How Europe has been cut out of Global Financial Systems?
When the crisis devolved on global citizens in 2008, none were more circumspect than banks about coming litigation though most of the big Wall Street and US banks were more ready to provide for litigation reserves and prove the regulators while the European invested in more lobbying and cosying up to the government side of the fence yet regulators were granted super regulator powers to start or stop banking services of any kind including that crises brought about by scarcity of Capital after losses. However, while Europe is more about the credit squeeze under the new risk weights applied, having started expanding the Balance sheet in 2012 after EBA stress test failures were put under the scanner and BIS and other regulators found reason for bank balance sheet contraction to have become the raision de etre of the rejuvenated crisis/recession in Europe with not many non Europeans investing too much in Europe apart from their allowance for speculative derring dos, including the likes of HSBC which have exported their offices out of Europe to survive under lighter regimes.
Also on the US firmament, it remains painfully obvious that Europeans still trying like Deutsche Bank to Europeans done beat trying including the Wealth specialists from Swiss (Credit Suisse and UBS) and London traders with a leg in new Amsterdam (Barclays and StanChart) are not welcome. The Europeans seem to love Wall Street and Deutsche, Barclays and Credit Suisse are still counted among the Top 10 on the street but they are not really expanding as Depository institutions or lenders after having the likes of Societe Generale, RBS and big bad Deutsche walk into the lair on securitised products to try and one up the mortgage markets in 2007
Cost Savings and Deleveraging hit Europe
According to a report available on the internet, more than 300,000 are still employed by top flight banks in Europe and 2013 Job cuts could be as high as 160,000, half of which would come from UK and continental Europe where that would translate into deeper recession cuts in the Services GDP but save more than EUR 20 B for banks
The occassion of BBA being sidelined for the bank LIBOR was probably the first event when regulators from both shores talked to each other in setting up fines and penalties showcasing Barclays and the common witness of UBS as finally talking about the same thing. Deutsche Bank is still trying to revitalise its Institutional funds management business after the Bankers Trust and Scudders purchase and then faile sale did not take off for the bank’s prospects and independent hedge funds and PE players from DB alumnus did better in 2011 than the bank itself in the battles across the pond.
A current catch up on Bank litigation timelines
Wealth majors like HSBC are fighting with their backs to the wall as regulations requiring disclosure of American assets increasingly shut out options for Americans overseas or traveling back now including War veterans as European banks fightback the only way they know. They are refusing to do business ith Americans even as they also take their legs out of Asia to pacify local regulators and demands made in Conditions documents for bailout cash
Nine new banks were added to LIBORgate litigation this month, New York and connecticut producing sub poenas for Europeans including West LB, Rabobank, Credit Suisse and Lloyds with Bank of America and the European majors starring in the club LIBOR show including Deutsche Bank and Barclays
Meanwhile JP Morgan received strictures in Power trading and Goldman Sachs paid out another quick $300 M to CFTC this time for a $8.3 B fraud by a GS trader Matt Marshal Taylor involving S&P futures using the lax regulations regarding client segregation etc to corner a neat packet for himself. Rajat Gupta, the infamous Goldman Sachs Director has been asked to pay $15 mln and serve a 2 year sentence for associating with the likes of Raj Rajarathnam.
The First Settlement on Residential mortgage securities (RMBS)
The first settlement on Residential mortgages cost Credit Suisse and JP Morgan $417 mln with the SEC also this month after five banks were earlier docked for their plays in the CDO market created by packaging residential mortgages. Eric Schneiderman (New York) is also fighting JP Morgan for misselling $20 B portfolio of Bear Stearns MBS, the failure of which portfolio rolled up BS and waMu into JP Morgan. The JP Morgan share is $297 mln
Apparently in the RMBS saga the mortgage originators Bear Stearns kept cash from bulk settlements for defaulted loans and the Securities continued to hold the defaulted loans leaving large holes with investors while JP Morgan and Credit Suisse sold out these defective MBS packages to unknowing investors
- Liabilities and litigation litter BP road to closure(uk.reuters.com)
- UBS Fixed-Income Capitalulation Boon for Deutsche Bank – Bloomberg(bloomberg.com)
- Wall Street Damps Pay Expectations After 2011 Bonus Shock – Bloomberg(bloomberg.com)
- Credit Suisse Is A Bank Stock Worth Buying(forbes.com)
- European bank deleveraging: Basel III edition(ftalphaville.ft.com)
- JP Morgan Chase and Credit Suisse pay $416.9m in penalties over mortgages(guardian.co.uk)
- Which Big Bank Has The Strongest Balance Sheet?(seekingalpha.com)
- UBS to cut up to 3,000 jobs in London(guardian.co.uk)