Banks Mis-sell 90% of Rate Swaps

In an unsurprising revelation it appears that banks have yet again been fingered for selling another "dodgy" financial product that was totally unsuitable for the hapless customers onto whom it was foisted.

This time the offending products were complex interest rate derivatives, sold to SME's.

The FSA is of the view that around 90% or more of these products, which did not comply with one or more regulatory requirements, were mis-sold.

Seemingly the banks structured these products in such a way that escape from them was prohibitively expensive.

Martin Wheatley, chief executive designate of the Financial Conduct Authority, accused lenders of selling businesses “absurdly complex products” and said many customers could now expect compensation from their banks.

Mr Wheatley is quoted in the Telegraph:

“This marks significant progress in our review of these products. We believe that our work will ensure a fair and reasonable outcome for small and unsophisticated businesses.”

Lenders have seemingly set aside over £700M against potential swap mis-selling claims, with Barclays making the largest provision of £450M. Whilst it is expected that the provisions will double, the final cost may in fact hit £10BN.

Happy Bonus Season!

As a bleak and gloomy January draws to a close, the banksters are looking forward to awarding themselves some fat bonuses for all their "hard work" last year.

Sadly for the banksters not everyone is happy at the prospect of their self awarded largess. Step forward Unite which has demanded a meeting with UK Financial Investments Ltd (UKFI), which manages the government's (ie the taxpayer's) investments in RBS, Lloyds and UK Asset Resolution, over RBS's expected bonus payout of £250M.

As if things were not already bad enough for RBS, the Wall Street Journal reports US authorities are pushing for a settlement of LIBOR allegations that would result in the bank not only paying a fine of £500M, but also pleading guilty to criminal charges. Barclays and UBS got away with criminal charges, because they co-operated with the authorities.

RBS executives don't want to plead guilty because they fear that it will cause clients to cut off activity with the bank, and that it could increase exposure to ever more litigation.

Maybe then they should hold back on paying out a bonuses this year, lest the money be needed to pay for ongoing litigation?

The Great Green Loan Rip Off

The government has announced today, with all the usual fanfare and razzmatazz, that those wishing to improve the energy efficiency of their homes will be able to borrow money to buy energy efficient boilers and to insulate their homes etc.

However, what the government doesn't tell you is that the interest rates charged on these "green loans" will be relatively high, and that the "green assessors" (doubtless trained at taxpayer expense) who will visit your home to asses its "green needs" will charge for their services.

In other words it is a rip off!

UK Economy Flatlines

The UK economy shrank by 0.3% in the final three months of last year, and posted zero growth for the year as a whole.

Many now expect the UK to go into a triple dip recession.

Conclusions of Forthcoming EU Summit

Here, courtesy of the FT, are the draft guidelines for the conclusions of the forthcoming European Council summit to be held on 7th and 8th of February.

At the end of the document, to be added later, is the Multiannual Financial Framework (MFF) ie the European budget!

Diamond Geezer In The News Again

The Telegraph reports that some of Barclays’ most senior executives, including former chief executives Bob Diamond and John Varley and current head of investment banking Rich Ricci, are among 104 people who unsuccessfully attempted to keep their names private ahead of the UK’s first trial related to the manipulation of Libor.

The list of 104 individuals comes from a case brought by Guardian Care Homes, which is seeking about £38M in damages from Barclays over interest rate swaps it claims it was mis-sold by the bank.

Guardian Care Homes says that the swap product it was sold was tied to Libor, which it argues was set dishonestly.

Barclays was ordered to give lawyers working for Guardian Care Homes the identities and emails of staff that it passed to regulators investigating the manipulation of the key interest rate.

Davos 2013 - The Grischa Hotel

The Grischa Hotel, where the "great and the good" of the world of finance are staying in Davos this year during the World Economic Forum (WEF).

Davos Live

Davos 2013

Davos is hosting the annual gathering of the "great and good" in the world of finance, more commonly known as the "World Economic Forum" (WEF).

It seems that all and sundry are worried about David Cameron's promise of an "in/out" referendum on Europe post the 2015 election if the Tories win.

They should not worry, this is political posturing designed to put UKIP's nose out of joint and to buy Cameron more time wrt his EU discussions.

There is absolutely no guarantee that the Tories will win the next election, nor that Cameron will be leading them; hence the "promise" of a referendum is a meaningless as the oft repeated assurances emanating from Eurozone finance minsters that the "crisis" is over.

E.ON's 9% Price Hike

As the country is blanketed in snow and the mercury plummets what better day for E.ON's 9% price hike (announced in December) to come into effect?

Money Laundering In The Eurozone

Cyprus has put together a presentation to convince the Eurozone that it is not a haven for money laundering.

One of the slides shows how Cyprus and other Eurozone countries score wrt complying with recommendations on 49 areas evaluated by the Organisation of Economic Co-operation and Development’s financial action task force.

The highest ranking country for non compliance was Greece, scoring 13.

Barclays Discovers Ethics

Barclays discovers that ethics is not a county near London!

Blockbuster

Blockbuster has gone the way of HMV and Jessops, and has gone into administration.

Deloittes will act as administrators.

Lee Manning, joint administrator at Deloitte, said:

“In recent years Blockbuster has faced increased competition from, internet based providers along with the shift to digital streaming of movies and games.

We are working closely with suppliers and employees to ensure the business has the best possible platform to secure a sale, preserve jobs and generate as much value as possible for all creditors.

The core of the business is still profitable and we will continue to trade as normal in both retail and rental whilst we seek a buyer for all or parts of the business as a going concern. During this time gift cards and credit acquired through Blockbuster’s trade-in scheme will be honoured towards the purchase of goods.”

 Blockbuster employs over 4,000 people.

Bundesbank Repatriates Gold Bullion

The Bundesbank is to repatriate gold reserves held abroad in order to tighten control and combat future currency crises. It will repatriate a large percentage of its holdings from New York and all of its bullion from Paris.

This move signals the demise of the the Dollar as a reserve currency (as the gold stored in the Fed can be pledged to shore up the Dollar), and the resurgence of a quasi gold standard.

The lesson is clear, if you invest in gold do not rely on mere paper certificates to validate your holding.

Why LIBOR Matters

As per Max Keiser:

"LIBOR and other mrk riggers have just dropped UK 10-yrborrowing costs below 2%. Each £ saved in interest loses 2 £'s from pensions/savers."

In other words the LIBOR riggers profited at the expense of the rest of us!