Loans and Finance

Loans and Finance

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News and information about loans, money, debt, finance and business issues.

Monday, December 31, 2012

Happy Fiscal Cliff Day

Good luck to the people of the world relying on American politicians not tipping the USA back into recession today!

Friday, December 21, 2012

The #economia50

My thanks to those who voted for me in economia’s (the official magazine of the ICAEW) list of the top 50 most influential sources of finance news and information in social media.

I am number 30 on the list.

As per economia:
We asked, and you responded. Here are the top 50 most influential sources of finance news and information in social media, voted for by economia readers and ordered by PeerIndex…


Using the hastag #economia50, readers sent us their nominations, we counted the votes and ranked them according to influence in association with PeerIndex, to reveal the economia Finance Twitter 50.

Topping the list is Michel Barnier, the EU commissioner who oversees financial regulation. The bilingual bureaucrat’s presence at the top of the list suggests the significance of the ongoing EU audit debate as well as the general uncertainty over the eurozone.

Aside from the influence of Europe, the list is dominated by journalists, with Newsnight’s economics editor Paul Mason coming in at number seven. The energetic tweeter offers insight to the UK economy and the political machinations behind it.

Flying the flag for chartered accountants in the top ten is Richard Murphy, founder of the Tax Justice Network and an advisor to the TUC on taxation and economic issues. A sometime columnist for The Guardian and Forbes.com, he offers his followers forthright views on the profession.

Never afraid to express his opinions on HMRC or the profession in general, Ken Frost rounds out the top 30. Frost writes regularly on his own website and blogs for Metro.

Given her role as chair of the Public Accounts Committee, which has spent the last month lambasting tax avoidance schemes used by large companies in the UK, it’s no surprise that MP Margaret Hodge features on our list at 37.”
The full list can be seen here economia.

Wednesday, December 19, 2012

UBS Fined $1.5BN

Last Friday I wrote that UBS was to be fined $1Bn for its role in the LIBOR rate fixing scandal.

I was wrong, UBS has in fact been fined $1.5BN.

Mea culpa!

Tuesday, December 18, 2012

RBS and NatWest To Refund £10M

It appears that some bank customers when withdrawing cash from an ATM are a tad forgetful and, believe it or not, don't actually take the cash dispensed from the machine.

What happens then?

The ATM sucks the cash back in and recredits the customer's account.

Well that's how most banks treat it, except NatWest and RBS which don't; instead, up until now, they have been crediting a "dump account".

However, that seems set to change as Finextra reports that Royal Bank of Scotland and NatWest have set aside a £10M reserve to refund up to 300,000 customers who made a withdrawal at the ATM but walked away without the cash.

The bank is apparently checking its records over the past seven years and will repay the money, plus the interest earned on the sum, to customers who forgot their cash. 
 
This brings a whole new meaning the phrase "bank error in your favour".

Cyprus To Default

According to Cyprus Finance Ministry Secretary Christos Patsalides Cyprus is going to default within days unless it receives Euro300BN.

Oddly enough there are some people who have been taken by surprise by this development.

I don't understand why, in August I wrote the following:
"Cyprus has barely managed to sell Euro23.1M of government bonds.

It achieved a "bid to cover ratio" of 1 (ie there were only just enough "punters" prepared to buy them), at a yield of 7% (the last auction in June achieved a yield of 6.25%).

A yield of 7% is "the point of no return"; it is the level at which Greece, Portugal and Ireland went with their begging bowls to others asking for a bailout.

Why is Cyprus having problems?

Around 40% of its largest banks' exposures are to Greece
."
Therefore this should come as no surprise to anyone.

Monday, December 17, 2012

Greece's New Fence

Today's announcement by Greece that it has completed its "anti immigration" fence along its border with Turkey could not have come at a better time, for it seems that it is still struggling to collect back dated taxes.

The Washington Post reports:
"The European Union says that Greek tax collection is still falling well short of some key targets that need to be met to reduce the government’s staggering debt pile.

The EU’s task force to help Greece overcome the crisis that brought it to the brink of bankruptcy said in Monday’s quarterly report that Athens still has trouble to deal with old, outstanding tax claims. With 2 months to go in 2012, it was still about a billion euros behind the EU target of recovering €2 billion."
The fence will not only help prevent immigration, but also stop Greek citizens escaping from their own country.

Friday, December 14, 2012

UBS $1BN LIBOR Settlement

UBS is, according to the Telegraph, close to agreeing a settlement with UK and US regulators on LIBOR rigging.

The bank is expected to announce next week that it has reached a combined $1BN deal with US and British authorities to settle an investigation into the role it is alleged to have played in rigging global borrowing rates.

To put the $1BN into context, LIBOR is the basis for $800 TRILLION of financial products. The banks that participated in its rigging would have made billions out of this over the years.

Additionally, UBS's bonus pool was $2.79BN in 2011.

Therefore shed no tears for them!

Wednesday, December 12, 2012

Merkel Downplays Euro Summit

Another week another European summit to, allegedly, save the Eurozone etc.

This summit (scheduled for Thursday and Friday), as with all the others, has no chance of success. Indeed even Angela Merkel realises it is a waste of time, as she has warned members of her Christian Democrat party that the' summit is unlikely to result in an agreement on deepening economic and monetary union in the Eurozone.

The only purpose, and tangible outcome, of these summits is to provide a recurring source of revenue for the catering companies.

Tuesday, December 11, 2012

Northern Rock Customers To Receive Windfall

In the spirit of a game of Monopoly, where a "bank error in your favour" has occurred, some of Northern Rock's customers are to receive an unexpected windfall.

Reuters reports that Northern Rock Asset Management, the state-owned remnant of defunct lender Northern Rock plc, is refunding £270M of interest payments to approximately 152,000 customers.

For why?

Northern Rock failed for some reason to make mandatory disclosures in loan documentation and customer letters in 2008. The mistakes pre-date the separation of Northern Rock plc and Northern Rock Asset Management.

There is of course a downside, the refund according to Treasury Economic Secretary Sajid Javid is "likely to increase public sector net borrowing for 2012/2013".


HSBC On Probation

Congratulations to HSBC for entering the record books, wrt the size of settlement that it has agreed to for money laundering.

The BBC reports that HSBC has confirmed it is to pay US authorities $1.9BN in a settlement over money laundering, the largest paid in such a case.

A US Senate investigation said the UK-based bank had been a conduit for "drug kingpins and rogue nations".

HSBC has announced it has appointed a former US official to work as its head of financial crime compliance, which is a new position.

Bob Werner was previously the head of the US Treasury's Office of Foreign Assets Control (OFAC) - the agency responsible for enforcing the US sanctions on countries including Iran.

He will be responsible for beefing up HSBC's anti-money laundering and sanctions compliance systems.

As per HSBC's statement on the matter, it is now effectively on probation for the next five years:
"Over the five-year term of the agreement with the Department of Justice, an independent monitor will evaluate HSBC's progress in fully implementing these and other measures it recommends, and will produce regular assessments of the effectiveness of HSBC's compliance function."
The full text of the statement is reproduced below:
"HSBC has reached agreement with United States authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanctions laws. This includes a Deferred Prosecution Agreement (DPA) with the US Department of Justice. HSBC has also reached agreement to achieve a global resolution with all other US government agencies that have investigated HSBC's past conduct related to these issues1 and anticipates finalising an undertaking with the United Kingdom Financial Services Authority shortly.

Under these agreements, HSBC will make payments totaling US$1.921bn, continue to cooperate fully with regulatory and law enforcement authorities, and take further action to strengthen its compliance policies and procedures.

Stuart Gulliver, Group Chief Executive, said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes. Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters.
"While we welcome the clarity that these agreements bring, ensuring the highest standards wherever we do business is an ongoing process. We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world."

In the past several years, the Board of HSBC Holdings plc has taken decisive action to direct management to fix past shortcomings as they have come to light. Since 2011, with new senior leadership teams in place at both HSBC Group and HSBC North America, HSBC has taken extensive and concerted steps to put in place the highest standards for the future.

The Department of Justice has recognised these efforts in the DPA: "Management has made significant strides in improving 'tone from the top' and ensuring that a culture of compliance permeates the institution. The efforts of management have dramatically improved HSBC Bank USA's and HSBC Group's Bank Secrecy Act / Anti-Money Laundering and Office of Foreign Assets Control compliance programs."

As noted in the DPA, HSBC Bank USA already has, over the past several years, undertaken the following voluntary remedial measures:
  • increased its spending on anti-money laundering (AML) approximately nine-fold between 2009 and 2011;
  • increased its AML staffing nearly ten-fold between 2010 and 2012;
  • revamped its Know Your Customer programme, including treating non-US HSBC Group Affiliates as third parties subject to the same due diligence as all other customers;
  • exited 109 correspondent relationships for risk reasons;
  • clawed back bonuses for a number of senior officers, and
  • spent over US$290m on remedial measures.
HSBC Group has also undertaken a comprehensive overhaul of its structure, controls, and procedures. A number of these improvements is included in the DPA. Among other measures, HSBC Group has:
  • simplified its control structure, allowing the Group to manage risks worldwide more effectively;
  • elevated the role of Group Compliance and given it direct oversight over every compliance officer globally, so that both accountability and escalation now flow directly to and from HSBC Group Compliance;
  • created the new role of Head of Group Financial Crime Compliance and Group Money Laundering Reporting Officer, who will help to establish a Global Financial Intelligence Unit;
  • made other new senior hires with extensive experience handling relevant international legal and regulatory issues, including a new Chief Legal Officer and a new Global General Counsel for Litigation and Regulatory Affairs;
  • adopted a set of guidelines limiting business in those countries that pose a high financial crime risk;
  • issued a new global sanctions policy using a more extensive and consistent set of lists to screen all cross-border payments;
  • commenced a review of all Know Your Customer files across the entire Group - the first phase of this remediation will cost an estimated US$700m over five years, and
  • undertaken to implement single global standards shaped by the highest or most effective anti-money laundering standards available in any location where the HSBC Group operates.
Over the five-year term of the agreement with the Department of Justice, an independent monitor will evaluate HSBC's progress in fully implementing these and other measures it recommends, and will produce regular assessments of the effectiveness of HSBC's compliance function.

The agreement notes that HSBC Bank USA and HSBC Group have "provided valuable assistance to law enforcement." HSBC conducted multiple extensive internal investigations, voluntarily made employees available for interviews, and collected, analysed and organised voluminous evidence and information.

HSBC is firmly committed to putting in place robust standards that will help promote the integrity of the global financial system. 
Media enquiries to:
London 
Patrick Humphris
+44 (0)20 7992 1631
patrick.humphris@hsbc.com

New York
Robert A Sherman
+1 212 525 6901
robert.a.sherman@us.hsbc.com

Hong Kong 
Gareth Hewett
+ 852 2822 4929
garethhewett@hsbc.com.hk

Investor Relations enquiries to:
London
Guy Lewis
+44 (0)20 7992 1938
guylewis@hsbc.com

Robert Quinlan
+44 (0)20 7991 3643
robert.quinlan@hsbc.com

Hong Kong
Hugh Pye
+852 2822 4908
hugh.pye@hsbc.com


Footnote:
1 These include: (i) a deferred prosecution agreement with the New York County District Attorney's Office; (ii) consent orders with the Board of Governors of the U.S. Federal Reserve System; (iii) an agreement with the U.S. Department of the Treasury's Office of Foreign Assets Control; (iv) agreements and consent orders with the Office of the Comptroller of the Currency (the "OCC"); and (v) a consent order with the Financial Crimes Enforcement Network ("FinCEN") of the Treasury Department. 
Notes to editors:
The websites of the agencies involved in these agreements are as follows:
US Department of Justice: www.justice.gov/UK Financial Services Authority: www.fsa.gov.uk/
The New York County District Attorney's Office: www.manhattanda.org/
The Board of Governors of the US Federal Reserve System: www.federalreserve.gov/ US Department of the Treasury's Office of Foreign Assets Control: www.treasury.gov/ofac
Office of the Comptroller of the Currency: www.occ.gov/
Financial Crimes Enforcement Network of the Treasury Department: www.fincen.gov/

The HSBC Group
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,900 offices in over 80 countries and territories in Europe, the Asia-Pacific region, North and Latin America, the Middle East and Africa. With assets of US$2,721bn at 30 September 2012, the HSBC Group is one of the world's largest banking and financial services organisations."



Monday, December 10, 2012

Christmas Windfall For Barnsley Building Society

Members of Barnsley Building Society are in for an unexpected Christmas present as they will receive up to £5,000, after the building society recovered money tied up in failed Icelandic banks.

Barnsley was forced to merge with Yorkshire Building Society after £10M it had deposited with two Icelandic banks, Kaupthing Singer & Friedlander and Heritable Bank, was feared lost.

However, as per the Telegraph, it promised that any money it recovered from the banks' administrators would be returned to its savers and borrowers. Approximately £8.8M has been recovered.

Barnsley's savers will receive 3.31% of their total savings balance held with the society on October 21 2008, subject to a minimum of £25 and a maximum of £5,000. Borrowers will get a flat payment of £250, although all payments will be taxed at source. Approximately 28,000 account holders will benefit.

To qualify for the windfalls, savers and borrowers are required to have maintained continuous membership between October 21 2008 and October 21 this year with one or more of the brands in the Yorkshire Group, which also includes Chelsea and Norwich & Peterborough building societies and Egg.

The payments are expected to be completed by 21 December, just in time for Christmas.

Greece Extends Bond Buyback Deadline

Friday was the alleged "deadline" for the Greek bond buyback. However, as I stated at the time:
"Note the use of the word "expected". Doubtless if insufficient bondholders have come forward the deadline will be extended."
Unsurprisingly, the deadline has indeed been extended to noon GMT Tuesday, in the hopes of selling another Euro3-4BN of bonds.

Friday, December 07, 2012

D Day For Greek Bondholders

Today is D Day for those who wish to sell their Greek bonds.

As per the Hellenic Republic Ministry of Finance:
"The invitation is expected to expire at 5:00pm, London time..The expected settlement date of the invitation is 17 December 2012."
Note the use of the word "expected". Doubtless if insufficient bondholders have come forward the deadline will be extended.

Thursday, December 06, 2012

Eurozone Languishes In Recession

EU GDP figures have confirmed that the Eurozone is languishing in recession for the second time in four years.

GDP in the Eurozone fell by 0.1% in Q3, having fallen 0.2% in the previous three months.

Meanwhile in Greece the unemployment rate in September rose to 26%, up from 25.3% in August (in September 2011 it was 18.9%).

Not all was doom and gloom, Italy continues to provide "comic relief" in the shape of ex Prime Minster Berlusconi's antics. He is now openly speculating that may well stand for Prime Minister for the fifth time in next March's elections.
 
Market rumours also abound that Mario Monti will resign as Prime Minister today.

Well done Italy for trying to provide a much need distraction form the financial chaos, sadly though this merely adds to it!

Wednesday, December 05, 2012

Live Coverage of George Osborne's Autumn Statement

Greece Most Corrupt EU Country

The Corruption Perception Index 2012 has, unsurprisingly, ranked Greece as being perceived as being the most corrupt EU country out of the 27 member states.

Greece's global ranking also took a knock, and has fallen from 80th in 2011 to 94th in 2012.

Osborne Rearranges The Deckchairs On The Titanic



George Osborne is set to deliver his Autumn Statement 2012 today at 12.30pm, in which he will rearrange the deckchairs.

Tuesday, December 04, 2012

Boris Johnson's Wise Words On The Euro

Boris Johnson has given a most concise and effective summary of the Euro:
"It will limp on with sclerotic growth rates continuing to immiserate loads of uncompetitive parts of the eurozone and it will be a bad business. It will eventually blow up but I wouldn't care to bet when."
It would appear that Angela Merkel agrees with him:
"I could take it easy and say the euro is saved. But I am very cautious about saying the worst of the crisis is over." 
In fact it would appear that Merkel believes that things are going to become worse.

Monday, December 03, 2012

Spain Requests Bailout That Is Not A Bailout

Spain has requested a €39.5bn bailout for its banks, which is likely to be approved later today at a meeting of eurozone finance ministers in Brussels.

However, this is not a "bailout" in the Greek sense of the word. Spain will use this money only for its banks, it will not use it to prop up its ailing economy.

The request for a full bailout, in the Greek sense of the word, has yet to come. However, be patient it will come!

Banks Trouser Taxpayers' Money

The Telegraph reports that banks drew down £4.36BN from the Bank of England's Funding for Lending Scheme in its first two months and increased net lending by £496M.

The scheme does not help firms access credit (it should be noted that banks are in fact tightening their lending criteria), it only makes credit cheaper to those successful in their loan applications.