Monthly Archives: July 2012

Libor scandal: Deutsche Bank admits some staff involved

Deutsche Bank has confirmed that a “limited number” of staff were involved in the Libor rate-rigging scandal.

However, it said an internal inquiry had cleared senior management of taking part in attempts to manipulate the rate at which banks lend to each other.

Deutsche Bank also announced it is to shed 1,900 staff, mostly outside Germany, due to the European economic downturn.

Euro-Area Unemployment Rate Reaches Record 11.2%: Economy

The jobless rate in the euro area reached the highest on record as the festering debt crisis and deepening economic slump prompted companies to cut jobs.

Unemployment in the economy of the 17 nations using the euro reached a revised 11.2 percent in May and held at that level in June, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995. In Germany, unemployment climbed for a fourth straight month in July, a separate report showed.

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HSBC Apologizes For Compliance Failures

HSBC Holdings Plc (HSBA), the British bank accused of helping drug lords in Mexico launder money, apologized to investors for compliance failings and set aside $2 billion more to cover the costs of fines and redress.

The lender made a $1.3 billion provision in the first half to compensate British clients wrongly sold payment-protection insurance and derivatives, London-based HSBC said in a statement yesterday as it posted an 8.3 percent drop in net income. It also made a $700 million provision for U.S. fines after a Senate committee found the bank gave terrorists, drug cartels and criminals access to the U.S. financial system. That sum may increase, Chief Executive Officer Stuart Gulliver said.

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Libor scandal overshadows UBS Q2 results

ZURICH, July 31 (Reuters) – Swiss bank UBS (UBSN.VX) will be scrutinised on Tuesday for what it says about Libor interest rate manipulation, overshadowing an expected increase in first-quarter profit.

Swiss regulator FINMA said on Monday it is questioning UBS and Credit Suisse (CSGN.VX) in an investigation over possible Libor interest rate rigging.

“We are actively going after information that will enable us to make a judgment on what has happened,” a FINMA spokesman told Reuters on Monday.

The two banks are not under formal investigation as Swiss banks are legally obliged to cooperate with FINMA, which regulates the country’s banks.

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Fed Seen Forgoing Next Round Of Asset Purchases Until September

Federal Reserve Chairman Ben S. Bernanke will probably forgo announcing a third round of large- scale asset purchases this week, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt, according to median estimates of economists in a Bloomberg News survey.

Eighty-eight percent of economists say the Federal Open Market Committee will refrain from starting new purchases at a two-day meeting beginning today in Washington. Forty-eight percent say the FOMC will announce the buying at its Sept. 12-13 meeting, according to the July 25-27 survey of 58 economists.

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UK seeks urgent Libor reform

Policy ideas on Libor reform due Aug. 10

LONDON, July 30 (Reuters) – Britain is seeking urgent reform of the key interest rate rigged by a number of banks, including Barclays, in a transatlantic scandal that is threatening to seriously damage London’s reputation as a financial centre.

The government on Monday set the terms for a swift review of Libor, to be carried out by regulator Martin Wheatley in time for recommendations to be included in a draft law making its way through parliament.

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Libor scandal: RBS facing huge fine, warns chief Stephen Hester

The chief executive said the taxpayer-backed bank will “have our day in the spotlight” over the rate-rigging that has cost its rival £290m in fines and three executives, and reignited the public’s anger towards bankers.

RBS is one of the banks tied up in Libor. We’ll have our day in that particular spotlight as well,” Mr Hester told the Guardian. He did not know the size of the fine but said that the investigation by the Financial Services Authority was “in process”.

The Telegraph understands that any possible fine is likely to be significant.

Mr Hester added that he believes the rate-rigging scandal was bad for the entire industry.

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Timothy Geithner again under fire on Capitol Hill, this time over Libor scandal

Treasury Secretary Timothy F. Geithner was back in the hot seat Wednesday.

One of President Obama’s most polarizing Cabinet officials, Geithner returned to Capitol Hill for the 66th time since taking office, this time defending himself against charges from House Republicans that he had failed to stop big banks from rigging a critical global interest rate four years ago.

Geithner’s role in the unfolding scandalaround the London interbank offered rate, or Libor, centers on whether he responded aggressively enough in 2008 after he learned of potential rate-fixing while serving as head of the Federal Reserve Bank of New York. The Libor is a benchmark for hundreds of trillions of dollars worth of credit cards, mortgages, student loans and financial securities.

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Bernanke, Geithner Response to Libor Scandal Rings Hollow Read more: Bernanke, Geithner Response to Libor Scandal Rings Hollow

Ben Bernanke heads the most powerful central bank in the world. Yet the Federal Reserve chairman says he was largely powerless to stop what some are calling the biggest financial fraud in history: the systematic manipulation of a key global interest rate.

It’s a line of argument that has fallen flat with some lawmakers and investors, who want to know why Bernanke and other key U.S. regulators did not do more to end a potentially criminal rigging of interest rates affecting trillions of dollars in financial contracts.

Bernanke said last week he had been largely unable to directly address problems with Libor, or the London interbank offered rate, which he said he learned of in 2008.

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Fed Weighs Cutting Interest On Banks’ Reserves After ECB Move

Federal Reserve Chairman Ben S. Bernanke may be taking another look at cutting the interest rate the Fed pays on bank reserves to bring down short-term borrowing costs and spur the slowing U.S. expansion.

Bernanke testified to Congress on July 17 that reducing the rate from its current 0.25 percent is one of several easing steps the Fed might take to reduce unemployment stuck above 8 percent for more than three years. In February, by contrast, the Fed chairman told Congress that lowering the rate might drive away investors from short-term money markets.

“They’re reconsidering it,” said Ward McCarthy, a former Richmond Fed economist. A July 5 decision by the European Central Bank to cut its deposit rate to zero is prompting renewed interest in the strategy, said McCarthy, chief financial economist at Jefferies & Co. McCarthy said it’s unlikely the Fed will reduce the rate at a two-day meeting that starts tomorrow.

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