The Group faces legal, competition and regulatory challenges, many of which are beyond the Group’s control. The extent of the impact on the Group of these matters cannot always be predicted but may materially impact the Group’s results of operations, financial results, condition and prospects…
There’s not much that’s actually new in a base prospectus published by Barclays on Thursday, covering a future $60bn debt programme. But what the document does offer is a compendium of all the litigation and regulatory action the bank faces around the world. Read more
Given the repeated hints from across the pond that BNP Paribas is going to get clobbered with a $10bn fine by the US authorities for alleged sanction busting, etc, we should not be too surprised that the European banks team at Credit Suisse has almost doubled its estimate of continent-wide litigation costs. The CS base case has been hiked from the $58bn guessed at in February last year to $104bn now.
To put that number in context, $104bn is roughly half the losses registered during the subprime crisis. And CS reckons some $39bn has yet to be provided for, so litigation risk is inevitably going to be a drag on growth and capital return for the foreseeable…
We’ll share the CS charts below, but first a quick glance at the main areas of potential pain: Read more
It’s been a little while since we had a nice Libor risk estimate so we were delighted when Morgan Stanley’s attempt dropped into our inbox. MS take the Libor risk in three chunks:
1) Regulatory fines (an estimated median 7 to 12 per cent hit to 2012 EPS). From MS (all with our emphasis): Read more
US Bancorp has sued Bank of America over a $1.75bn mortgage pool to which the Midwestern lender served as trustee, citing a “startling rate” of defaults in loans underwritten by Countrywide, the FT reports. The suit carries the now-familiar demand that BofA buy back the loans. Adding to BofA’s legal predicament, the bank’s lawyers knew that AIG was prepared to sue it for more than $10bn seven months before the suit went public, Reuters says. Legal analysts were divided on whether BofA’s litigation disclosure was sufficient, but the case illustrates investors’s fears that the legal risks facing BofA remain largely unknown. However, a judge has dismissed claims brought by Deutsche Bank and BNP Paribas against BofA for losses on asset-backed notes, Bloomberg reports.
For the commute home, or while marking your over/under on tomorrow’s payrolls number,
- Banks’ litigation losses in tabular form. Read more
US banks are coming under increasing pressure to set aside extra money for mortgage-related expenses as questions surrounding their foreclosure practices spark broader concerns over how these loans are sold, the FT reports. As banks, including Bank of America, Wells Fargo and Citigroup, report earnings this week, mortgage-related expenses are expected to be a hot topic on investor conference calls. JPMorgan Chase last week increased its reserves for mortgage repurchases by $1bn to $3bn. The bank also set aside an additional $1.3bn to cover mortgage-related litigation. Shaun Donovan, US housing secretary, said on Sunday it was “shameful” that financial institutions might have made the housing crisis worse by improperly processing foreclosures, reported Reuters. Mr Donovan wrote in a column on the Huffington Post website that a comprehensive review of the foreclosure crisis was under way and that the Obama administration would respond with “the full force of law where problems are found”.
Preet Bharara, US attorney for the southern district of New York, will unveil another weapon against Wall Street fraud on Thursday, according to the FT, with renewed emphasis on civil litigation alongside existing criminal actions. Mr Bharara will announce the appointment of Heidi Wendel, a former New York state deputy attorney-general, to head a six-strong unit focused on taking civil enforcement action against fraud. Her remit covers “every single type of fraud”, including complex financial misconduct, mortgage deals, abuse of the government’s troubled asset relief programme and healthcare scams, Mr Bharara said.
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Have you been burnt by by Bernard Madoff? Suddenly can’t afford your valet? Has your kid’s college fund disappeared along with your Centurion card? Never fear, the hedge funds are here to help. Read more