Knight Is Said To Have Spurned $500 Million Citadel Loan

Knight Capital Group Inc. (KCG) rejected a last-minute, $500 million rescue-loan offer from Citadel LLC on Aug. 5 as it worked on a competing plan from a group of investors, said two people with knowledge of the matter.

The loan terms would have given Citadel a minority stake inJersey City, New Jersey-based Knight’s stock and an interest in the market maker’s HotSpot foreign-exchange subsidiary, said the people, who spoke on condition of anonymity because the talks were private. Citadel, the $12.5 billion hedge fund run by billionaire Ken Griffin, competes with Knight’s market-making and electronic-trading business.

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RBS’s CEO Blames Libor-Manipulation On ‘Handful’ Of Individuals

Royal Bank of Scotland Group Plc Chief Executive Officer Stephen Hester sought to limit the damage from the Libor-rigging scandal, blaming a “handful” of employees for attempting to manipulate the benchmark rate.

RBS dismissed four employees for trying to influence the individual responsible for Libor submissions following an internal investigation, the bank said today, without identifying the staff involved. Hester said it is too early to estimate the potential cost of fines and litigation linked to rate-rigging.

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Standard Life’s Grimstone Says Libor Scandal Is Hurting London

London’s reputation as a global financial center has been marred by the Libor-rigging scandal, said Gerry Grimstone, chairman of Standard Life Plc (SL/), Scotland’s largest insurer.

He was speaking on Bloomberg TV’s “The Pulse” show with Maryam Nemazee in London.

On London’s reputation after the Libor scandal:

“I’ve been in the financial services for 30 years and I’ve never known a time like this. It’s been terrible. Some of the language people use has been terrible. I’m concerned that the public don’t really understand it. The public talks about hanging bankers. We shouldn’t use words like cesspit to describe the City of London.”

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Recession, Libor, Facebook punish Europe’s banks

(Reuters) – Leading European banks reported dismal profits on Tuesday, blaming everything from the continent’s debt crisis and Spain’s property market crash to Facebook’s disastrous stock market debut.

Within a space of an hour UBS (UBSN.VX) of Switzerland, Deutsche Bank (DBKGn.DE), BBVA (BBVA.MC) of Spain and Austria’s Erste Bank (ERST.VI) delivered the bad news on an industry already beset by investigations into a number of scandals.

Deutsche Bank, Germany’s flagship lender, announced it will axe 1,900 jobs under a plan to cut costs by 3 billion euros ($3.7 billion) and streamline its business. New co-Chief Executive Anshu Jain said expectations on profitability had moved “closer to our grim scenario”.

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Swiss regulator quizzes Credit Suisse, UBS on Libor

(Reuters) – Swiss regulator FINMA said it is questioning UBS and Credit Suisse 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.

Credit Suisse said on July 16 it did not expect a “material” impact from the regulatory probe.

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Shrinking investment bank saps SocGen profit

(Reuters) – French bank Societe Generale’s (SOGN.PA) quarterly profit tumbled 42 percent, hit by losses at its investment bank, which it is shrinking in response to the euro zone crisis, and one-off writedowns on the value of U.S. and Russian units.

Under pressure to strengthen its balance sheet, France’s No. 2 listed bank is more than half way through a plan to slash debt and sell assets at its corporate and investment bank.

Profit at that unit, which has cut back risk since a huge rogue-trading loss in early 2008 hammered its reputation, plunged by 70 percent in the second quarter.

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LETTER: Libor rigging losses another’s gain

David Gleason wrote a remarkable primer on the Libor scandal (Libor a little part of interest rigging, July 26 ) which serves as recommended reading for anyone trying to understand this crisis.

What may confound some readers is what the impact of rigging the Libor rate by a fraction of a basis point translates to in the real world. To add more perspective to this question, we can turn to research done by Morgan Stanley on this question.

It is worth putting into numerical value what the Libor rate is. It is the reference rate for about $350-trillion of financial products. Morgan Stanley estimates that Libor rigging could possibly account for $720m of profit for each of the banks under investigation over a four-year period. The obvious question would be why would banks wilfully turn a blind eye to this? The answer is simple: greed. Compensation as a percentage of investment banks’ revenue is typically 40% to 50% of their profit, and Libor rigging serves this self-interest.

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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.

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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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