Which also means that richer clients in Cyprus will lose between 40% and 100% of their savings above €100,000, unless they were smart enough to fly to Britain in time and transfer it all to another bank.
Still, Laiki Bank UK is simply a branch of the mothership Laiki Bank on Cyprus, with the difference that deposits fall under UK deposit "compensation" laws. Unlike Bank of Cyprus UK, Laiki is not incorporated under UK law.
And I had been wondering why everyone was talking about Russian depositors in Cyprus, but nobody mentioned the Brits, who must have tons of bank accounts there, the island being a former colony and all. I guess perhaps I have my answer now.
Laiki has had UK branches since 1974, nothing strange there, long running ties (though never incorporation). But it also has majority interests in banks in Russia, Ukraine, Estonia, Malta and other countries. Maybe someday we'll find out what happened there since March 16. For instance, how much money was taken out at Laiki Moscow in the past 10 days?
For the moment, I'd be satisfied with details on what went on in its UK branches. What remains at Laiki will need to be used to pay off debt. But if the ship has been leaking like a sieve all the time, how much is left to do that with? And whatever has been taken out will come at the expense of what has not: it could easily be the difference between losing 40% or 100%. Just a guess, to be sure, but that's all anybody has right now.
UK Chancellor of the Exchequer George Osborne (who today sent another plane carrying €13 million in cash for British soldiers stationed in Cyprus) says he's working on a plan to exempt British branches - and their clients - of Cypriot banks from the worst of the Laiki mess, i.e. make all British citizens whole.
Leaving the UK branches open for business, and not telling the outside world, would seem to be a firm step in that direction. Think maybe the 4 branches have called their (best) clients with a warning or two? After a friendly call from Osborne's office? Barclays has "offered" to speed up opening accounts especially for the purpose. Good patriots...
Holland and Britain made 340,000 savers at Iceland's Landesbanki whole when it collapsed in 2008. Will they do the same this time? For all those people who moved their money and accounts to Cyrpus to avoid domestic tax schemes? This has the makings of a good story. Unless you're simply a hard working Cypriot living on Cyprus. Then you're simply screwed.
Zero Euro Bill
Source
_________________________
Why the British Banking Industry has become identical with an Organised Criminal Enterprise. Part 3
This is the third
and last tranche of evidence I submitted to the Commission on Banking
Culture and which their Government Servants sought to suppress.
banzai7Why the British Banking Industry has become identical with an Organised Criminal Enterprise. Part 3
This is the third
and last tranche of evidence I submitted to the Commission on Banking
Culture and which their Government Servants sought to suppress.
Regulation by prosecution
47.The recent report issued by the Treasury
Select Committee entitled '... Fixing LIBOR: some preliminary findings...'
contains very little that those of us
who have long been concerned about the criminal state of the British banking
sector did not already know.
48.One of the key findings of the report deals
with the relationship between the various regulatory agencies of the State, and
the way in which they dealt with the emergence of incriminating details about
the LIBOR affair.
49.What this report demonstrates so clearly is
the lack of willingness for the FSA to adopt its powers to prosecute financial
crime, and the very narrow interpretation they placed upon their function. This
reflects earlier findings concerning the attitude of the regulator towards its prosecutorial
role uncovered in its earlier days.
51.'...The Committee is concerned that the FSA
was two years behind the US
regulatory authorities in initiating its formal LIBOR investigations and that
this delay has contributed to the perceived weakness of London in regulating
financial markets...'
52.This failure to respond effectively to the
early information about Barclays is reflected upon critically by the Committee,
as it identifies the likelihood
that this evidence may have led to evidence of other wrongdoing elsewhere in
the wider market.
53.'...Barclays may well not be alone. Nor is
it likely to be a London-based phenomenon. The FSA is continuing to investigate
the conduct of seven other banks in relation to LIBOR— some of them non-UK
based banks. The FSA’s regulatory counterparts in several other countries are
also conducting their own investigations. Barclays is just one of many international
banks under investigation for possible market manipulation. It is important
that Barclays’ serious shortcomings should not be seen in isolation from the
possible actions of other banks and
we await the results of ongoing investigations...'
54.This is a classic scenario which identifies
the sheer 'shamateurism' of most British regulatory actions. It is manifested
by the failure to be able to read the signs of crime and appreciate the fuller
ramifications of their implications.
Thus it is that the regulators tend to focus on simply that evidence which is
immediately in front of them, and without seeking to extrapolate from the
initial facts what else might be happening in the wider market context.
55.The Committee do not lay the blame entirely
on the shoulders of the FSA, they also contribute serious criticism on the
actions of Barclays and their Compliance function.
56.'...It is important to state that Barclays’
internal compliance department was told three times about concerns over LIBOR
fixing during the period under consideration and it appears that these warnings
were not passed to senior management within the bank. Statements that
everything possible was done after the information came to light must be
considered against a background of serious failures
of the compliance function within the bank. In other words, the senior
management should have known earlier and acted earlier...'
57.This is a damning indictment of the
compliance function within Barclays, but it comes as no surprise to anyone who
has any experience of this particular criminal enterprise. Compliance Officers
were not encouraged to develop pro-active
lines of disclosure, nor were they encouraged to think out of the box. They
were largely an army of box tickers, but it is even more concerning to note
that there did not appear to be any form of channel of communication to escalate
these concerns.
58. Every compliance and money laundering 'best
practice' manual will talk glibly of the need for a direct channel of
communication between the head
of compliance and the Chief Executive. They talk of the need for unfettered
communication in a discreet and secure manner. How was it therefore that the
news of these criminal manipulations were not brought to Bob Diamond's
attention at the earliest possible opportunity. What was standing in the way of the desired state of direct
communication?
59.Clearly, there was a culture inside Barclays
of 'No bad news please', or 'No surprises'. The compliance department clearly
knew what every compliance officer who stays in post for more than a few months
knows, they knew what
questions to ask and what questions not to ask, and when to go deaf, dumb and
blind!
60.A major part of the report deals with the
FSA's failings to take strong executive action when financial criminality is
discovered. It is as if the FSA has taken a deliberately blinkered view of
their powers and has refused to look beyond and outside their most immediate
remit. This is very disappointing because it has been hoped that the FSA would
begin to take a more robust
approach towards its powers to prosecute financial
crime, after the introduction of the FSMA in 2000.
61.Financial practitioners do not fear
regulatory fines, mostly because they are not individually called upon to pay
them. The burden always falls on the shoulders of the shareholders, many of
whom, if the Standard Chartered Bank case is anything to go by, will not even
blame the Executives of the bank for landing them in this mess in the first
place. Regulatory findings will always find fellow practitioners who are willing
to sympathise with them. Public scandal can be difficult to handle, but rarely
does an executive get forced from office. He may quietly resign at a later
stage, but he does so with a well-padded pension fund and other benefits to
cushion his existence.
62.This whole issue of the suitability of
punishment for serious wrong-doing has been a critical element of the
longer-term failures of the FSA to bring a robust approach to the regulation of
the UK financial market. Ultimately,
it is prosecution for crime which the financial practitioner truly fears, but
if the market knows that the regulator is deliberately avoiding adopting its
prosecutorial role, then this will lead to a realisation that the regulator has
no real teeth!
63.It has always been one of the greatest
ironies of the whole regulatory conundrum that criminalisation for simple
offences of ordinary 'crime' is one of the greatest fears of the Executives of
the financial sector.
64.Ironically, it is not necessarily the
sentence which is passed which is of the
most importance, the true fear of the financial practitioner is of the verdict of 'guilty' being publicly
pronounced in open court. Such a verdict immediately takes away the sense of
being a 'protected species' which too many banksters have believed they
possessed for too long.
65.A criminal conviction places them on a par
with other ordinary criminals, people who under any other circumstances they
would go out of their way to avoid like the plague. The fact of conviction now
puts them in the same 'criminal class' category and it spells social and commercial
death for any city practitioner who has been so convicted. It is the ultimate exclusionary weapon of
social and reputational mass destruction.
66.So powerful is the impact of criminalisation
that even those who had once called the convicted man a friend find it very
difficult to continue to see him, even in a private social context. As for any
further dealings with him on a
commercial context, such a thought would never enter their heads. He is now
entirely beyond the pale, and he can never be received again inside the magic
circle.
67.This may be what makes it so difficult for
regulators to bring such a powerful weapon to bear on those whom they perceive may
come from the same class and socio-economic background as themselves! They won't
admit this of course, and they tend instead to use the excuse that financial crime cases are too difficult to
get convicted, that juries do not understand them, although that has never been
my experience.
68.This was one of the major problems about the
predecessor of the FSA, the Securities and Investments Board, who absolutely
refused to contemplate prosecuting any financial practitioner for crime.
69.In 1999, I was invited to conduct a review
of financial services regulation for the UK Treasury. Among other people I
interviewed was a senior staffer from the SIB who would be moving into the new
FSA. I asked him about the powers to prosecute possessed by the new regulatory
agency.
70.'... the official concerned was more
forthcoming. He agreed that the FSA would become responsible for a far greater
degree of responsibility for prosecution in a number of areas, including money
laundering issues, but felt that this predicated the need for a further
regulatory interface. He said;
71.“…There is an anxiety about the new criminal
functions which we are being tasked to accept…various elements such as insider
dealing, market manipulation, etc,
all tend to colour our internal philosophy towards the question of conducting
prosecutions…you really should understand,
because of the difficulties associated with obtaining convictions in the
criminal courts, there is no unswerving acceptance of the need for wholesale
prosecution powers…”
72.This answer was given in such an open way,
in contrast to so many other answers which he gave, that he was invited to
state why he was so sure that this
was the case. His answer was studiously revealing, and must be considered to
contain a huge degree of truth. He said;
73.“…Because, frankly, Howard Davies has no
intention of ending up with the sort of reputation which so bedevilled the SFO
in its early days. He refuses to be
tarred with the same brush as Barbara Mills or George Staple…”
74.The Treasury Select Committee has clearly
identified that this mentality still exists within the regulatory environment.
They state;
75.'...The FSA apparently believes that its
fees are not raised for the purpose of prosecuting offences other than those
set out in FSMA. The Committee is concerned
by this. The FSA has responsibility for regulating the key participants in
financial markets. The FSA’s decision whether to initiate a criminal
prosecution should not be influenced by the fact that its income is derived
from firms which it regulates. The FSA has an obligation under section 2(1)(b)
of FSMA to discharge its functions in the way in which it considers most
appropriate for the purpose of meeting its regulatory objectives.
76.Under section 2(2)(d) the reduction of
financial crime is one of these objectives. Financial crime is defined in
section 6(3) as including not only misconduct in relation to a financial market
but also any criminal offence of fraud or dishonesty. The FSA took a narrow
view of its power to initiate criminal proceedings for fraudulent conduct in
this case. The Committee recommends that the Government, following the Wheatley
review, should consider clarifying the scope of the FSA’s, and its successors’,
power to initiate criminal proceedings where there is serious fraudulent
conduct in the context of the financial markets.
77.That this state of affairs still exists
after all these years is a matter of deep concern and the Committee rightly
urges direct reforms of this state of affairs.
78.'...The Committee urges the Wheatley review
to consider the case for amending the present law by widening the meaning of
market abuse to include the manipulation, or attempted manipulation, of the
LIBOR rate and other survey rates. They should also consider the case for widening
the definition of the criminal offence in section 397 of FSMA to include a
course of conduct which involves the intention or reckless manipulation of
LIBOR and other survey rates...'
79.Again, the Committee saw fit to criticise
the length of time taken by the SFO to open an investigation and demands that a
new relationship be forged between the two agencies. There is no reason why
that FSA and the SFO could not and should not operate in tandem when conducting
investigations, so that if, as it seems, the FSA is unhappy to mount
prosecutions, then the SFO can adopt this mantle.
80.'...The Serious Fraud Office (SFO) is now
conducting a criminal investigation
into LIBOR. The Committee was surprised that neither the FSA nor the SFO saw
fit to initiate a criminal investigation until after the FSA had imposed a financial penalty on Barclays.
81.The evidence in this case suggests that a
formal and comprehensive framework needs to be put in place by the two
authorities to ensure effective relations in the investigation of serious fraud
in financial markets. The lead authority must be clearly identified for the purposes
of an investigation, and formal minutes of meetings between the authorities
must be maintained. We recommend that the Wheatley review examine whether there
is a legislative gap between the responsibility of the FSA and the SFO to
initiate a criminal investigation in a case of serious fraud committed in relation
to the financial markets...'
82.Quite rightly, the Committee's report makes
reference to the issue of public anger against that banks in the UK. They are
right so to do. The British public is sick and tired of watching their
financial affairs being raped and pillaged by the criminal banking sector. They
have lost any sense of trust in the banking sector, trust which is vital for
the effective running of the market. A report today by Currencies.co.uk
discloses that 62% of British citizens have lost trust in the banks. The
Committee knows that this state of affairs is very dangerous for uk plc, and
they call for some focused thinking on behalf of the banking sector.
83.'...The findings have focussed pre-existing
public anger with banks. Barclays is one of many instititutions that have
contributed to the state of banking’s reputation. LIBOR has followed the vast
public bailouts of banks during the
financial crisis, the liquidity support and guarantees given to all banks and the apparent lack of penalties
for those who contributed to that crisis, most of whom retained very high
levels of remuneration even after 2008. More recently there has been the scandal
of payment protection insurance (PPI) mis-selling, criticism of banks’
perceived reluctance to lend, complaints about the sale of unsuitable and
complex interest rate swap products to businesses (which are under
investigation by the FSA), and serious IT failures at RBS Group. The economy
needs well functioning banks. They will have a crucial role in any economic
recovery through their lending to businesses and households. An end to crude
‘banker bashing’ would be highly
desirable, but bankers must recognise that they have brought much of this upon
themselves through actions which have seriously damaged public
confidence. While banks continue to provide evidence that wrongdoing
persists the popular mood is likely to remain hostile...'
84.For myself, I believe that the issue has
gone too far, and the genie is out of the bottle. The only way these organised
criminal enterprises can be dismantled is for a root and branch reform of the
banking sector, breaking up the big conglomerates, jailing a lot of 'too big to
jail' bankers, and reintroducing an environment where banks become the servants
of the community and the economy, and not high-rollers in the most unregulated
casino on the planet.
85.So, this Commission is an excellent
opportunity for Government to take a close look at the way in which the
financial sector is policed, because unless something drastic is done to change
the way in which the financial sector
is regulated, then we shall continue to suffer from the kind of scandals that
have made London a cess-pit, the venue of first resort for every con-man, scam-artist
and bankster in the world, rapidly ensuring our descent into the ranks of the
global pariah states.
_______________________
Egan-Jones Downgrades UK From AA- To A+
Submitted by Tyler Durden: Thought you could shut up Egan-Jones? Sure, you could... as a NRSRO: the same worthless designation that is carried by Moodys and S&P. However, that does not prevent them to act, and provide their ratings opinion, as a non-NRSRO. Which is exactly in what capacity the infamous firm, which was targeted by the SEC for daring to downgrade the US (the same reason S&P was sued by the DOJ later), just downgraded the UK from AA- to A+.
Full report here.DOWNGRADING United Kingdom FROM AA- to A+ (S&P: AAA)
THIS IS A NON-NRSRO RATING.
Synopsis: Re. the balance of payments, imports have exceeded exports by an average of 500B pounds annually over the past several years. The major problems for the UK is that Europe's banking crisis does not appear to be abating as evidenced by the problems of the Cypriot banks. On the fiscal side, the deficit to GDP has declined over the past three years from 11.5% to 8.3%, which is a respectable decline, but is still substantial; the bulk of the deficit reduction was the result of increased taxes. The over-riding concern is whether the country will be able to continue to cut its deficit in the face of weaker economic conditions and a possible deterioration in the country's financial sector. Unfortunately, we expect that the UK's debt/GDP will rise and the country will remain pressed (we are waiting for addl 2012 data). We are downgrading.
Source
banzai7
No comments:
Post a Comment