(CNN) - In a first for a U.S. credit ratings agency, Standard & Poor's has received official notice from Washington that it will face a civil lawsuit over imprecise ratings - now criticized as being too high by analysts, U.S. lawmakers and even S&P itself - of mortgage-backed investments that eventually contributed to the 2008 financial crisis.
Many of those investments received AAA ratings, a grade which implies highest safety and least risk, but imploded as the U.S. housing bubble burst.
As S&P awaits further word from the U.S. Department of Justice, ratings agencies Moody's and Fitch will be watching to see if they are next.
(CNN) – Another week, another round of news that suggests it’s a bad time to be a banker.
First came news Deutsche Bank became the first global bank to that could claw back payouts. Deutsche Bank's clawback rules allow it to take away from newly hired senior staff the un-vested equity bonuses earned at previous employers - if they were turned into Deutsche Bank shares. This is a significant tightening of bonus rules by Europe's largest lender, CNN’s Jim Boulden says. Pay consultants say the rule is unusual in the banking world and comes as European banks now hold employees accountable for questionable behavior.
But the question remains: Will other banks follow? And will the new rules give Deutsche Bank trouble recruiting?
(CNN) – Everything is “fine” (and more fines) for some big global banks these days.
Barclays has agreed to pay $453 million in fines for the Libor scandal, charged with manipulating key lending rates.
Now Standard Chartered has agreed to pay $340 million to New York regulators for years of conspiring with Iran to avoid U.S. sanctions and laundering $250 billion in transactions over 10 years.
London (CNN) - Fresh from the frying pan and about to leap into the fire, former Barclays boss Bob Diamond faces a UK parliamentary committee today to answer questions on a rate fixing scandal that cost his bank $450 million and Diamond his job.
Diamond resigned yesterday - alongside COO Jerry del Messier – saying “the external pressure placed on Barclays has reached a level that risks damaging the franchise.”
A memo published by Diamond ahead of his testimony today appears to point the finger at senior central bankers and politicians, suggesting Barclays was encouraged to lower the rate known colloquially as ‘LIBOR.’
David Ruffley, a Conservative member of parliament for Bury St Edmunds, is one of 13 lawmakers from a cross-party panel which will grill Diamond later today.
World Business Today spoke to Ruffley about the questions lawmakers want answers to. FULL POST
(CNN) – Global investors inhaled deeply when Greek President Karolos Papoulias relayed a difficult call with the head of the nation’s central bank - since Monday, Greeks pulled around 800 million euros (around $1 billion) out of the nation’s banks.
"There is, of course, no panic, but there is fear that could develop into panic," Papoulias said, describing what Central Bank Governor George Provopoulos told him. "He also said that the strength of banks is very weak at the moment."
So how much money is in the Greek banking system? About 170 billion euros (more than $216 billion) at the end of March, according to the Financial Times.
Since 2009, about 25% to 30% of Greek deposits have left the country. That’s not good for Greece, but given the turmoil of the past two years, it certainly could be worse.
Davos, Switzerland (CNN) - To hear the European leaders in Davos you would think the eurozone crisis had only just occurred and there was an urgency to deal with it hitherto unforeseen.
German Chancellor Angela Merkel, British Prime Minister David Cameron and European economics commissioner Olli Rehn -– just about any leader in Davos - is now saying that time is of the essence –- that it is time to actually sort out the eurozone's problems. Forgive me. What on earth have the European leaders been doing and promising over the past three years?
It is strange that now as we enter a new year they believe 2012 is the right moment to actually take the necessary decisions and implement the changes. And yet they were saying similar things in 2011, in Davos. So it is entirely understandable if we are now skeptical that they have the willpower and ability to put things right. FULL POST
London (CNN) – When I first heard that the wife of Philipp Hildebrand, then president of the Swiss National Bank had bought foreign exchange, weeks before the bank changed policy, giving her a thumping big profit, it seemed an open and shut case.
Of course he had to go. FULL POST
London (CNN) – Despite the bad prognosis and worrying doomsayers of grim tidings, the new year has got off to a rousing start with London up 2.29%, Frankfurt up 1.5% and even the Parisian market, which has the most to worry about, gaining just under 1%.
There are those who will use this to support the belief that if the first trading day is up, then that bodes well for the year overall. They would be wrong.
Just take last year – on the first trading day of 2011 the FTSE, DAX and Dow all rose. By the end of the year, the FTSE was nursing a loss of 5.5%, the DAX was down a whopping 15%, and only the Dow managed a gain of around 6%.
Going further back won’t help much either. As Mark Hulbert points out, by and large the first market day of the year tells us nothing about how the year will play.
(CNN) - UBS stands for the Union Bank of Switzerland. Yet this week's discovery of a $2 billion loss by an alleged rogue trader gave this most conservative of financial institutions the dubious honor of being dubbed the ‘Unauthorized’ Bank of Switzerland across many a dealing room in London.
The trader allegedly responsible has been identified. Police have made an arrest and the bank’s head of risk management will likely be engaged in some serious conversations. All the while, banking sector analysts are furiously adjusting their next earnings forecasts for the company.
In a memo to staff, UBS Chief Executive Oswald Grueber reportedly told staff that management would get to the bottom of the matter as soon as possible.
However, people familiar with the matter tell me Thursday's event may lead to some profound changes for the 157-year-old finance house.
(CNN) – The summer bloodletting from multinational banks isn’t over.
HSBC, a huge employer in Hong Kong and an anchor in a city known as Asia’s financial hub, announced that 3,000 people – roughly 10% of its workforce – will be out of a job by 2013.
The cuts are part of HSBC’s plans to eliminate 30,000 positions worldwide.
HSBC employees won’t be alone hitting the bricks with resumes in hand. This week, the Charlotte Observer – the hometown paper for Bank of America – wrote the largest bank in the U.S. plans to shed between 25,000 and 30,000 jobs.
Last week, Dutch bank ABN Amro said it will cut 2,350 jobs. In Stockholm, Nordea, the largest bank in the Nordic region, plans to cut 2,000 workers. The week before Swiss bank UBS announced 3,500 job cuts.
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