Chillin' out till it needs to be funded
FT reports (subscription: story link) that the ex CEO of the Bank, Bob Diamond and the current Investment Banking Head Rich Ricci are among those who have been indicted in various forms by the Bank in its statements to the regulators and are currently responding in High court litigation against the bank. The Bank however had managed to keep these executives’ names hidden while a plaint in Court judged today that they cannot keep their names hidden bringing them out as an ugly 104 of which a shortlist of 24 executives is separately listed by the bank as not necessarily directly implicated in any wrongdoing admitted as of now part of the large settlements made with regulators in 2012. Financial Times was also part of the effort by media organisations to get these names in public fairly and squarely
Traders including Ronti Pal, Head of US Interest Rates trading and his report Don Lee were among illustrious names reported by the bank and who are likelty not already disciplined by the bank from which Diamond chose to step down at BOE’s behest after the rumblings of various mishaps including Mis-selling of home Insurance to seniors and swaps designed as “insurance” brought to a head by UBS confessing to larger accounts of misdeeds at its LIBOR desks. The particular high court litigation in which the names were being kept secret refer to Guardian Care Homes and other care homes suing the baank for selling them swaps wrongly and rounding it off with a floating rate based on a inter bank rate the bank conspired to design to its comfort
As penalties get bigger and banks get slammed from global regulators higher cost of deposits ( in the US) and lower RoE, LIBORGate will probably turn out to be the ticket for regulators to show up on bigger windows as they wrangle Billion dollar settlements from banks. Amounts have been increasing in size in settlements to earn key brownie points to regain the bedrock of trust without which ROE is unlikely to return to stable double digit levels. Meanwhile Dimon continues to try and dissuade narrow sighted action in Davos and continues to be paraphrased based on his 2011 standoff with governments and regulators for example, and Corporate and Institutional Banking remains a larger victim of a low deal volume world with Trading almost knocked down in 2011 and Private Equity and Hedge funds out of the reach of banks except for a limited equity in these earning rich businesses. Even as Hedge funds disprove themselves of the aura of higher income arbitrage , retail banking hobbles back to normal but canntot go beyond the low interest rates on the ground and Business in Debt and Equities issuance trying to come back is unlikely in itself to ramp up on a one sided incline in 2013 itself making way for Banking investments to be questioned well into the next decade.
Barclays has also decided to cut more than 200 investment banking jobs this quarter followed by Lloyds in the UK apart from the earlier withdrawals from CIB business by Credit Suisse and largely UBS
Last month UK’s SFIO had made arrests in LIBORGate and Barclays CEO Tony Jenkins had promised to rid the bank of jerks.