barclays will struggle to move on.