Friday, June 29, 2012

The Stench of Corruption and Greed Overwhelms Britain's Financial Services Industry

Britain's tarnished financial services industry and banking sector seems intent on bringing about its own self destruction. Over the years there has been a litany of scandals eg:

- endowment mis-selling
- subprime mortgages
- PPI mis-selling
- LIBOR fraud
- NatWest computer meltdown
- Northern Rock, RBS etc etc to name but a few

However, it seems that the industry is determined to add to its list of self inflicted shame and dishonour. Step forward the usual suspects ie; Barclays (a familiar name), HSBC, Lloyds and RBS which have all admitted to mis-selling interest rate hedges to small and medium sized business customers.

Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland have all agreed to immediately halt the sale of complex interest rate hedges to smaller businesses and have pledged to compensate potentially thousands of customers who have been screwed by them.

According to the Telegraph the FSA is of the view that about 28,000 businesses had been sold interest rate hedges.

Another nail in the coffin of the tarnished reputation of the UK's financial services industry.

The financial services industry is now fully immersed in its own self created shit, and quite clearly is on the verge of implosion.

Diamonds Aren't Forever!

Despite saying that he won't resign, the smart money is on Bob Diamond resigning from Barclays within a matter of days.

Thursday, June 28, 2012

Question For The British Bankers Association



Why are you only now "shocked" at the revelations about LIBOR being rigged, when over three years ago Zerohedge wrote the following?
"Everyone knows there is something very screwy about LIBOR...."
You could have asked your board to investigate at the time, the board is after all rather well placed to know what is going on with LIBOR as it contains senior executives from banks such as Barclays.

Barclays Shares Collapse

Barclays shares are now down 10%.

This is the largest fall in nearly a year.

I wonder where bottom is?

Osborne's Statement on Barclays Fraud

I see that the Treasury state that George Osborne is to make a statement on the Barclays fraudulent manipulation of LIBOR:
"
The Chancellor will be making a statement to Parliament at around 1215 about the FSA investigation into bank borrowing rates, known as LIBOR"
You will observe that they have politely avoided using the word "fraud".

Whilst the avoidance of the word "fraud" may suit the sensibilities of those in Whitehall I suspect that, once people who owe Barclays money (eg mortgages, personal loans etc) wake up to the fact that the rates that they paid were based on the fraudulent manipulation of LIBOR, the word "fraud" will be liberally peppered across the myriad of class action suits that are bound to arise.

Wednesday, June 27, 2012

Barclays Fined $450M for Libor Manipulation - Dude I Owe You Big Time!

Barclays will pay at least $450M to US and British authorities to settle a probe into the manipulation of Libor.

Page 15 FSA Report:
"On 26 October 2006, an external trader made a request for a lower three month US dollar LIBOR submission. The external trader stated in an email to Trader G at Barclays 

“If it comes in unchanged I’m a dead man”. Trader G responded that he would “have a chat”. Barclays’ submission on that day for three month US dollar LIBOR was half a basis point lower than the day before, rather than being unchanged. 

The external trader thanked Trader G for Barclays’ LIBOR submission later that day: 

“Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger”.

Libor is the benchmark for about $360 trillion worth of financial contracts worldwide. 

The fine of course may be but the tip of the iceberg, if victims of this manipulation (eg mortgage holders) were to sue Barclays via a class action.

Barclays Rigs Libor

Advice from Zerohedge to anyone with a Barclays variable rate mortgage between 2005 and now:
"Our advice to anyone who had an adjustable rate mortgage in the period between 2005 and today: sue the living feces out of Barclays, and all other banks who crawl out of the woodwork with purported settlements. 

Because due to their undisputed mark manipulation, it is absolutely safe to say that ARMs, which rely on Libor for interest rate formation, were grossly manipulated by the same idiot traders who left written evidence of their manipulation year after year. 

Now it is their turn to pay."

Greece Will Run Out of Money By Mid July




Source @Pawelmorski

Question For NatWest and Stephen Hester

Where's my money?

Tuesday, June 26, 2012

Greek Government Disintegrates

Having lost its Finance Minister the Greek government, of less than a week, has now lost its Deputy Minister for Shipping (Vernikos) who has resigned this afternoon.

Greece Names New Finance Minister




With the resignation of Vassilis Rapanos the yet to be sworn in Greek Finance Minister, from his hospital bed on Monday, Greece's new Finance Minister has been named as Yannis Stournaras (the man who led Greece into the Euro using fraudulent data).

It is assumed that he will be able to remain in office at least long enough to be sworn in, before being rushed to hospital.

Above, in case you are wondering, is a photo of the Athens Finance Ministry (courtesy of ZDF).

NatWest's Death March To Self Destruction II

Day 8 of NatWest's ongoing death march, and NatWest sent the following email to their hapless customers this morning at around 07:48:
"Dear ****,

We know that our current technical issues may still be impacting a number of our customers as we work to clear the backlog.

To make it easier for our customers experiencing difficulties accessing cash we have made the following arrangements. All our current account customers who have an RBS, NatWest or Mint credit card in good order can now:

* Withdraw up to an additional £100 over their limit on their credit card, with over-limit fees or charges automatically waived or refunded


* For Cash withdrawals on their card, cash advance fees as well as one month's worth of interest on the transaction will be waived or refunded
For all current account customers we will:
*
Automatically waive or refund overdraft fees and charges on current accounts for customers who have been impacted
We are making these commitments today and there is no requirement for any customer to take further action to benefit from these changes.

We appreciate this has caused an unacceptable level of inconvenience, and to help further we are again extending opening hours in over 900 NatWest branches from 8am until 7pm today.

For further support, please call us on either 0161 931 9959, 08457 77 77 66 or 0800 656 9639. Alternatively, for the latest information and answers to common questions please visit natwest.com

Yours sincerely,


Chris Popple
Managing Director, Retail Banking"
On the NatWest site Stephen Hester (CEO of RBS) is expecting the problems to last all week, as branches are going to remain open longer than normal all week:
"The problems of the past few days have caused disruption and inconvenience for our customers as well as for many customers of other banks. 

I am very sorry for the difficulties people are experiencing. Our customers rely on us day in and day out to get things right, and on this occasion we have let them down. This should not have happened.

Right now my top priority, and the priority of the entire RBS Group, is to fix these problems and put things right for our customers. 

This is taking time, but I want to reassure people that we are working around the clock to resolve these problems as quickly as we are able.

I also want to be clear that where our customers are facing hardship or difficulty we can and will help them. Our staff have already helped thousands of customers to access cash and we will continue to provide this service on a 24 hour basis while we work to resolve the problems. 

I also want to reassure customers that no one will be left permanently out of pocket as a result of this, and again, they should contact us directly about this.

We have doubled the usual number of staff in our call centres, and for the first time ever we will open 1,200 branches across the country on a Sunday from 9am to 12pm. We are also extending opening hours in over 1,000 branches on Monday 25th June from 8am to 7pm, and on Tuesday 26th June to Friday 29th June from 8am to 6pm.

Once again I am very sorry for the inconvenience."
Customers of NatWest should be warned that various criminals are now trying to take advantage of the chaos, and are sending out phishing emails.

As to what caused the glitch rumours abound that it was caused by software upgrade implemented by an outsourced IT function in India, NatWest are currently denying this. At some stage however, they will have to identify and explain exactly what when wrong and why it went wrong.

Monday, June 25, 2012

NatWest's Death March To Self Destruction

As we enter day 7 of NatWest's technical meltdown and its death march to self destruction, the hapless and hopeless bank has warned its 17 million customers that the problems may well last for a few more days.

Neither the customers nor the financial regulators are particularity impressed with NatWest's handling of this. Andrew Tyrie, the chairman of the Commons Treasury select committee, is quoted by the Telegraph:
 “It seems scarcely credible that something like this, which has caused problems for hundreds of thousands of people, could have gone on for so long. No doubt the committee will want a full explanation.” 
Still there is good news for the shareholders. The glitch has meant that the capital reserves of NatWest have been boosted and, even better, the bank made some short term profits by providing customers with an 0845 number (ie one that costs the customers money) to ring to complain (NatWest have relented and now provide a free number and will reimburse the costs of the calls).

All in all a shambles by anyone's standards!

Sunday, June 24, 2012

NatWest Apologises

NatWest sent the following email to its customers this morning at 03:36:
"Dear *****,

We apologise to all of our customers who have been affected by our current technical issues. These resulted in money credited to customers accounts overnight not appearing in their balances as it should. This problem is strictly of a technical nature, we have fixed the initial problem and our priority has been to work round the clock to sort the backlog as soon as possible.


We appreciate this has caused an unacceptable level of inconvenience, and to help you we have over 900 of our branches extending their opening hours today until 6pm. Branches will also be open on Sunday 24th June from 9am to 12noon. Staff in our branches are ready and available to answer any customer questions and help with emergency needs.

Or, please call us at 08457 888 444.

Alternatively, for the latest information and answers to common questions please visit natwest.com

Yours sincerely,



Chris Popple
Managing Director Digital"
Stephen Hester (RBS CEO) has also issued a public apology on the NatWest website:
"Message to Customers from Stephen Hester RBS Group Chief Executive The problems of the past few days have caused disruption and inconvenience for our customers as well as for many customers of other banks. 

I am very sorry for the difficulties people are experiencing. Our customers rely on us day in and day out to get things right, and on this occasion we have let them down. This should not have happened.

Right now my top priority, and the priority of the entire RBS Group, is to fix these problems and put things right for our customers. 

This is taking time, but I want to reassure people that we are working around the clock to resolve these problems as quickly as we are able.

I also want to be clear that where our customers are facing hardship or difficulty we can and will help them. Our staff have already helped thousands of customers to access cash and we will continue to provide this service on a 24 hour basis while we work to resolve the problems. 

I also want to reassure customers that no one will be left permanently out of pocket as a result of this, and again, they should contact us directly about this.

We have doubled the usual number of staff in our call centres, and for the first time ever we will open 1,200 branches across the country on a Sunday from 9am to 12pm. 

Once again I am very sorry for the inconvenience."
There are still problems with some accounts, I for one could not draw any money out of an ATM yesterday afternoon (even though my account is in credit, the ATM told me there was insufficient funds in my account).

Friday, June 22, 2012

Greek Prime Minister In Hospital

The Greek Prime Minister Antonis Samaras has also been admitted to hospital, for surgery on his retina.

Greek Finance Minister Collapses

Seemingly Greece's new Finance Minister, Vassilis Rapanos, has collapsed and has been taken to hospital.

NatWest Technical Glitch - Day Three

NatWest and its hapless customers are having to endure a third day of technical problems with its online banking services. The problems are also affecting RBS and Ulster Bank.

The BBC reports that approximately 1,000 NatWest branches opened early today to help customers who are still unable to access their accounts because of technical problems.

NatWest said:
"Unfortunately we are once again experiencing technical issues with our systems and account balances have not updated properly overnight. 

This means where money has gone into a customer's account, there may be a delay in it appearing on their balance.

We can assure our customers that this problem is strictly of a technical nature and we continue to work hard to resolve this."

The Financial Ombudsman has advised what customers' rights are:
  • Anyone out of pocket owing to a technical or systems failure has certain rights
  • Banks should put customers back into the position they were in had the problem not occurred
  • That does not mean extra compensation is a right
  • Anyone affected should let the bank know about their situation as soon as possible
  • Customers should check to see if any payments due from an account have bounced
  • They should also keep a record of how the problem has affected them - just in case a formal complaint is required later
My advice to NatWest is simple, turn the system off and then on again!

Thursday, June 21, 2012

Greece Devolves To Emerging Economy

Reuters reports that Greece is now devolving from a first world economy into an emerging economy.

MSCI has placed Greece on review for relegation to emerging market status, this will make it the first country to be thrown back out of developed equity indices.

Wednesday, June 20, 2012

Greece Has A Government

Samaras has been sworn in as Greece's new Prime Minister. Greece now has a government, for the time being.

The Oncoming Storm - Eurogeddon

Europe is poised to bailout Spain and Italy to the tune of £600BN, and the Telegraph reports that a  Bank of England policy maker has told traders to prepare for a devastating market seizure similar to the collapse of Lehman Brothers.

Batten down the hatches!

Interest Rates Under Review

The MPC has placed its interest rate of 0.5% "under review", as per the Minutes of the Monetary Policy Committee Meeting held on 6 & 7 June 2012.

The reason for the "under review" status being the ongoing deterioration of the economic situation in Europe, and "weaker economic data from the United States and emerging economies".
"Overall, the Committee judged that, at the present time, a further reduction in Bank Rate would not have any advantages over an expansion of the asset purchase programme, though it would keep the position under review."
This means that it is highly likely that rates will be reduced in the very near future.

Tuesday, June 19, 2012

Spanish Bank Auditors Go On Summer Holidays



The Wall Street Journal reports that the deadline for auditors from Deloitte, KPMG, PwC and Ernst & Young to present full reports on the capital needs of Spain's financial sector has been delayed from July 31 to September.

For why?

Officially the reason being presented is the need for more time to complete the evaluation, and the fact that most of Spain (especially the government) is on holiday during the summer.

Amazingly enough the auditors, and those organisations that have commissioned the auditors to do the work (ie Spain's government, the International Monetary Fund and the European Central Bank), have agreed to a delay in order to allow people to go on holiday.

There are two possible conclusions to be drawn from this absurd excuse for a delay:

1 There is in fact no urgent need for any reform or further funding of the financial sector or, more likely,

2 There is something that has yet to emerge that people want hidden for the time being.


Draw your own conclusions.

Doubtless the "crisis" will not get any worse during the summer recess!


Monday, June 18, 2012

Euro0.5Trillion EU Exposure To Greece

€ BillionTotal Exposure to Greece
Eurozone:Austria15.5

Belgium17.7

Cyprus1.1

Estonia0.7

Finland8.5

France138.9

Germany139.4

Greece7.7

Ireland7.8

Italy84.9

Luxembourg1.3

Malta0.6

Netherlands30.7

Portugal19.8

Slovakia2.7

Slovenia2.3

Spain55.7
Non-Eurozone:Bulgaria0.2

Czech Republic0.3

Denmark0.5

Latvia0.0

Lithuania0.1

Hungary0.3

Poland0.4

Romania0.3

Sweden0.9

United Kingdom13.5
Total
551.8

Source Zerohedge

Roadmap To Banking Union - Secret EU Summit Document

Courtesy of the Telegraph the "limite" text is secret, restricted for the "eyes only" of diplomats and officials preparing for the 28 and 29 June European Council in Brussels.


#Grexit

"Now is not the time for any kind of discounts to Greece"
 German deputy government spokesman Georg Streiter.

Source Zerohedge.

The Dead Cat Bounce of The Greek Election



The markets are currently going through the motions of a dead cat bounce, in response to the results of the Greek election (which did not, at this stage, put Syriza into office).

However, the results show a deeply divided nation (29.7% to New Democracy and 27% to Syriza) which is going to need a third bailout by July if it is to avoid complete financial collapse.

In other words the fundamentals have not changed, and the problems that Greece and the Eurozone face have not gone away!

Friday, June 15, 2012

Whither Project Merlin? - Osborne's Maxed Out Plan A

Kudos to Mervyn King and George Osborne for gamely trying to shore up the British economy, against the oncoming Eurozone tsunami, with a £100BN support programme.

The FT reports that:
"the chancellor told a City audience on Thursday night that he was working with Sir Mervyn King, the Bank of England governor, to “deploy new firepower” amid fears that turmoil in the Eurozone could lead to a severe credit crunch and higher interest rates in Britain.

Mr Osborne’s aides spoke of a “maxing out of Plan A” – taking advantage of the country’s record of fiscal discipline and credibility with the markets to unleash an aggressive monetary policy offering cheaper loans to businesses and households."
The markets have reacted favourably (as they always do) to "hopeful" news.

This is all very well, if one could trust the banks to lend the money on to companies and individuals. However, all that the banks will do it use the £100BN to shore up their own balance sheets.

Not one penny of this will reach the business or individuals who need it, and would be the engines of growth for the British economy.

It would be better of Osborne took the £100BN and simply dropped it from a helicopter over the UK, that way he could be sure that it will have some positive effect on the economy.

Am I being too cynical?

I don't think so, have you all forgotten the hopes and hype wrt Project Merlin?

Whatever happened to that then?

Thursday, June 14, 2012

Cyprus To Ask For Bailout?

It appears that Cyprus is to ask the EU for a bailout.

The EU has stated that Cyprus hasn't asked for a bailout, but that is what the EU said about Spain last Friday.

Spanish Bonds Now Junk

Spanish bond yields have hit an unsustainable 7%, ie they have become junk.

It is as though the "bailout" of last Sunday never occurred!

Wednesday, June 13, 2012

The Euro Titanic Has Now Hit The Iceberg

Advice For The Oncoming Grexit

It is clear that Greece will leave the Euro, the only uncertainty being when.

Aside from George Osborne publicly stating that Greece may be forced to leave the Eurozone (ie sacrificed) in order to save the Euro, Greek banks have seen a marked increase in the pace of bank withdrawals as the general election nears (combined daily deposit outflows from the major Greek banks have reached 500-800 million euros over the past few days, with the pace picking up as the election draws closer).

Therefore what do you do if you are planning to travel to Greece (on business or for pleasure) in the coming weeks, and are caught up in a Grexit?

My personal advice is to take some spare cash with you in a sock (or equivalent). When Greece leaves the Euro there will be, at the very least, the following "events":

- an imposition of capital and border controls,
- atms will run out of cash
- foreign banks and companies will treat Greece as a "plague ship", and stop all financial dealings in the short-term
- credit cards will not be accepted by many establishments (in fact this is already the case)
- there will be issues of street and civil disorder to contend with
- airports will be full, as foreigners rush to leave

The above "events" are not pleasant to contemplate, but anyone who is planning to go to Greece in the coming weeks needs to be aware of what may happen.

Tuesday, June 12, 2012

Italian Bond Yields Beyond Danger Level

Italian bond yields have gone beyond the 6% danger level this morning.

For why?

No one believes, with good reason. that the Spanish "bailout" will be anything more than a short-term palliative.

Greek Scenarios

StockPundits has noted that the senior European Commission economy spokesman, Olivier Bailly, has told reporters that the European Commission is working on various "scenarios" for Greece. Whilst there are no "plans" for a Grexit, there are most certainly discussions about it.

Monday, June 11, 2012

The Spanish "Bailout" That Dare Not Speak Its Name



The market "relief" at the Euro100BN Spanish "bailout" that dare not speak its name has been somewhat short lived, Spanish 10-year government bond yields are now back above Friday's close.

For why?

Whilst the Spanish banks may have been saved in the sort term, the fundamentals remain unchanged. Spain has the highest unemployment and the third widest fiscal deficit in Europe, and its government is not regarded as being fiscally competent.

Next in line comes Italy, for which there is not enough money in the Eurozone to bail it out.

Sunday, June 10, 2012

Y Viva Espana



Q: When is a bailout not a bailout?

A: When it is a Euro100BN "recapitalisation" of Spanish banks.


Friday, June 8, 2012

Spanish Bailout Mañana III

Spain will make a formal request for a bailout after the US markets have closed tonight.

Spanish Bailout Mañana II

The Eurozone has now confirmed that there will be an emergency teleconference tomorrow to discuss the Spanish bailout (which the Spanish still deny).

Spanish Bailout Mañana

Spain will request a Eurozone bailout tomorrow (Saturday) for its failing banks, this despite the fact that the Spanish government is still denying that they will ask for a bailout and the Eurozone has yet to confirm the emergency teleconference tomorrow.

Thursday, June 7, 2012

The Linkedin Security Breach

Linkedin have yet to tell its members about the recent security breach that may have put millions of passwords at risk (reports now indicate that well over 6 million may have been hacked), or advise them as to what they should do.

This is not an example of effective crisis management, and will damage the brand, reputation and share value of the company.

Those of you who have a Linkedin account should not wait for Linkedin to contact you, but are strongly advised to change your passwords to new, more secure and unique ones.

EU Admits There Is No Plan

Finally the EU has admitted to what we have known all along, namely that it has no plan.

Specifically, in the case of Spain, there has been no request from the Spanish authorities for a bank rescue and that there is no EU rescue plan for Spanish banks.

I assume that this statement is meant to somehow reassure the markets?

Just remember, and repeat, as I have said many times before:

- There was no plan
- There is no plan
- There never will be a plan

The Vacuum At The Heart Of European Economic Policy



Nature abhors a vacuum.

The "leaders" of the Eurozone and ECB may care to ponder the above statement, in relation to their inaction and non existent "plans" for resolving the Euro crisis.

For why?

A political vacuum, caused by inactive, ineffectual politicians and hare brained economic policies, will be filled by scum such as the individual in the above video.

This is a portent of the future of Europe; if the "leaders" of the Eurozone et al do not get their acts together, Europe will descend into chaos to the benefit of the scum of the extreme right and left.

Wednesday, June 6, 2012

D Day Anniversary

Today is anniversary of D Day; the day that the UK, USA, Canada and Free French re-entered Europe to rescue it from itself.

Judging by the inaction of the European politicians wrt the financial meltdown of Europe, it seems that another rescue from outwith Europe is required.

The EU "Master Plan"

The EU has decided to try to stop the ongoing meltdown of the Eurozone, by publishing new crisis management measures to avoid future bank bail-outs. The aim is to ensure losses are borne by bank shareholders and creditors, and minimise costs for taxpayers.

The main resolution tools are the following:
  • The sale of business tool whereby the authorities would sell all or part of the failing bank to another bank;
  • The bridge institution tool which consists of identifying the good assets or essential functions of the bank and separating them into a new bank (bridge bank) which would be sold to another entity. The old bank with the bad or non-essential functions would then be liquidated under normal insolvency proceedings;
  • The asset separation tool whereby the bad assets of the bank are put into an asset management vehicle. This tool cleans the balance sheet of a bank. In order to prevent this tool from being used solely as a state aid measure, the framework prescribes that it may be used only in conjunction with another tool (bridge bank, sale of business or write-down). This ensures that while the bank receives support, it also undergoes restructuring;
  • The bail-in tool whereby the bank would be recapitalised with shareholders wiped out or diluted, and creditors would have their claims reduced or converted to shares. An institution for which a private acquirer could not be found, or which could be complicated to split up, could thus continue to provide essential services without the need for bail-out by public funds, and authorities would have time to reorganise it or wind down parts of its business in an orderly manner. To this end, banks would be required to have a minimum percentage of their total liabilities in the shape of instruments eligible for bail-in. If triggered, they would be written down in a pre-defined order in terms of seniority of claims in order for the institution to regain viability.
Sadly, as with all EU "plans", there is a caveat. Even if these "plans" were to be enacted and to be effective, they will not come into force until 2014 at the very earliest.

These "plans" are therefore of no help or hope to the millions of people in Europe who are now unemployed, and to the millions of people who have seen their taxes squandered by EU politicians and Eurocrats who are frozen with fear and indecision like rabbits in the headlights of the oncoming financial juggernaut.

Friday, June 1, 2012

Martin Lewis Sells Website

Martin Lewis, the owner of moneysavingexpert.com, has sold the website to Moneysupermarket.com for £87M.

A deal that one suspects will be less fraught with controversy and bitterness than the recent Faecesbook IPO.