BRITAIN: Osbourne to Court Bankers at Mansion House with #Brexit on the Cards

#AceFinanceNews – Featured Report:BRITAIN:June.10: Despite a spate of record fines of bankers rigging international rates, miss-selling people insurance policies and bagging huge bonuses, UK Chancellor George Osborne is set to use his annual Mansion House event in the City of London to keep his friends happy.

Against the growing lack of trust in the City, Osborne is set to keep his banking friends sweet. The theme of the chancellor’s speech is the need for a new settlement with the EU, with the City, and in the way the public finances are managed. 

Having won electoral success in May, the Conservative government is keen to use its majority to press on with traditional Tory financial policies, which often means fawning to its City backers and friends. 

The annual Mansion House speech is given by the chancellor to black-tied bankers, the City elite and other grandees – many of whom are Conservative Party donors. Osborne himself has an estimated personal fortune of around $6 million, as the beneficiary of a trust fund that owns a 15 percent stake in Osborne & Little, the wallpaper-and-fabrics company co-founded by his father, Sir Peter Osborne. 

However, the City has been rocked in recent years by rows over huge bankers’ bonuses, despite the global economic crash caused by toxic debt flying around and the credit crunch. In the UK the taxpayer had to bail out both Lloyds and RBS in 2008 in order to keep them afloat. 

The government also had to support Northern Rock and Northern Rock (Asset Management), as well as Bradford & Bingley. The total support package for the ban bailout during 2008-9, according to the National Audit Office, came to an eye-watering $1.85 trillion. 

Bonuses and Record Fines

Not content with having had to bail out the bankers, taxpayers have been angered at their bonuses. This year it was reported that bankers were set to be awarded $7.7 billion in bonuses. Bailed bank RBS handed over $770 million, and Lloyds paid $580. 

In the latest scandal, London-based HSBC is being investigated in several countries for operating a secret bank in Switzerland used by rich people and companies to avoid tax in other states in an ‘aggravated money laundering’ operation. 

Meanwhile record fines have been handed over by banks who admitted rigging international rate systems. In 2012, Barclays Bank was fined $200 million by the Commodity Futures Trading Commission, $160 million by the United States Department of Justice and £59.5 million by the UK Financial Services Authority for attempted manipulation of the Libor and Euribor rates.

All eyes will be on whether George Osborne cuts the bank levy, which has been used to swell the government coffers by taking a charge on the financial sector. Stuart Gulliver, chief executive of HSBC, will be listening very carefully, having threatened to move his headquarters out of London and move back to Hong Kong.

Osborne, however, is unlikely to do anything that will upset his City mates too much. He has too much to lose.

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#barclays, #citigroup, #commodity-futures-trading-commission, #deutsche-bank, #federal-reserve-system, #financial-conduct-authority, #foreign-exchange-market, #the-royal-bank-of-scotland, #ubs, #united-states-department-of-justice

#US : `Federal Reserve Tightens Rules’ on `Foreign Banks’ to make them hold `Higher Reserves’

#AceFinanceNews says that `United States Federal Reserve‘  has tightened its rules for `Foreign Banks’ operating in the `US’ to `Hold Higher Reserves’ and prevent another 2008 Financial Crisis

In 1935, Cret designed the Seal of the Board o...

In 1935, Cret designed the Seal of the Board of Governors of the Federal Reserve System. (Photo credit: Wikipedia)

The Federal Reserve has tightened the rules for foreign banks operating in the US, forcing them to hold higher reserves to make them responsible for losses and provide extra solvency in case of another crisis.

Foreign lenders holding $50 billion in US assets will have to establish a subsidiary that will also need to follow the same risk management and liquidity standards as the biggest national banks do.

The Federal Reserve extended the deadline by which foreign banks must comply and meet all the requirements, until July 2016, one year later than originally proposed.

The Fed board approved the decision by a 5 – 0 vote.

The move should “help address the sources of vulnerability” revealed by the crisis, the new chair of the Fed Janet Yellen said.

Before the financial crisis broke in 2008, foreign banks moved from a traditional lending to broker-dealing, where they borrowed dollars in short–term money markets and sold it abroad.

However, the crisis made vulnerable all the lenders equally regardless of the operations they had been involved in, which made foreign players“disproportionate users” of the emergency lending facilities established by the Fed, as USA Today quotes Fed Governor Daniel Tarullo.

Major foreign players on Wall Street like Deutsche Bank and Barclay’s, had pushed back against the Fed’s decision. The new law will squeeze their lending, and raise costs of doing business as lenders will need to transfer costly capital from Europe.

However Sally Miller, the CEO of the Institute of International Bankers in New York, who considers the new Fed rules beneficial to the economy, still thinks that the restrictions were too onerous.

“We continue to have a fundamental disagreement with the Fed about the appropriateness and necessity of applying an extra layer of US bank capital requirements,” as USA today quotes Mrs Miller.

The Fed was ordered to toughen its regulations for large banks that could threaten the entire financial system under the Dodd-Frank Act that Congress passed in 2010 in response to the financial crisis.

RT 

 

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” Third `JP Morgan’ Employee has died under `Mysterious Circumstances’ in a matter of Weeks”

#AceFinanceNews says “Financial Death Toll Rises to `SIX’ as `JP Morgan‘ Employee jumps from Asian HQ Building”‘

Published time: February 19, 2014 09:52
The 30-floor Chater House tower housing the headquarters of investment bank JPMorgan in Hong Kong. (AFP Photo / Philippe Lopez)The 30-floor Chater House tower housing the headquarters of investment bank JPMorgan in Hong Kong. (AFP Photo / Philippe Lopez)
A third JP Morgan employee has died under mysterious circumstances in a matter of few weeks. A still unidentified “Chinese male in is thirties” jumped from the roof of Charter House, the 30 floor Hong Kong headquarters of JPM.

An eyewitness told the South China Morning Post he saw a man climb onto the roof of the skyscraper shortly after lunchtime on Tuesday.

#DOOMPAUL: ANOTHER BANKER SUICIDE THIS MORNINGhttp://t.co/Cfn4zXiUCC pic.twitter.com/u4ACn54z0v

— ThirdPosition (@Third_Position) February 18, 2014

Despite attempts to talk him down, the man jumped before emergency crews arrived, landing on the road outside the building.

The man who jumped was taken to Ruttonjee Hospital where he was declared dead on arrival.

I believe i can fly. 1 banquier de jpm de moins http://t.co/DT0TkeIMeqpic.twitter.com/SjKfmYYzXu

— vladimir guez (@vladimirguez) February 18, 2014

The unidentified man, aged about 33, was a junior employee who served a supporting function at the bank and wasn’t involved in investment activity, according to Bloomberg. Rumors circulating in the media say that his last name was Li.

A colleague of the man said that before the suicide he had complained about heavy work-related stress, though police say no suicide note has been found.

“Out of respect for those involved, we cannot yet comment further. Our thoughts and sympathy are with the family that’s involved at this difficult time,”JP Morgan said in an e-mailed statement.

The latest apparent suicide marks the 3rd sudden death at JP Morgan and the 6th in the global financial world in just a few weeks.

On February 3, a 37 – year old JP Morgan executive director died at his home in Stamford, Connecticut. The cause of death, however, remains unclear and will be determined after a toxicology report is completed.

About a month ago, 39-year-old Gabriel Magee, a JP Morgan vice president in technology operations, died after falling from JPMorgan’s London headquarters.

Other apparent business suicides include a 58-year-old former senior manager for Deutsche Bank, who was found hanged in his home; Karl Slim, the managing director of Tata Motors aged 51, and 50-year-old Mike Dueker who worked for Russell Investment and was found dead on January 29 close to the Tacoma Narrows Bridge in Washington State after being reported missing on the same day.

Also reporter David Bird, who works in the Dow Jones newsroom went missing on January 11 when he left his New Jersey home for a walk.

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#UK ” Major Crisis for `British Bankers’ on the Cards as `Exposure’ to `Asia and Pacific Regions’ to `Large Debt’ Risk”

#AceFinanceNews says `Europe Exposed: Over $3 trillion in Emerging Market Loans – time to bail-out!

Published time: February 04, 2014 15:09
Edited time: February 05, 2014 13:03
  
AFP Photo/Lionel BonaventureAFP Photo/Lionel Bonaventure
​The Fragile Five, BRICS and MINT are acronyms for countries like Turkey, Mexico, Indonesia, and China that are at the focus of the emerging crisis. But Europe may be the most vulnerable, as banks have more than $3.4 trillion in loans in shaky markets.

European companies have a bigger exposure to emerging markets than US or Japanese firms, according to research by Morgan Stanley Capital International.

Europe’s most vulnerable banks the ones with the most risk in emerging markets – are BBVA, Erste Bank, HSBC, Santander, Standard Chartered, and UniCredit, according to analysts, Reuters reported. Deutsche Bank analysts estimate the six most exposed European banks have more than $1.7 trillion tied up in developing markets.

Spain’s Santander is deeply intertwined in Latin America with bank earnings sourced from Brazil (23 percent) and 132 billion euro in loans across the region at the end of 2013.

Another big Spanish lender BBVA is very involved in Mexico, which in 2013 made up 80 percent of group profits. The bank has $55 billion in exposure to Mexico, whose peso weakened nearly 3 percent in January.

BBVA and UniCredit have high exposure in Turkey, Standard Chartered and HSBC have exposure to India and Indonesia, according to analysts cited by Reuters.

At the end of September, European banks had $3.4 trillion of loans in developing countries, according to data from the Bank for International Settlements. British banks had a $518 billion exposure in Asia and Pacific regions, Spanish banks had a $475 billion in Latin America, and French and Italian banks both loaned $200 billion in ‘southern’ European economies.

European banks hold about 12 percent of their assets in emerging markets, which are high risk but high return, Deutsche Bank analyst Matt Spick told Reuters.

Weak economic growth, paired with the US’s decision to wind-down its stimulus bond-buying program has sent emerging markets into a financial frenzy and currencies in South Africa, Turkey, and Mexico to pre-crisis lows. Investors are selling off their emerging market assets to Europe and the US, which are regaining economic strength and may bump up interest rates soon.

Reuters/Luke MacGregorReuters/Luke MacGregor

‘Threat’ to Europe’s banks

“When currency [volatility] combines with revenue slowdowns and rising bad debts, we see compounding threats to the exposed banks,” Spick told Reuters.

According to Spick, Standard Chartered may be the most exposed bank, as 90 percent of the bank’s earnings are dependent on Asian, African, and Middle Eastern loans.

Brazil, Russia, India, China, and South Africa, the BRICS nations account for 25 percent of global gross domestic product, and as a whole their growth disappointed in 2013: Russia’s economy only grew 1.3 percent by preliminary estimates, and China expanded by less than 8 percent for the first time in 20 years, with growth slowing to 7.5 percent.

With the exception of China – which keeps tight control over the yuan – BRICS currencies have been badly weakened. India’s rupee has had one of its worst years ever, and in 2013 lost 11 percent against the dollar. The Russian ruble has hit a 5-year low against both the dollar and euro.

Mexico, Indonesia, Nigeria, and Turkey make up the ‘MINT’ countries – economies that are forecast to eventually eclipse the BRICS. MINT nations continue to be hit hard by the emerging crisis, and have seen large currency devaluation.

Devaluation is partly a reaction to the US decision to taper, but domestic monetary policy set by central banks- like interest rates and currency controls- also have a big effect on currency strength. Turkey and India have raised rates in an attempt to counter weaker currencies.

Negative shocks in the emerging market – fueled both internally and externally, have resulted in a $7 billion leak out of exchange traded funds in developing nation assets in January 2014, according to Bloomberg data.

Europe is currently trying to reform its banking system by performing stress tests to make sure banks have adequate capital, and it can expose weak points and boost investor sentiment after it was pummelled by the 2008 financial crisis.

 

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