Probably best to just get on and crowd-source the analysis and commentary on this one:
Yeah, so “stupid Libor emails” is now an established sub-genre in banker literature.
Though the funny thing about Wednesday’s RBS revelations is that attempts at manipulation generally, at least at the start, weren’t written down. The whole problem was that people trading rates were sat right next to people in charge of submitting rates for Libor. That’s due to the “Short-Term Markets Desk”, RBS management’s October 2006 bid to “facilitate more communication”. Oops. Read more
Presenting the CFTC order against RBS, as part of the bank’s $325m settlement with the regulator over allegations of “hundreds” of attempts at manipulation of Libor (notably Yen Libor):
It’s not exactly surprising that US Libor prosecutors are pushing for criminal charges against one of Royal Bank of Scotland’s subsidiaries.
As we keep hearing, RBS’s level of involvement in the rate-rigging scandal is somewhere between Barclays, which got a nonprosecution agreement and paid $460m in penalties, and UBS, which paid $1.6bn and had to agree to having a Japanese subsidiary plead guilty to criminal charges. Read more
Soon, it appears, we’ll have another big Libor settlement to write about — this one from RBS. Both the FT and the WSJ are tipping the fines to be in the order of £500m. The FT says it could be more than £400m to the US authorities and about £100m to the FSA; the WSJ doesn’t mention how it might breakdown between the US and UK, but says the settlement “could be completed within the next two weeks”.
Also, yikes! RBS (or specifically, an Asian unit of RBS) might have to plead guilty to some criminal charges if the US prosecutors have their way, says the WSJ.
Shockingly RBS does not like this. But… RBS may not have any choice: Read more
The research department at Investec offer a notably clear illustration of any given analyst’s recommendation record on any particular stock.
Let’s look at Ian Gordon’s record on Lloyds and RBS. Click to enlarge each image. Read more
Here’s another addition to the canon of Libor-related conversations.
A former RBS employee is suing the bank for wrongful dismissal after the bank fired him last year for allegedly participating in Libor-fixing. Tan Chi Min, the ex-employee in question, was the bank’s Singapore-based head of delta trading for Asia. Read more
Almost four years after the Royal Bank of Scotland was part-nationalised, the UK government is still struggling to figure out what to do with it. Until recently the discussion was focused on when and how to sell the state’s 82 per cent stake back to the market. Now the focus is on fully nationalising it. Go figure.
From Thursday’s FT: Read more
Aka: an attempt to fill in the missing pieces of the underpants gnomes’ collateral swap, details of which were revealed last week.
First a reminder of how this will work, from Claire Jones over at Money Supply: Read more
“The other effect of the euro-area crisis has been to create a large black cloud of uncertainty hanging over not only the euro area but our economy too, and indeed the world economy as a whole.”
Here’s the speech. Read more
Okay, it’s a cliche to call Coutts & Co “HM Bank,” although Her Majesty does indeed bank there.
Which makes this instant news: Read more
Stephen Hester, RBS chief executive, has said that larger losses posted on Thursday could in fact be interpreted as a good thing, showing the rapid removal of the bank’s legacy assets, the FT reports. Mr Hester added that the bank was “more than three-quarters of the way” through cleaning up its balance sheet, which has shrunk from £1.6tn to £977bn in three years, compared with a target of £1.2tn. But RBS has also been swept up in a tide of debt crisis losses at European banks, including the biggest income hit for Credit Agricole since it went public in 2001, the WSJ adds. Read more
Breaking pre-market news on Thursday,
- RBS posts £2bn loss, pays £390m in bonuses – statement. Read more
Royal Bank of Scotland’s insurance arm has taken a step closer to an expected multi-billion pound flotation by dropping the name of its parent in a rebranding exercise, says the FT. The business has renamed itself Direct Line Group, after one of its best known brands in a stable that also includes Churchill, Privilege and car breakdown service Green Flag. The name change is another sign that parts of RBS are distancing themselves from the bank’s brand. Coutts dropped the Royal Bank of Scotland name from its international businesses in November as part of its attempt to revitalise one of the oldest brands in private banking. Read more
Tax authorities have arrested a number of investment bankers at Royal Bank of Scotland and other banks in an inquiry into alleged fraud, reports the FT. Investigators arrested four current and one former RBS employee at their homes, as well as several bankers at two other banks, on allegations that they used investments in film productions to evade taxes. HM Revenue & Customs, which is conducting the investigation, on Sunday confirmed the raids, which happened on Wednesday, without naming the banks involved. “This investigation relates to the actions of the people arrested in relation to their own financial affairs and is not connected to the business activities of the banks,” the tax authority stressed. RBS said: “We will co-operate with the authority in any way that can be helpful to them.” Read more
RBS is still in its loss making phase (1) which inevitably gives us communication challenges. The losses ironically are a measure of our recovery success…
– Stephen Hester’s memo to staff on Tuesday. Read more
Stephen Hester has revealed that the dramatic restructuring of Royal Bank of Scotland has cost £38bn in a rallying memo to staff days after the embattled chief executive waived a £1m bonus, the FT reports. Urging employees to “prove the critics wrong”, Mr Hester provided a stark reminder of the difficult task he faces in cleaning up the bank after its £45bn government bail-out three years ago. The £38bn charge includes the loan losses, disposal costs and restructuring charges the bank has taken since its near collapse in 2009. People close to RBS estimated that the final restructuring bill could surpass the price paid for the government’s 83 per cent stake. Mr Hester highlighted the cost for the first time as he sought to boost morale among staff following the recent bonus dispute. “There is no doubt that our position in the spotlight makes the job harder,” he wrote in an email. “But the best way to deal with it is to prove the critics wrong.” Read more
Stephen Hester has revealed that the dramatic restructuring of Royal Bank of Scotland has cost £38bn in a rallying memo to staff days after the embattled chief executive waived a £1m bonus, reports the FT. Urging employees to “prove the critics wrong”, Mr Hester provided a stark reminder of the difficult task he faces in cleaning up the bank after its £45bn government bail-out three years ago. The £38bn charge includes the loan losses, disposal costs and restructuring charges the bank has taken since its near collapse in 2009. People close to RBS estimated that the final restructuring bill could surpass the price paid for the government’s 83 per cent stake. Mr Hester highlighted the cost for the first time as he sought to boost morale among staff following the recent bonus dispute. Read more
Some will see this as further evidence that the Daily Mail runs the country….
The Forfeiture Committee has reached a decision. Read more
RBS is scrambling to overhaul its pay systems to head off a repeat of its executive pay fiasco, says the FT. Sir Philip Hampton, RBS’s chairman, and Penny Hughes, head of the board’s remuneration committee, are in talks over how pay and bonuses are set. “We need to start wrestling with how we stop this happening again next year,” said a person close to the board. But the political maelstrom around the bankers’ bonuses shows little sign of abating with Labour determined to keep up the pressure by pressing ahead with a debate on February 7 calling for a reintroduction of a tax on such awards. The newspaper also says Barclays will provide much more granular detail on remuneration in this year’s pay report, expected to be released in March, citing people familiar with the plan. Read more
Can’t beat a Sun headline to round off a national bonus neurosis:
RBS chief executive Stephen Hester agreed on Sunday night to give up a bonus worth almost £1m, bowing to an intense media and political campaign and averting what threatened to be a humiliation in the House of Commons, the FT says. Mr Hester had been urged by the RBS board to defy his critics, but he finally buckled after Ed Miliband, Labour leader, announced his party would stage a Commons vote denouncing the bonus. “It was the final straw,” admitted one ally of the bank chief. The vote threatened to be a harrowing occasion for Mr Hester, with MPs from all sides expected to line up to criticise him and to demand that he give up the £963,000 bonus, awarded in spite of RBS’s share price almost halving last year. Read more
RBS has sought to defuse mounting political and public pressure in awarding chief executive Stephen Hester a bonus of just under £1m, less than half the amount he received for 2010, reports the FT. The controversy over the size of Mr Hester’s payout had reached fever pitch in recent weeks, as the state-owned bank announced plans to slash more than 4,000 jobs and shut down large chunks of its investment banking business following dismal results. But the political furore may only just be beginning. Jeremy Browne, a Liberal Democrat foreign office minister, last night reflected public anger on BBC’s Question Time when he said Mr Hester had a “moral duty” to waive the bonus, in a sign of coalition splits on the issue. As with all share awards, the potential value of the award will fluctuate with the bank’s share price. RBS shares need rise only slightly to push the value of the award over Mr Cameron’s supposed line in the sand of £1m, pay experts noted. Mr Hester’s total remuneration for the year could be worth £7m, the Telegraph says. Read more
David Cameron has insisted that RBS chief executive Stephen Hester should receive a bonus of no more than £1m this year – half of last year’s award – as the UK prime minister attempts to tighten his clamp down on executive pay, says the FT. Stephen Hester’s pay, an annual lightning rod for public and political criticism after the bank received a £45bn state bail-out during the crisis, has become a crucial litmus test for the government’s appetite for a public showdown over pay in recent weeks. The newspaper cites unnamed officials as saying a tough message will be delivered to RBS’ remuneration committee on Wednesday by the UKFI, which holds the taxpayers’ stake in RBS. Read more
Serving at the ECB’s pleasure: billions, if not trillions, of euro-denominated assets pledged as collateral for three years of funding.
And while it’s banged up by being pledged at the central bank… it is, naturally, not circulating through the market. Read more
Italy’s banks, led by UniCredit, were the biggest users of the special three-year funding mechanism launched by the European Central Bank in December, according to a new research report, writes the FT. UniCredit – Italy’s biggest bank by assets – took €12.5bn of three-year money under the facility, closely followed by Intesa Sanpaolo, with €12bn, and Monte dei Paschi di Siena, which took €10bn, the report from analysts at Morgan Stanley says. Aside from Italian banks, other significant users of the ECB’s three-year facility included Royal Bank of Scotland, which tapped it for €5bn, via its Dutch subsidiary – equivalent to a quarter of its 2012 funding needs, according to Morgan Stanley, and Spanish banks. FT Alphaville has the full table of Morgan Stanley’s estimates. Read more
David Cameron’s pledge to curb executive pay and stop “rewards for failure” is set to face its biggest test, the FT says, as Royal Bank of Scotland prepares to offer a bonus of more than £1m to its chief executive, even though the state-controlled bank’s share price has almost halved in a year. Sir Philip Hampton, chairman of RBS, and the bank’s board are determined to face down political pressure and will press ahead with a bonus payment to Stephen Hester likely to be in the range of £1.3m-£1.5m on top of a salary of £1.2m. Final figures will be settled next month. Meanwhile, the FT reports separately, the investment industry is still pulling together a diplomatic response to Mr Cameron. But privately investors are dismayed by the idea of a binding vote, because as one unnamed insider at an investment body said “They don’t want new powers that mean they will be tarred with more failure [to hold down executive pay].” Read more
Breaking pre-market news on Tuesday,
- RBS sells RBS Aviation Capital - statement. Read more
RBS has finalised the sale of its aircraft leasing business to one of Japan’s largest banks for $7.3bn, reports the FT, in the biggest single disposal since the state-backed bank’s government bail-out in 2008. The deal with Sumitomo Mitsui Financial Group, was struck late on Monday after months of talks with a number of interested buyers, including China Development Bank, the state-owned lender and Wells Fargo, the US bank. The deal with Sumitomo Mitsui Financial Group, was struck late on Monday after months of talks with a number of interested buyers, including China Development Bank, the state-owned lender and Wells Fargo, the US bank. The business attracted strong interest from international banks and private equity buyers as it is expected to provide long-term stable returns as long as the owner can meet the funding requirements. Sumitomo is thought to have offered one of the highest prices and convinced RBS that it would be best placed to complete the transaction, according to people familiar with the auction. Read more
Royal Bank of Scotland last night finalised the sale of its aircraft leasing business to one of Japan’s biggest banks for $7.3bn in the biggest single disposal since the state-backed bank’s government bail-out in 2008, the FT reports. The deal with Sumitomo Mitsui Financial Group, was struck late on Monday after months of talks with a number of interested buyers, including China Development Bank, the state-owned lender and Wells Fargo, the US bank. The business attracted strong interest from international banks and private equity buyers as it is expected to provide long-term stable returns as long as the owner can meet the funding requirements. Sumitomo is thought to have offered one of the highest prices and convinced RBS that it would be best placed to complete the transaction, according to people familiar with the auction. Read more