Bankrupt Banker

Rio hit with £500k bill after losing court battle

The England and Manchester United star will now be saddled with paying the estimated £500,000 legal bills incurred by the Sunday Mirror in defence of the lawsuit.Ferdinand sued the newspaper for misuse of private information after they published details of his 13-year relationship with interior designer Carly Storey, who accepted £16,000 for telling the tale of her liaisons with the defender.But Mr Justice Nicol dismissed the case at London's high court on Thursday, and refused Ferdinand's legal team permission to appeal."Overall, in my judgment, the balancing exercise favours the defendant's right of freedom of expression over the claimant's right of privacy," he said.The judge was not swayed by Ferdinand's claims that he had not tried to meet Storey after being made England captain, despite claims in the newspaper that he had snuck Storey into the team hotel."I did not find this answer persuasive. In his evidence the claimant said that (Fabio) Capello had told him to be professional, not only on the pitch but 'around the hotel'," the judge said."In the past, the Claimant (Ferdinand) had not behaved in a professional manner around the hotels into which he had tried to sneak Ms Storey."Whether or not he had done that in the few weeks since he had been made the permanent captain of England, his relative recent past failings could legitimately be used to call into question his suitability for the role."Former England captain Ferdinand, who has three children with wife Rebecca, had told the judge at an earlier hearing that, "I do not see why I should not be entitled to a private life just because I am a famous footballer."Sunday Mirror editor Tina Weaver hailed the judge's decision."The Sunday Mirror is very pleased that the court has rejected Rio Ferdinand's privacy claim," she said."The judge found that there was a justified public interest in reporting the off-pitch behaviour of the then England captain and discussion of his suitability for such an important and ambassadorial role representing the country."We are pleased the judge ruled that Mr Ferdinand had perpetuated a misleading public image and the Sunday Mirror was entitled to correct this impression."There has never been greater scrutiny of the media than now, and we applaud this ruling in recognising the important role a free press has to play in a democratic society."

Rio hit with £500k bill after losing court battle

The England and Manchester United star will now be saddled with paying the estimated £500,000 legal bills incurred by the Sunday Mirror in...

Paramedics Who Tried To Save Singer's Life Give Evidence

Alberto Alvarez was in charge of back stage during Jackson's final rehearsal on June 24, 2009. He described Jackson as "happy and in good spirits" during the performance. "He was doing very well for the most part," he told the Los Angeles court. He explained that he later drove Jackson back to his rented Holmby Hills home and saw Dr Murray's car parked there. He said the last time he saw Jackson alive was when he said "good night" to the singer. Mr Alvarez was the first person who went into Jackson's bedroom after Dr Murray telephoned for help as he was trying to resuscitate the singer. He said Jackson was lying on his back, with his hands extended out to his side, and his eyes and mouth open. "When I came into the room, Dr Murray said 'Alberto, hurry, we have to get to hospital, we have to get an ambulance'." Jackson's logistics director Alberto Alvarez He then described how Jackson's children Paris and Prince entered the room behind him. "Paris screamed out 'Daddy' and she was crying. "Dr Murray said to me 'Don't let them see their dad like this see'. "I ushered the children out and told them 'Don't worry, we will take care of it, everything is going to be OK'." Mr Alvarez asked what had happened, to which Dr Murray replied: "He had a bad reaction". Two paramedics who tried to save Jackson's life are also due to give evidence on day three of the trial. Martin Blount and Richard Senneff are expected to say that Jackson already appeared to be dead when they arrived at his home on June 25, 2009. The court will also hear from another key witness - Jackson's personal chef Kai Chase. Sky's US correspondent Greg Milam, who is at the court, said: "There are fewer demonstrators, fans of Michael Jackson, and supporters of Dr Murray here today - but they are still being very vocal in their support of both sides in the case." On Wednesday, Jackson's security chief revealed how the star's children crumpled in shock, as they saw their apparently dead father being given heart massage in his bedroom. The court also heard that Dr Conrad Murray, accused of involuntary manslaughter over Jackson's death two years ago, asked aides if any of them knew how to do cardiopulmonary resuscitation (CPR). "Paris was on the ground balled up crying, and Prince was standing there, and he just had a real shocked, you know just slowly crying type of look on his face," bodyguard Faheem Muhammad, referring to two of Jackson's three children, said. "I went and gathered them together, and I kind of talked to them for a second, got the nanny... and we walked downstairs and put them in a different location," he said. He was describing the scene after he was called up to the master bedroom of Jackson's rented Los Angeles mansion where the star died after an overdose of a powerful sedative. The defence team for the doctor insists Jackson self-administered other sedatives, prompting the overdose while his physician was outside the bedroom. Dr Murray, 58, faces up to four years in jail if convicted of involuntary manslaughter for administering the overdose of Propofol.

Paramedics Who Tried To Save Singer's Life Give Evidence

Alberto Alvarez was in charge of back stage during Jackson's final rehearsal on June 24, 2009. He described Jackson as "happy and...

Raids in 7 countries in $200M investment fraud

Dutch authorities say raids have been conducted in seven countries in connection with an alleged $200 million investment fraud scheme, and...

Treasure hunters eye huge shipwreck haul

When the SS Gairsoppa was torpedoed by a German U-boat, it took its huge silver cargo to a watery grave. Seventy years later, US divers said they are working to recover what may well be the biggest shipwreck haul ever. Florida-based Odyssey Marine Exploration on Monday confirmed the identity and location of the Gairsoppa and cited official documents indicating the ship was carrying some 219 tons of silver coins and bullion when it sank in 1941 in the North Atlantic some 490km off the Irish coast. That's worth about $200m today, which would make it history's largest recovery of precious metals lost at sea, Odyssey said. "We've accomplished the first phase of this project -- the location and identification of the target shipwreck - and now we're hard at work planning for the recovery phase," Odyssey senior project manager Andrew Craig said in a statement. "Given the orientation and condition of the shipwreck, we are extremely confident that our planned salvage operation will be well suited for the recovery of this silver cargo." Recovery is expected to begin next spring. After a tender process the British government awarded Odyssey an exclusive salvage contract for the cargo, and under the agreement Odyssey will retain 80% of the silver bullion salvaged from the wreck. The 125m Gairsoppa had been sailing from India back to Britain in February 1941, and was in a convoy of ships when a storm hit. Running low on fuel, the Gairsoppa broke off from the convoy and set a course for Galway, Ireland. It never made it, succumbing to a U-boat's torpedo in the contested waters of the North Atlantic. Of the 85 people on board, only one survived. The Gairsoppa came to rest nearly 4 700m below the surface, but Odyssey is insisting that won't prevent a full cargo recovery. "We were fortunate to find the shipwreck sitting upright, with the holds open and easily accessible," Odyssey chief executive Greg Stemm said. "This should enable us to unload cargo through the hatches as would happen with a floating ship alongside a cargo terminal." Odyssey, a world leader in deep-ocean exploration, recently conducted remotely operated vehicles from its main ship, the Odyssey Explorer, to inspect the shipwreck. It said it acquired still and video imagery from the site which were used to confirm the identify and evaluate the condition of the Gairsoppa.

Treasure hunters eye huge shipwreck haul

When the SS Gairsoppa was torpedoed by a German U-boat, it took its huge silver cargo to a watery grave. Seventy years later, US divers ...

Tony Blair is unaccountable over business interests, adviser says

More questions have been raised over Tony Blair's lucrative business activities after an adviser in his role as a Middle East peace envoy said the former Prime Minister continued to operate outside a defined code of conduct. Channel 4's Dispatches, due to be broadcast tonight, claims that Mr Blair is not required publicly to disclose his commercial interests as he would if he were an MP. Mr Blair combines a £2m-a-year consultancy with the US investment bank JP Morgan with his unpaid post in Jerusalem, where he is heading international efforts in preparation for a future Palestinian state. He also advises the insurance group Zurich Financial, while his company Tony Blair Associates signed a reported £27m-deal advising the Kuwaiti government. They are among a string of globetrotting business interests that have seen him build an estimated personal fortune of £20m since leaving office in 2007. But a senior French diplomat Anis Nacrour, who advised Mr Blair on security for three years, has fuelled doubts over the former Labour leader's public accountability.

Tony Blair is unaccountable over business interests, adviser says

More questions have been raised over Tony Blair's lucrative business activities after an adviser in his role as a Middle East peace en...

UBS CEO Gruebel resigns over rogue trading loss

UBS chief executive Oswald Gruebel has resigned over a $2.3 billion loss caused by rogue trading at its investment division, which is to be restructured now to prevent similar incidents in future, the Swiss bank said Saturday. Gruebel, who had come under heavy pressure from shareholders over the scandal, said he hoped his resignation would allow the bank to restore its reputation in the eyes of clients and investors. Article Controls EMAIL REPRINT NEWSLETTER SHARE "As CEO, I bear full responsibility for what occurs at UBS (	 UBS - news - people )," he said in a memo to staff. "From my first day on the job I placed the reputation of the bank above all else. That is why I want to and must act according to my convictions." UBS Europe chief Sergio P. Ermotti will take over immediately as interim chief executive until Gruebel's replacement is appointed. Gruebel's departure caps 10 days of speculation over his future following the bank's announcement that a single London-based trader had evaded internal control systems and gambled away $2.3 billion. The trader, 31-year-old Kweku Adoboli, was arrested Sept. 15 and charged with fraud and false accounting. A judge ordered him Thursday to be held in jail until a hearing next month.

UBS CEO Gruebel resigns over rogue trading loss

UBS chief executive Oswald Gruebel has resigned over a $2.3 billion loss caused by rogue trading at its investment division, which is to b...

Spain’s central bank reported this week that things were getting worse for that country’s banks

Spain’s central bank reported this week that things were getting worse for that country’s banks — but not because they held a lot of Greek debt or bonds issued by other troubled European economies. The problem, instead, is the same old one. With Spain’s economy weak and home prices falling, bad loans are growing. And the central bank thinks things are getting worse. In a surprisingly frank presentation to investors in London on Tuesday, José María Roldán, the Bank of Spain’s director general of banking regulation, said that Spanish land prices had fallen about 30 percent from the 2007 peak, adjusted for inflation, and that home prices were off about 22 percent. “In both cases, we expect further corrections in the years to come,” he said. For land prices, he said, the bank’s “baseline scenario” was that prices would fall to little more than half of the peak level. The “adverse scenario” indicated that the decline could be significantly worse. That was a significant change from a presentation he made in February. Then, with home prices down about 18 percent from the peak, he argued that the decline was similar to past cyclical downturns and that prices were likely to begin rising soon. Remarkably enough, collapsing home prices have not left Spanish banks holding large amounts of bad mortgage loans, thanks largely to the fact the Spanish mortgage market operated during the boom in far different ways than the American market. But if lending to home buyers was conducted in a far more prudent manner than it was in the United States, lending to real estate developers and construction companies was, if anything, more irresponsible. The higher land prices went, the more eager the banks were to push out loans. The story of how Spain’s banks got into the mess — and the way its mess differs from that of American banks — show that it is impossible for banks to walk away from a collapsing bubble in real estate. It also shows that the structure of mortgage markets can make a major difference in how a collapse plays out. The figures released by the central bank this week showed that by the middle of this year, 17 percent of Spanish bank loans to construction companies and real estate developers were troubled — or “doubtful,” the term favored by the central bank. That figure has been rising rapidly, reflecting the deterioration in real estate values. When the financial crisis first broke out, in 2008 and 2009, it appeared that Spanish banks were in a better position than most, in part because of regulation that had kept the big banks from making some of the mistakes others made. But it turned out that smaller Spanish savings banks were heavily exposed to a real estate market that had outpaced even the United States’ market for a time during the first decade of this century. That market continued to rise after the American housing market stopped climbing. The Bank of Spain has created a program to force mergers of the smaller banks and to bring in better management. It has put about 11 billion euros into the banks to recapitalize them, and is putting in another 15 billion euros in a process that is supposed to be completed by the end of this month, said Antonio Garcia Pascual, the chief Southern European economist for Barclays Capital. But, he added, “our estimate is that the overall number needed is closer to 50 billion euros.” The banks are bleeding from loans secured by raw real estate, and from loans for construction. The pain is made worse because such lending soared during the property boom. It is those loans that are now devastating bank balance sheets, as developers who borrowed to build offices, stores and neighborhoods saw demand dry up and now cannot pay the banks back. Other corporate loans are also showing weakness, as would be expected when unemployment is above 20 percent and not expected to improve for at least two years, but less than 5 percent of those loans are said to be doubtful. There are also signs of trouble in car loans and other loans to individuals.

Spain’s central bank reported this week that things were getting worse for that country’s banks

Spain’s central bank reported this week that things were getting worse for that country’s banks — but not because they held a lot of Greek...

European banks head towards another meltdown

Shares in some of Europe's largest banks fell by 10pc as the cost of insuring European lenders' senior bonds rose to record levels, according to credit default swap prices. The Markit iTraxx Financial Index of contracts on the senior debt of 25 banks and insurers climbed to an all-time high 315.5 basis points. The last banking crisis was regarded by most eurozone members as an Anglo-Saxon phenomenon caused by lax lending controls that resulted in major UK and US institutions either collapsing or having to take costly state-funded bail-outs. To offset the threat of another crisis spreading across the eurozone, European regulators ordered their banks to increase their liquidity buffers. Government bonds were generally viewed as the most liquid and least risky assets to hold. However, this policy has come back to haunt them, leaving many lenders across the region seriously exposed to the eurozone sovereign debt crisis. French banking giants BNP Paribas and Société Générale are among the hardest hit. Recent estimates suggest BNP has eurozone sovereign debt exposure of about €75bn (£65bn), amounting to roughly 6pc of total assets, including €14bn of Greek debt and €21bn of Italian government bonds. The other two major French banks, SocGen and Credit Agricole, each have exposures of a similar size. Between them, France's banks have about €56bn of Greek sovereign bonds alone, and have so far taken 20pc writedowns on this.

European banks head towards another meltdown

Shares in some of Europe's largest banks fell by 10pc as the cost of insuring European lenders' senior bonds rose to record levels...

signs of an institutional run on French banks

Christine Lagarde, the managing director of the International Monetary Fund, urged Europe's leaders to bail out their fragile banks, as the boss of the eurozone's biggest bank, BNP Paribas, rejected fears that the financial sector was "in peril". Addressing journalists in Washington at the opening of the IMF's annual meeting, Lagarde said that Europe must tackle "this twin problem of sovereign debt and the need to strengthen capital buffers". She said: "It is critical that to fuel growth, banks be in a position to finance the economy, to finance enterprises, to finance households, to finance local governments. To do that they need to have the balance sheet that will actually support credit to the economy." Despite the recent stress tests carried out by the European Banking Authority, which suggested that most of the banks were well-placed to cope with the sovereign debt crisis, the IMF estimates that banks have taken a €300bn (£260bn) hit in the past year as a result of the growing risk of default by Greece and other vulnerable eurozone countries. Lagarde's call came as Baudouin Prot, BNP's chief executive, emphatically denied reports that it was in talks with Middle Eastern investors about securing a capital injection. "I formally deny this," he said. "We have no particular contact because we don't need a capital increase." But French bank shares – which have lost 50% of their value in three months – continued to fall as markets endured one of their worst trading days since 2009. BNP was off more than 5% and close rival Société Générale fell almost 10%. In the UK, bailed-out Lloyds Banking Group was down more than 10%, bearing the brunt of anxiety about a slowdown in economic growth. The FTSE 100 closed down 4.7% with large falls from mining companies, which make up a large part of the index and whose fortunes are closely tied to global economic prospects. Out of the 100 stocks, only technology company Autonomy – supported by a bid from Hewlett-Packard – fell by less than 1%. A survey from the crucial manufacturing sector, which chancellor George Osborne had hoped would lead an economic recovery, exacerbated the nervous mood by suggesting industry had been hit hard by the collapse of confidence around the world. The CBI's monthly industrial trades survey showed declining orders, both at home and abroad, and a rising backlog of finished goods, in the latest evidence that the recovery has stalled. Minutes from the latest meeting of the Bank of England's monetary policy committee revealed on Wednesday policymakers were preparing a new round of quantitative easing to respond to the worsening outlook. The gloom was echoed in the eurozone, where the early, "flash estimates" from the closely watched purchasing managers surveys signalled a sharp downturn in both manufacturing and services growth, adding to fears that Europe could be heading for a new recession. The Greek government announced new austerity measures this week to persuade investors that it is committed to tackling its debts. But investors are still fretting about the potentially devastating impact of a default on the region's banks. BNP insisted on Thursday that it could maintain a core tier one ratio – an important measure of financial strength – of 9% by January 2013 even if it sustained losses through the eurozone crisis. But Mohamed El-Erian, boss of the world's biggest bond investor Pimco, warned in a blog on the FT's website that there were "signs of an institutional run on French banks".

signs of an institutional run on French banks

Christine Lagarde, the managing director of the International Monetary Fund, urged Europe's leaders to bail out their fragile banks, a...

U.S. deep-sea explorers must turn over to the Spanish government 17 tons of silver coins and other treasure recovered from a sunken Spanish galleon in 2007

<img alt="" height="100" src="http://lh4.ggpht.com/-fPhs0e5VKCg/TntAvaHnyAI/AAAAAAAAHsU/QoV9i0HaXJ4/%25255BUNSET%25255D.jpg" style="float: left;" width="801" />U.S. deep-sea explorers must turn over to the Spanish government 17 tons of silver coins and other treasure recovered from a sunken Spanish galleon in 2007, a federal appeals court ruled Wednesday. But Tampa, Fla.-based Odyssey Marine Exploration has vowed to continue the protracted legal battle over the cache, which could be worth as much as $500 million. In a statement Wednesday, the company said it would take the next step in the appeals process, requesting a hearing before all the judges of the 11th Circuit Circuit Court of Appeals. That came after a three-judge panel of the 11th Circuit had issued its ruling in a case that could case spill over to treasure hunts for years to come. "We are certainly disappointed by the 11th Circuit's ruling," said Melinda MacConnel, Odyssey's vice president and general counsel. "We believe the U.S. Constitution and all other applicable laws give jurisdiction to the U.S. courts to determine the rights of Odyssey, Spain and all other claimants in this case." Attorneys for Odyssey asked the three-judge panel to overturn a lower court ruling and uphold the "finders keepers" rule that would give the treasure hunters the rights to coins, copper ingots, gold cufflinks and other artifacts salvaged in April 2007 from the galleon found off the coast of Portugal. Spain's lawyers countered that U.S. courts are obligated by international treaty and maritime law to uphold Spain's claim to the haul. The ship, called the Nuestra Senora de las Mercedes, was sunk by British warships in the Atlantic in 1804 while sailing back from South America with more than 200 people on board. Odyssey created an international splash in May 2007 when it announced that it had recovered more than 500,000 silver coins and other artifacts from the wreck and flew the treasure back to Tampa. Spain went to the U.S. District Court in Tampa, where the company is based, claiming ownership. Odyssey disputed the Spanish government's ownership of the valuable cargo. James Goold, a Washington attorney who represented the Spanish government in court, called the appeals court decision "a complete and much-deserved victory." "The court recognized that stripping the sunken Spanish ship of coins to sell to collectors is no more appropriate than to do that to the USS Arizona in Pearl Harbor," Goold said. "We are pleased and gratified that the court recognized U.S. obligations under international law, just as Spain respects the sanctity of sunken U.S. Navy ships." A federal judge sided with Spain in the first round of the tug-of-war in June 2009, accepting the Spanish government's argument that it never surrendered ownership of the ship and its contents. Attorneys argued the case before the 11th Circuit panel in May. Odyssey had argued that the wreck was never positively identified as the Nuestra Senora de las Mercedes. And if it was that vessel, then the ship was on a commercial trade trip — not a sovereign mission — at the time it sank, meaning Spain would have no firm claim to the booty. International treaties generally hold that warships sunk in battle are protected from treasure seekers.

U.S. deep-sea explorers must turn over to the Spanish government 17 tons of silver coins and other treasure recovered from a sunken Spanish galleon in 2007

U.S. deep-sea explorers must turn over to the Spanish government 17 tons of silver coins and other treasure recovered from a sunken Spanis...

La Tasca evolves brand into Spanish Tapas Bar and Kitchen

LA TASCA RESTAURANTS LTD IS RE-LAUNCHING THEIR 65 STRONG CHAIN THROUGH THE NEW CONCEPT LA TASCA SPANISH TAPAS BAR & KITCHEN. The first to see the change were Windsor and Leeds, which have had the complete overhaul into the new concept. The change is set to bring a more contemporary, sincere approach to the brand and deliver a fresh new menu, which has halved in size and is sourced from Spain where possible to enhance provenance. La Tascas' customers remain a central focus for the future of the business, Simon Wilkinson CEO said: "We want to keep our current customer base but attract plenty of new ones too, it's been a frantic but very exciting few months, and we can't wait to roll out another six before Christmas for people to enjoy." The change also brings an innovative approach to its people within the business, focusing on a new training programme, recognition and reward and re-instating the value of being part of the La Tasca family. David Pepper, people director said: "People are the core cog of the business and drive every aspect of its success. Implementation of innovative training with flow, a new training manager and people development strategy in place are just the beginning of what we want to do for our 'family' at La Tasca." Today a new website launched as part of the evolvement of the brand, allowing customers to engage more via social media, enhance the online guest experience with a simplified booking system and new features in the form of a customer gallery, what's on and a bigger focus on careers for the business. This innovative approach brings the people and its customers back to the heart of the business and both Windsor and Leeds restaurants have been a test bed of which the successful elements will appear next in Glasgow, St Martins Lane- London and Bluewater. La Tasca Restauarants became a private company in March and is operated by CEO Simon Wilkinson. Prior to this the company had 3 previous owners including most recently Bay Restaurant Group, which is now Stonegate Plc. The first La Tasca opened in 1993 in Manchester and now has 65 UK restaurants spread over all regions and five in the USA and aims to double its estate in the next three years.

La Tasca evolves brand into Spanish Tapas Bar and Kitchen

LA TASCA RESTAURANTS LTD IS RE-LAUNCHING THEIR 65 STRONG CHAIN THROUGH THE NEW CONCEPT LA TASCA SPANISH TAPAS BAR & KITCHEN. The firs...

Spain’s CAM Says More Than Half of Developer Loans in Default

Caja de Ahorros del Mediterraneo (CAM), a Spanish savings bank seized by the Bank of Spain, said more than half of its loans for property development were in default. Of 12.7 billion euros ($17.2 billion) lent to developers, 6.4 billion euros were classed as doubtful, the lender said in explanatory notes to its first-half earnings published late yesterday. Another 1.3 billion euros of those loans were classed as “substandard,” the lender said. The Bank of Spain is looking for a buyer for CAM, which was seized in July. It posted a 1.14 billion-euro first-half loss as its default ratio more than doubled to 19 percent since December. Selling the stricken lender is a priority for the regulator as it seeks to bolster confidence in a banking industry pummeled by defaulted loans to developers. Auditors KPMG said yesterday that the bank’s viability depends on the success of a plan put together by the government’s rescue fund. The Alicante-based lender said 5.4 percent of its 1.1 billion euros of mortgage loans to individuals were in default. Property development and business-services loans accounted for 29 percent of its loan book, the lender said.

Spain’s CAM Says More Than Half of Developer Loans in Default

Caja de Ahorros del Mediterraneo (CAM), a Spanish savings bank seized by the Bank of Spain, said more than half of its loans for property de...

Scottish supermarkets face extra tax on selling alcohol

Plans to hike business rates for major retailers of alcohol and tobacco in Scotland could see supermarkets pay around £110 million in tax over the next three years.   Finance Secretary John Swinney announced the new levy yesterday, as part of the Scottish government’s Spending Review.   Swinney said the review contained “tough choices, because of the cuts from Westminster that go too far, too fast”.   “We have had to restrict pay costs, reluctantly implement pensions increases on public sector staff, and maximise the income gained from asset sales,” he said.   He outlined that part of the extra revenue brought in would come from a tax on major retailers who sell alcohol and tobacco.   The measure was a surprise announcement, as during the last parliament a proposal to introduce a “Tesco tax” was voted down and it was not included the SNP’s manifesto.   Scottish Retail Consortium director Ian Shearer said: “This new tax is a blatant fund-raising exercise which is illogical and discriminatory. It targets a part of the retail sector which funds Drinkaware, rigorously prevents under-age sales with Challenge 25 and has led the way on clear alcohol labelling, giving it an exemplary record on the sale of alcohol and tobacco.   “Supermarket margins are already cut to the bone as stores compete to offer the best deals to cash-strapped consumers. The UK already has some of the highest alcohol taxes in Europe. This tax would make it harder for food retailers to keep prices down for customers, and makes Scotland a less attractive place to do business, invest and create jobs.”   The WSTA's Jeremy Beadles said he was "disappointed" the meaure had been announced with no consultation.   "The tax on large retailers will place an additional burden on Scottish businesses and push the price up for all consumers regardless of whether they consume alcohol at all,” he added.   “At a time of financial constraint, when many businesses in Scotland are already feeling the pinch and paying increase rates, we do not believe that punishing responsible consumers in Scotland with another tax is either fair or justified.”     Minimum alcohol unit pricing could become as reality north of the border by next summer, although the price has not yet been set. The Scottish government claims it is the “most effective and efficient way” of reducing consumption and alcohol related harm.

Scottish supermarkets face extra tax on selling alcohol

Plans to hike business rates for major retailers of alcohol and tobacco in Scotland could see supermarkets pay around £110 million in tax ...

Bloody Sunday family rejects payout

Relatives of one of the Bloody Sunday victims have firmly rejected any offer of Government compensation. Sisters Linda and Kate Nash, whose teenage brother William was among 14 men who died after paratroopers opened fire on civil rights protesters in Londonderry in January 1972, said: "I find it repulsive." The Ministry of Defence has confirmed that moves are under way to compensate the families following representation from solicitors acting on behalf of some of the relatives. The Nash sisters said they would not take money for personal financial gain: "Not under any circumstances will I ever accept money for the loss of my brother. "I find it repulsive, taking anything from the MoD. If the MoD wants to set up bursaries they can, but not in my brother's name," Ms Nash said. Prime Minister David Cameron has already apologised to victims and said the shootings were wrong. An MOD spokesman said: "We acknowledge the pain felt by these families for nearly 40 years, and that members of the armed forces acted wrongly. For that, the Government is deeply sorry. We are in contact with the families' solicitors and where there is a legal liability to pay compensation, we will do so." Lord Saville drew up a landmark report last year which criticised the Army over the killings. His panel ruled that the Army fired first and without provocation. It found that all 14 who died and the others who were injured almost four decades ago were unarmed and completely innocent. The MoD's move followed a letter sent to the Prime Minister by solicitors for the families, asking what he was going to do about Bloody Sunday. He described the killings as unjustified and unjustifiable. Defining who would be eligible for compensation could be complicated as many immediate family members are already dead. Relatives received a small payment worth a few hundred pounds from the MOD, without admitting liability, shortly after the event.

Bloody Sunday family rejects payout

Relatives of one of the Bloody Sunday victims have firmly rejected any offer of Government compensation. Sisters Linda and Kate Nash, whos...

Spain Examines Long Hidden Swiss Account

Emilio Botín is a billionaire Spanish banker renowned for running a tight ship. He asks that his top credit officers at Santander — one of Europe’s largest banks — make a trek to his vacation home each summer to report on loan exposures. And he queries the head of his charitable foundation, euro for euro, on its smallest donations. Enlarge This Image Daniel Ochoa De Olza/Associated Press A Spanish court is investigating whether the family of Emilio Botín, the head of Banco Santander, paid too little taxes. Add to Portfolio HSBC Holdings PLC Barclays PLC Go to your Portfolio » Enlarge This Image Nacho Cubero/Reuters Emilio Botín is head of Banco Santander, which is based in Madrid. Readers’ Comments Share your thoughts. Post a Comment » Read All Comments (30) » Yet, there is one not-so-small matter that Mr. Botín (pronounced bo-TEEN) has failed to keep tabs on: a Swiss bank account secretly opened long ago by his father that grew to such a size that when Spanish authorities discovered its existence last year, Mr. Botín and other family members paid 200 million euros (about $273 million currently) in taxes to avoid tax evasion charges. At the request of tax fraud inspectors, a Spanish national court is investigating whether the payment is enough, given the amount that was stashed abroad; tax experts in Spain say that the account could reach two billion euros. The court has also said that officials need more time to sift through the blizzard of documents that the family submitted and will consider whether a criminal charge of document fraud should be brought. A lawyer for the Botíns, Jesús Remón, said the family was cooperating with the investigation and was “fully in compliance with its tax obligations following their voluntary filing” last year. He added that no family member had been charged with wrongdoing. Mr. Botín’s tax problems come as debate intensifies over whether struggling governments should demand more tax revenue from the rich. On Monday, President Obama called to end some tax breaks for the wealthiest taxpayers in the United States. Last Friday, the Spanish government reintroduced a wealth tax that it had abolished three years earlier, hoping to collect an estimated 1.08 billion euros from taxpayers with more than 700,000 euros in declared assets. Spain’s wealthiest have so far not publicly endorsed calls for higher taxes, and Mr. Botín on Friday told reporters that “it seems to me very bad to reintroduce” the wealth tax. More so than in other European countries, where bankers are largely anonymous figures, Mr. Botín holds sway in Spain. Although he avoids social events and his public utterances are few, his influence is seen as wide-ranging. And he has been able to retain control of Santander despite his family’s controlling just 2 percent of its shares. Neither the judiciary nor the family has provided details about how much money the Swiss bank account contained or how the amount grew over time. Nor would Mr. Remón, the lawyer, comment on whether Mr. Botín had been aware of the account. What is known is that Mr. Botín’s father, also called Emilio, left Spain with part of his wealth in late 1936, after the start of the Spanish Civil War, fearing, like many other Spaniards, what might come. The elder Mr. Botín spent a few months in London before moving to Basel, Switzerland, and eventually returning to Spain to resume leadership of the bank that he had run since 1933. But while he returned to Spain, the money he salted away in Switzerland did not. The senior Botín died in 1993. Last year, the French government passed on to Spain data that it had obtained from Hervé Falciani, a former employee in HSBC’s Swiss subsidiary, naming almost 600 Spanish holders of secret bank accounts. Among those was one belonging to the estate of Mr. Botín’s father. In his opening summary, the judge in charge of the case, Fernando Andreu, highlighted “the complexity of the hereditary structures” of trusts, foundations and other companies set up to oversee the account. The closest he came to explaining what was in the account was to say that it also included a 12 percent stake in Bankinter, a midsize bank in which Jaime Botín, Emilio’s brother, is a leading shareholder. That holding, at current stock market value, would be worth about $310 million.

Spain Examines Long Hidden Swiss Account

Emilio Botín is a billionaire Spanish banker renowned for running a tight ship. He asks that his top credit officers at Santander — one of...

Expenses fraud ex-MP Elliot Morley freed from jail

Former environment minister Elliot Morley has been freed from prison after serving a quarter of his 16-month sentence for fiddling his expenses. Morley was jailed in May for claiming £32,000 in bogus mortgage payments relating to his home in Winterton, near Scunthorpe, North Lincolnshire. The 59-year-old was the first former minister to be jailed in the parliamentary expenses scandal. He was released from Ford open prison, near Arundel, West Sussex, on Tuesday. He joins three other former Labour MPs - David Chaytor, Eric Illsley and Jim Devine - and two former Tory peers - Lord Taylor and Lord Hanningfield - who have already been released after serving time behind bars for their role in the fraud. 'Wholesale abuse' In total, Morley claimed £16,800 on a bogus mortgage and £15,200 after inflating the amount he was previously paying - for which he should have been entitled to only £1,572. It is understood that he was freed under the home detention curfew scheme, which allows prisoners who pose a low risk to be tagged and released early after serving at least a quarter of their sentence. Sentencing Morley at Southwark Crown Court, Mr Justice Saunders said he was guilty of "blatant dishonesty" and had "thrown away his good name and character". The court was told that Morley had "engaged in the wholesale abuse of the expenses system". The prosecution overshadowed a political career lasting more than 20 years. As MP for Scunthorpe from 1987 to 2010, former teacher Morley was one of Labour's most prominent voices on agricultural issues and the environment. He was party spokesman on rural affairs and animal welfare from 1989 until the 1997 election victory, and served under Tony Blair as environment minister from 2003 to 2006. But during that time he was claiming thousands of pounds more than any of the other MPs convicted.

Expenses fraud ex-MP Elliot Morley freed from jail

Former environment minister Elliot Morley has been freed from prison after serving a quarter of his 16-month sentence for fiddling his exp...

UBS loss 'came from lots of small trades over months'

Kweku Adoboli carried out vast numbers of small transactions over many months, as he accumulated investments that would ultimately lead to $2bn or £1.3bn in losses for UBS. According to a banker with a close knowledge of Mr Adoboli's alleged activities, one reason why UBS failed to identify the unauthorised deals till Wednesday was that Mr Adoboli had a close knowledge of UBS's back office or administration procedures: he previously worked in the back office before becoming a trader. "His knowledge of the back office apparently helped him to disguise what he was doing," the banker said. He added: "naturally there are concerns about why it took UBS so long to identify what now looks like a long history of rogue trades. But when a trader sets out to systematically mislead his employer, as seems to have happened in this case, the best monitoring systems in the world won't pick up what happened." This revelation, that it may have been almost impossible for UBS to spot Mr Adoboli's unauthorised dealings at an early stage, is expected to reinforce political pressure in Switzerland for UBS to hive off its investment bank . UBS also apparently believes that Mr Adoboli's activities do not demonstrate that there is something intrinsically dangerous in the activities of the Delta One trading team of which he was a member. Delta One traders use sophisticated financial techniques, including derivatives, to construct investments - such as Exchange Traded Funds (ETFs) - that track financial indices or products. The Bank of England and Financial Services Authority have warned that there are dangers in the design of Exchange Trade Funds and the way they are traded. "It doesn't seem to me that in this case you can lay the blame for the losses on the nature of ETFs," the banker said. I have also learned that the losses generated by Mr Adoboli were not particularly associated with the decision earlier this month of the Swiss National Bank to force down the value of the Swiss Franc - despite widespread speculation that the devaluation of the Swiss Franc was somehow a trigger for the £1.3bn losses. UBS is expected to make a detailed statement about Mr Adoboli's transactions after the market closes later this afternoon.

UBS loss 'came from lots of small trades over months'

Kweku Adoboli carried out vast numbers of small transactions over many months, as he accumulated investments that would ultimately lead to...

Gadhafi spotted as rebels capture parts of south Libya town

<img alt="" height="183" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5_lgPczaw5ts2WYN-RlcHgwKLsuEjpKyh8wMQaSYfdmosWxiQ3Qdu9WHy13CCjKCO_CwnJF2wlF-d-QkOiJv-63EkzRFeSutu5uE0EfhZIa4uzEEf5pI2dopdEc0uSgZl45gfSqQMGTyu/" style="float: left;" width="275" />Fugitive Libyan leader Muammar Gadhafi was spotted in the southern city of Sabha a few days ago, the regional daily Asharq al-Awsat reported on Tuesday, citing an eyewitness. The witness claimed that Gadhafi was living in the city, located around 750 kilometers south of the capital Tripoli. 	 Anti-Gadhafi fighters firing a cannon near Sirte, the hometown of deposed leader Muammar Gadhafi, September 17, 2011. Photo by: Reuters Gadhafi's whereabouts have been unknown since rebels took over Tripoli in August. However, he continues to send statements and voice messages through the Syria-based al-Rai channel. The report comes after the anti-Gadhafi rebels said they took over parts of Sabha city as well as its airport. "The airport of Sabha has been liberated by our fighters," a military spokesman, Colonel Ahmed Bani, said in Tripoli on Monday. "Also two villages near Sabha have been liberated." For around a week the rebels have been fighting pro-Gadhafi fighters, who have put up stiff resistance in his birthplace of Sirte and the desert town of Bani Walid, south-east of Tripoli. Almost a month after they overran Tripoli, the rebels are at pains to take control of the two strongholds before their leaders can declare all of the North African country "liberated."

Gadhafi spotted as rebels capture parts of south Libya town

Fugitive Libyan leader Muammar Gadhafi was spotted in the southern city of Sabha a few days ago, the regional daily Asharq al-Awsat report...

Tony Blair 'visited Libya to lobby for JP Morgan'

A senior executive with the Libyan Investment Authority, the $70 billion fund used to invest the country's oil money abroad, said Mr B...

UBS raises rogue equity trade losses to $2.3 billion

<blockquote><img alt="" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjI8jmvZkD7dgoIlfSFSyrkGHX2NtUYFgmiS04fUpB-m3gaghBSu0OzmfbxRB-4zmrL7rVjJfuwRAAQYOKffaOBKH0B9zaICZdFMWv6omOD5kFee2RYBGpwnJ1Xg2pHUu9K4nzdMTFfxm4/" style="float: left;" width="320" />Swiss bank UBS on Sunday increased the amount it said it had lost on rogue equity trades to $2.3 billion and alleged a trader concealed his risky deals by creating fictitious hedging positions in internal systems. UBS stunned markets on Thursday when it announced unauthorised trades had lost it some $2 billion. London trader Kweku Adoboli was charged on Friday with fraud and false accounting dating back to 2008. "The loss resulted from unauthorised speculative trading in various S&P 500, DAX, and EuroStoxx index futures over the last three months," UBS said in a brief statement. "The loss arising from this matter is $2.3 billion. As previously stated, no client positions were affected." Global stock markets have been extremely volatile in recent months, plunging on concerns over euro zone and U.S. debt crises and then rebounding on hopes for their resolution. The loss is a disaster for the reputation of Switzerland's biggest bank, which had just started to recover after it almost collapsed during the financial crisis and faced a damaging U.S. investigation into aiding wealthy Americans to dodge taxes. "Loss even more. Reads like they're making excuses," said Helvea analyst Peter Thorne of the UBS statement. The new scandal has prompted calls for its top managers to step down and for its investment bank to be split into a separate unit from its core wealth management business. Chief Executive Oswald Gruebel, who was brought out of retirement in 2009 to turn the bank around, was quoted in a newspaper on Sunday as saying he is not considering quitting over the crisis, but said it was up to the board to decide. In a memo to staff on Sunday, he said: "Ultimately, the buck stops with me. I and the rest of senior management are responsible for dealing with wrongdoing." Swiss newspapers quoted unnamed insiders as saying the UBS board and important shareholders such as the Singapore sovereign wealth fund were still backing Gruebel, with immediate changes at the top the last thing the bank needed. Gruebel is widely expected to present plans to drastically cut back the investment bank at an investor day in November. INDEPENDENT INVESTIGATION The bank, whose three keys logo symbolise "confidence, security, discretion," has pulled its "We will not rest" global advertising campaign for now, that was designed by advertising agency Publicis to try to rebuild its image. Meanwhile, UBS client advisers have been writing to customers to reassure them of the underlying financial strength of the bank despite the trading loss, a spokesman said. "That we now suffer this setback at this point in our efforts to improve our reputation is very disappointing. This incident also sets us back somewhat in our capital-building efforts," Gruebel said in his memo. "However, I wish to remind you that our fundamental strengths as a firm remain intact... we remain one of the best capitalized banks in the industry. UBS said its board of directors had set up a committee chaired by independent director David Sidwell, former chief financial officer at Morgan Stanley, to conduct an independent investigation into the trades and the bank's control systems. The bank said it had covered the risk resulting from the unauthorised trades, and its equities business was again operating normally within previously defined risk limits. It said the trader had allegedly concealed the fact his trades violated UBS risk limits by executing fake exchange-traded fund (ETFs) positions. "Following inquiries directed to him by UBS control functions that were reviewing his positions, the trader revealed his unauthorised activity," the bank said. "The positions taken were within the normal business flow of a large global equity trading house as part of a properly hedged portfolio," UBS said. "However, the true magnitude of the risk exposure was distorted because the positions had been offset in our systems with fictitious, forward-settling, cash ETF positions." The Sunday Times cited unnamed insiders saying the trader placed bets worth $10 billion before his losses were detected. ETFs are index funds listed on an exchange and can be traded just like regular stocks. They try to replicate index performances and offer lower costs than actively managed funds, but regulators have warned about risks from some complex ETFs. In the past three months, DAX futures have fallen 22 percent, Eurostoxx 50 futures have dropped 20 percent and S&P 500 futures have dipped 4 percent. The instruments involved in the UBS case are similar to those that Jerome Kerviel, the rogue trader at Societe Generale, traded when he racked up a $6.7 billion loss in unauthorised deals in 2008. Christoph Blocher, vice-president of the right-wing Swiss People's Party (SVP) -- the country's biggest -- renewed his calls for a splitting off of the investment bank. "One has to seriously examine a ban on investment banking for commercial banks," he told the SonntagsZeitung, adding his party might team up with the center-left Social Democrats to push for such a move.</blockquote>

UBS raises rogue equity trade losses to $2.3 billion

Swiss bank UBS on Sunday increased the amount it said it had lost on rogue equity trades to $2.3 billion and alleged a trader concealed hi...

'Rogue trader' Kweku Adoboli faces fraud charges dating back to 2008

tearful Kweku Adoboli, the alleged rogue trader at the centre of a $2bn (£1.3bn) loss at Swiss bank UBS, appeared before magistrates on Friday to be charged with fraud and false accounting dating back to 2008. A clerk at City of London magistrates court handed the 31-year-old Ghanaian a tissue as the 15-minute proceedings began, after which the one-time star trader was led away to remain in custody until a bail hearing on 22 September. Adoboli's charge sheet appeared to allege that he had taken steps to cover loss-making trades as long ago as 2008. A committal hearing was set for 28 October. The timescale of the allegations will raise questions about risk management procedures at the bank, put intense pressure on the chief executive, Oswald Grübel, and fuel calls from some Swiss politicians for the bank to exit its investment banking business, putting thousands of jobs at risk in the City. Many UBS bankers already fear for their year-end bonuses. Smiling at times, Adoboli spoke only to confirm his name, address and date of birth, while the Swiss bank refused to add anything to the statement it issued on Thursday when it revealed it had called in City of London police at 1am to investigate Adoboli after uncovering "unauthorised trading". British-educated Adoboli – whose passport spells his name as Kwaku – joined UBS in 2006 and was a member of the so-called delta one trading desk, where, among other things, he traded exchange traded funds (ETFs). These complex financial instruments, on which the regulators issued warnings earlier this year, are structured to mimic market movements. His registration with the Financial Services Authority was switched to "inactive" on Friday at the request of the firm – indicating that he is no longer performing that role. Two charges claim that Adoboli falsified records of ETFs between October 2008 and December 2009 and then January 2010 and September 2011. A third charge alleges that he committed fraud between January 2011 and September 2011 while senior trader in global synthetic equities. His lawyers at Kingsley Napley – the law firm that advised Nick Leeson, the rogue trader who broke Barings – did not issue a statement or enter pleas to the charges. His father, John, told Reuters from Tema, Ghana: "I want the world to have an open mind. He should not be sentenced before the trial begins." The former United Nations worker is hoping to fly to the UK this week and is applying for a visa. The City of London police, who arrested Adoboli at his luxury home on the edge of the City at 3.30am on Thursday, said their investigation was continuing, in "close collaboration" with the Financial Services Authority, the Serious Fraud Office and the Crown Prosecution Service. Adoboli's trading activity, by its nature, required him to perform frequent numbers of small trades. One of the last postings on his Facebook page – "need a miracle" – came at around the time the Swiss National Bank intervened to reduce the value of the Swiss franc, which has prompted speculation that this helped expose his losses. The bank, which employs 6,000 staff in London, will now have to pay for a detailed investigation being launched by the FSA and the Swiss regulator, Finma, into the control systems at UBS, the failures that permitted the losses to occur, and details of the unauthorised trading activity. The "comprehensive, independent investigation" will be carried out by one of the big four accountancy firms, although no timescale has been given for when it might be completed. The discovery of the "unauthorised trading" has come at a sensitive time for the City, coinciding as it does with the third anniversary of the collapse of Lehman Brothers and coming after calls from politicians in the UK and Switzerland for the break-up of high street banks to separate "casino" investment banking arms. "It shows that investment banking is a high-risk field and it's important that we clearly separate systemically important functions from the rest of the banking business," said Caspar Baader, of the Swiss People's party. Switzerland's Social Democratic party called for "consequences" such as a ban on "proprietary trading" and replacing "egomaniacal, arrogant and irresponsible managers". Even a year after the banking crisis of 2008, during which Swiss taxpayers contributed to a $60bn bailout of UBS, the nation's banking assets totalled SFr3.47tr – nearly seven times the country's gross domestic product. New laws requiring UBS and Credit Suisse to rein in risk and hoard capital to a higher level than required elsewhere in Europe have already been passed in the first chamber of the Swiss parliament and were debated this week in the upper house, known as the national council. Moves to hive off riskier investment banking and private client operations from those banking functions vital to the smooth operation of the Swiss economy also form part of the legislation, but would not be implemented immediately. Banking analysts believe UBS may now have to scale back its investment banking business and axe even more jobs on top of the 3,500 group-wide cuts announced last month in a bid to save £1.5bn – a similar amount to the losses the bank now fears it faces from the alleged "unauthorised trading". "We are making further cuts in our 2012 profit estimates, as we believe that UBS is set to announce a more streamlined investment banking business strategy in November, with certain business units being closed and additional jobs being lost. This is part of the bank's efforts to address the long-term structural issues within the financial services industry," said Christopher Wheeler, an analyst at Mediobanca. Ratings agencies warned of a downgrade of the bank's credit rating. Standard & Poor's placed the bank on its Creditwatch list, citing factors including the "setback to UBS's efforts to rebuild its reputation and demonstrate strengthened risk-management following its weak performance in 2007-2009", when it almost collapsed during the credit crunch.

'Rogue trader' Kweku Adoboli faces fraud charges dating back to 2008

tearful Kweku Adoboli, the alleged rogue trader at the centre of a $2bn (£1.3bn) loss at Swiss bank UBS, appeared before magistrates on Fr...

UBS hit by $2bn rogue trade

Matthew Czepliewicz, an analyst at Collins Stewart, said the unauthorised loss cuts his 2011 earnings-per-share estimate for UBS by about 30pc - "a huge hit". He continued: "A loss of this magnitude will very likely have occurred in the FICC (Fixed Incomes, Currencies and Commodities) division, the very division UBS has been systematically rebuilding after shrinking it by 40pc during the credit crisis. That an unauthorised position of this size could have escaped oversight will renew pressure on management to radically scale back the FICC business, a volatile and capital-intensive business overall." He said that his upgrade of UBS to "buy" from "hold" on September 6 "now looks memorable, to say the least", but added: "As large and embarrassing as the loss is, it may in fact drive a positive strategic overhaul of the company. In the meantime, we await further detail on what went wrong and how management will respond." Andrew Lim, analyst at Espirito Santo, said the loss was manageable at group level at UBS. He added: "The $2 billion loss compares to our current estimate for the (third-quarter) group net earnings of 1.1 billion Swiss francs and (full-year estimated) net earnings of 5.1 billion Swiss francs. "The loss is therefore manageable at the group level, but is obviously not helpful for sentiment and confidence in the bank's risk management following the near-death experience of 2008/9." Fiona Swaffield, analyst at RBC, put the loss in context: "Assuming the loss is not revised at CHF1.7bn this is 3.4% of tangible book value end Q2 2011 and CHF0.35ps. Relative to target Basel III risk weighted assets of CHF300bn this is some 44bp. UBS on the most conservative measure has core T1 of 10% forecast end 2012 Basel III pre this and 13% with phased=in deductions. This would fall to 9.8% and 12.4%, respectively, so still respectable and above CS (8.8% on look through Basel III end 2012) but obviously hardly a positive as its strong capital base relative was an attraction." But she added the real issue over and above the financial impact is the reflection on risk management at UBS: "UBS was seen to have recovered significantly from the credit crisis and to have improved its risk management in the investment bank in spite of its struggle to improve returns. This obviously brings this very much into question." Goldman Sachs analysts Jernei Omahen and Peter Skoog wrote in a note: "This loss has the scope to have a material impact on the perception of UBS' private bank, impacting its future operating trends. "Today's announcement therefore adds to the long list of arguments (and pressure) for a substantially smaller investment bank." Louise Cooper, markets analyst at BGC Partners, said: "According to Bloomberg analysts were forecasting about a SFR 7bn or approx £5bn pre tax profit for UBS for the 2011, therefore a £1.3bn trading loss hits full year earnings by about a third." She added: "The jewel in the crown of UBS is its private banking business, producing consistent, quality earnings. An unexpected trading loss could do significant reputational damage to the bank especially given its track record during the crisis (massive recapitalisation and regulatory fines). Rich people tend not to want to do business with a bank where there are questions over risk control. UBS needs to do a good job in explaining what went wrong and assuring its clients that it will not affect them." Joshua Raymond, chief market strategist at City Index, commented: "Whilst the incredible volatility seen recently in the markets would have likely seen some traders lose and win big, the news that a rogue trader was allowed to stack up losses of $2bn will inevitably send nervous shockwaves through to those investors who have only just returned to the bank after a severe loss of confidence. "The Swiss firm has fought hard in the last few years to restore its credibility from having to be bailed out by the Swiss authorities, suffering a large fine for tax evasion and after it agreed to disclose the accounts of thousands of its clients to US tax authorities."

UBS hit by $2bn rogue trade

Matthew Czepliewicz, an analyst at Collins Stewart, said the unauthorised loss cuts his 2011 earnings-per-share estimate for UBS by about ...

Euro zone banks in the grip of funding squeeze

Funding through interbank markets remained scarce and expensive for euro zone banks on Tuesday as concerns about a Greek default and rising pressure on Italian bonds increased the focus on heavily exposed French institutions. The cost of insuring senior French bank debt against default rose according to data from Markit, while a media article suggesting BNP Paribas had no access to dollar funding was cited by equity and currency market participants. Money market traders said that while access to dollar loans remained difficult for French banks -- under close scrutiny owing to their large holdings of peripheral government bonds -- the situation was not one of rapid deterioration. "The stress levels have always been there and they're certainly not getting any less... but there's no sense of panic from the banks as they can fund themselves through central bank cash," a trader said. Fiscal slippages have threatened to cut off Greek aid, raising the prospect of a default by year end, while a weak Italian debt auction showed investors remain reluctant to buy new debt from the heavily-indebted state. The cost of dollar funding, measured by three-month Libor interbank rates , edged higher to 0.34711 percent and access to dollars via cross currency basis markets was close to its most expensive levels since late 2008 at -111 basis points.

Euro zone banks in the grip of funding squeeze

Funding through interbank markets remained scarce and expensive for euro zone banks on Tuesday as concerns about a Greek default and risin...

Pepper Pike lawyer faces up to 21 years in prison in stock scam

Pepper Pike attorney James Margulies was sentenced Friday to up to 21 years in prison for his role in a $110 million stock fraud . Judge Gregory Carro also ordered Margulies to make restitution of $7 million, money that prosecutors said he pocketed in the pump-and-dump scheme. The defense later disputed the amount and the judge put the order on hold until a Sept. 26 hearing. Margulies, 47, and other co-conspirators artificially inflated the price of shares in Industrial Enterprises of America; lured in buyers; then dumped their stock, leaving innocent investors holding the bag, according to prosecutors and testimony in a Manhattan courtroom. The trial took place in New York because Industrial Enterprises, which owns a company north of Pittsburgh that makes antifreeze and other car chemicals, was headquartered there. Margulies had been convicted of securities fraud, grand larceny and other crimes in July. He served as finance chief, legal counsel, and for about a year, chief executive of Industrial Enterprises while operating a small law firm he opened on Chagrin Blvd. after several years at Jones Day's Cleveland office. Margulies told the court Friday that he had never heard the term "pump-and-dump" before getting entangled in Industrial Enterprises. He said his actions were well-intended and he didn't realize until too late that he had been drawn into a scam led by the company's former chief executive, John Mazzuto. Margulies, who will lose his law license, said his "own client," Mazzuto, had lied to him, and that he was unable to recognize the deceit. Margulies also said he needed to be at home with his children and that his absence would have a devastating impact on his daughter, a special needs child. The judge said that what Margulies' children needed was their father's love, not a "house decorated like a museum." But Margulies was living lavishly with ill-got funds instead of spending the time with his children, the judge said. Carro described the Industrial Enterprises case as probably the largest and most compelling instance of financial fraud that had ever come before him. Margulies pleaded for probation or at least a sentence no stiffer than what Mazzuto might get because Mazzuto pleaded guilty to plundering Industrial Enterprises and became a prosecution witness. The judge was unmoved, saying the only injustice was that Margulies' "Cleveland cronies" were not sitting exactly where he was. The original indictment of Margulies and Mazzuto included 10 unidentified and unindicted co-conspirators. Testimony suggested that a handful of them are businessmen from the eastern suburbs of Cleveland. Prosecutors say the investigation continues. Assistant District Attorney Garrett Lynch pushed for what he called a "deterrence" sentence to send a message about pervasive penny stock fraud costing U.S. investors "incalculable" dollars. Ira London, an attorney for Margulies, said Lynch's comments showed he was more interested in vengeance than deterrence. "This was a sentence for financial fraud of a defendant with no prior criminal record. Under the circumstances of this case, the sentence was excessive," London said. Margulies plans to appeal. According to trial testimony, Mazzuto and Margulies issued 15 million shares of Industrial Enterprises stock of a type that is supposed to be restricted to employees and consultants. The shares went to friends, relatives, business associates and other "conduits" who funneled the stock into the public market for sale to unsuspecting investors. Part of the scheme involved a stock promoter in Texas whose "programs" to boost the value of penny stocks drew upon a list of 1,000 to 2,000 people who buy obscure, low-value securities to push up their price, in return for fees for engaging in the conspiracy. Prosecutors said the enterprise helped Margulies pursue a high-rolling lifestyle -- paying for a $500,000 vacation club membership, a $350,000 diamond ring for his wife and the amount remaining on the mortgage for his home in Pepper Pike, now listed for sale at $1.5 million. Mazzuto built a $3 million home in Southhampton, N.Y., and a $2.5 million home in Palm Beach Gardens, Fla. Prosecutors said Margulies did the legal work to paper over the scam, while Mazzuto, who preceded Margulies as Industrial Enterprises' CEO, was the public face of the company. Mazzuto convinced institutional investors such as the State Teachers Retirement System of Ohio and the United Methodist Church to buy millions of the illegally-issued company shares. "He was the architect," Carro told Margulies during Friday's sentencing, "but you were the engineer." Shares in Industrial Enterprises peaked at $8.50 in May 2006 before crashing in 2007 as the fraud came to light, wiping out more than $20 million in investor holdings. The stock trades today for a penny a share. All told, prosecutors said, the executives illegally issued $90 million in securities. Mazzuto, 62, spent seven months in jail, unable to afford bail, before agreeing to testify against Margulies. He is awaiting sentencing.

Pepper Pike lawyer faces up to 21 years in prison in stock scam

Pepper Pike attorney James Margulies was sentenced Friday to up to 21 years in prison for his role in a $110 million stock fraud . Judge G...

Germany's top representative on the European Central Bank resigned in an apparent protest of the bank's recent interventions in euro-zone debt markets

Germany's top representative on the European Central Bank resigned in an apparent protest of the bank's recent interventions in euro-zone debt markets, dealing a severe blow to an institution struggling to retain its credibility amid the region's worsening debt crisis.Jürgen Stark is stepping down "for personal reasons," the ECB said in a statement. ECB President Jean-Claude Trichet "wholeheartedly" thanked Mr. Stark for his tenure at the ECB, the bank said.<div class="insetContent embedType-image imageFormat-DV" style="margin-top: 0px; margin-right: 19px; margin-bottom: 10px; margin-left: 0px; padding-top: 0px; padding-right: 8px; padding-bottom: 0px; padding-left: 8px; font-size: 1em; zoom: 1; float: left; border-top-style: solid; border-top-color: #70787c; width: 264px; border: 0px initial initial;"><div class="insetTree" style="font-size: 1em; float: left; position: relative; padding: 0px; margin: 0px;"><div class="insettipUnit" style="margin-top: 6px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; font-size: 1em; float: left; top: 0px; padding: 0px;"><img alt="[stark0909]" border="0" height="394" hspace="0" src="http://si.wsj.net/public/resources/images/OB-PN993_stark0_DV_20110909093232.jpg" style="float: none; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; border: 0px initial initial;" vspace="0" width="262" /><cite style="font-style: normal; text-align: right; display: block; color: #666666; margin-top: 3px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px;">Reuters</cite><p class="targetCaption" style="margin-top: 6px; margin-right: 0px; margin-bottom: 6px; margin-left: 0px; font-family: Arial, Helvetica, sans-serif; font-size: 1.1em; line-height: 1.2em; color: #333333; display: block; padding: 0px;">European Central Bank's Executive Board member Jürgen Stark.</div></div></div>Mr. Stark, one of the ECB's most outspoken anti-inflation "hawks," had opposed the ECB's decision last month to reactivate its government bond purchase program, as did the head of Germany's central bank, Jens Weidmann. The ECB has purchased €50 billion ($69 billion) in government bonds since reactivating the program.Mr. Stark's departure comes as a surprise. His term doesn't expire for nearly three more years. As head of the ECB's economics division at the ECB's Frankfurt-based executive board, Mr. Stark holds considerable sway over the economic analysis behind the ECB's interest-rate decisions.<div class="insetCol3wide" style="margin-top: 0px; margin-right: 19px; margin-bottom: 0px; margin-left: 0px; font-size: 1em; width: 280px; float: left; clear: left; padding: 0px;"><div class="insetContent" style="margin-top: 0px; margin-right: 0px; margin-bottom: 10px; margin-left: 0px; padding-top: 0px; padding-right: 8px; padding-bottom: 0px; padding-left: 8px; font-size: 1em; zoom: 1; border-top-width: 4px; border-top-style: solid; border-top-color: #70787c;"><h3 class="first" style="margin-top: 8px; margin-right: 0px; margin-bottom: 8px; margin-left: 0px; font-size: 1.4em; font-weight: bold; color: #333333; background-image: none; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; background-position: 0% 0%; background-repeat: repeat no-repeat; padding: 0px; border: initial none initial;"></h3></div></div>The news sent the euro tumbling to $1.3697, its lowest level since February, and ensured U.S. stocks got off to a weak start. The Dow Jones Industrial Average was down more than 300 points in interday trading, while Germany's DAX ended the day down 4% to 5189.93Mr. Starks' resignation comes at a dicey time for the ECB. Mr. Trichet's eight-year term ends at the end of October. He will be succeeded by Mario Draghi, who currently heads the Bank of Italy.Unless Mr. Stark is replaced by another German, his departure leaves the prospect of the ECB having three Italians on the 23-member governing council, and only one German.Germany's government may nominate its deputy finance minister, Joerg Asmussen, to replace Mr. Stark on the ECB's executive board, according to one person familiar with the matter.Mr. Stark is the second top German official at the ECB to step down this year. Former Bundesbank President Axel Weber resigned in April. Mr. Weber, who had been seen as a front-runner to succeed Mr. Trichet, later cited his opposition the the ECB's bond purchases as a factor in his decision to not seek the presidency.German politicians have denounced the ECB's decision to purchase Italian and Spanish bonds during the past month, though the decision was praised in other parts of Europe, and in the financial markets, as having prevented a Lehman-like collapse in financial markets.German President Christian Wulff, whose position is largely ceremonial, has called the ECB's bond purchases "politically and legally questionable." The head of German's center-left SPD party, Sigmar Gabriel, has also denounced the move.At his monthly press conference Thursday, Mr. Trichet blasted his German critics, saying the ECB has kept inflation lower over its 12-plus years of existence than at any time in Germany over the past 50 years."I would very much like to hear the congratulations for an institution that has delivered price stability in Germany," Mr. Trichet said.Germany's finance ministry declined to comment on who would succeed Mr. Stark. But it said Finance Minister Wolfgang Schaeuble will discuss Mr. Stark's resignation at a press conference in Marseille on Friday evening.Mr. Stark's departure won't change the "fundamental direction" of the ECB, which is "clearly set in the EU treaty," Ewald Nowotny, an ECB Governing Council member and head of Austria's central bank, said in a statement Friday. Still, Austria's central bank regrets Stark's departure, the statement said.Mr. Stark will leave once a successor is appointed, which will be by the end of the year, according to the bank's appointment procedure, the ECB said.Mr. Asmussen, a member of Germany's opposition SPD party, became deputy finance minister in 2008 and was able to stay on in the post even after his party left government after the 2009 election.

Germany's top representative on the European Central Bank resigned in an apparent protest of the bank's recent interventions in euro-zone debt markets

Germany's top representative on the European Central Bank resigned in an apparent protest of the bank's recent interventions in euro...

Citigroup banker faces 30 years in jail after admitting $22m fraud

Former Citigroup banker Gary Foster has pleaded guilty to embezzling $22m (£14m) from the bank, money he spent on a lavish lifestyle of fast cars and fancy apartments. He faces up to 30 years in jail. The 12-year Citigroup veteran spent hundreds of thousands on cars including a Ferrari and a Maserati Gran Turismo, even though he is legally blind and was unable to drive them. He hired a chauffeur. Foster, 35, was arrested in June at John F Kennedy Airport as he was getting off a flight from Bangkok. He had quit the bank in January before Citi had uncovered his scheme. A former treasury finance department executive, Foster earned $100,000 a year managing internal investments at the bank. Prosecutors said his scheme began in September 2003 and continued into 2011. He wired the money from internal Citi accounts into his personal bank account and covered up his tracks by assigning phony contract or deal numbers to the transfers to make them appear bona fide. According to prosecutors, between July and December 2010, he moved around $14.4m from Citigroup's debt adjustment account and $900,000 from the bank's interest expense account to his personal account in eight separate wire transfers. In a single transfer, on 8 November, he is alleged to have wired himself $3.9m. The US Attorney's Office in Brooklyn has already seized $16m in assets including his cars, an exclusive apartment in Manhattan's Rockefeller Centre, an apartment in Brooklyn and mansion in Englewood Cliffs, New Jersey. "The defendant violated his employer's trust and stole a stunning amount of money over an extended period of time to finance his personal lifestyle," said US attorney Loretta Lynch. "We will vigorously investigate and prosecute such conduct and seek to recover as much of the proceeds as possible."

Citigroup banker faces 30 years in jail after admitting $22m fraud

Former Citigroup banker Gary Foster has pleaded guilty to embezzling $22m (£14m) from the bank, money he spent on a lavish lifestyle of fa...

American Banker Shows DOJ Sat On a Bank-Kickback Scandal

Jeff Horwitz has a big scoop in today’s paper, reporting on a HUD investigation that says banks forced mortgage insurers to pay them $6 billion in kickbacks over ten years. HUD’s inspector general tied a bow on the case and presented it to Obama’s Department of Justice, which has sat on it for two years now. It’s just the latest example of the Obama administration not going after the banks. Here’s the gist: Most homebuyers don’t put 20 percent down and banks require them to buy mortgage insurance from third parties to cover their risk. In the 1990s, banks started requiring insurers to pay them to reinsure the loans. Reinsurance is basically insurance for insurance companies, and if a deal isn’t crooked, the reinsurer will be compensated based on the risk it takes. But there was a major market flaw here (and an antitrust issue, if you think about it)—Banks control who gets to insure mortgages—and they took full advantage of it, naturally. If a PMI company resisted paying kickbacks—or didn’t want to pay a higher level of bribe—the bank would take its mortgages to someone who would. HUD’s IG says they gouged the PMI companies and consumers: Documents from the investigation show that the inspector general’s staff concluded that banks and insurance companies had created elaborate financial structures that had the appearance of reinsurance but failed to transfer significant amounts of risk to their bank underwriters. Some of the deals were designed to return a 400% profit on a bank’s investment during good years and remain profitable even in the event of a real estate collapse. Making matters worse, banks allegedly forced unknowing consumers to buy more insurance than they needed and failed to properly disclose the reinsurance agreements, another RESPA violation. But AB’s excellence here isn’t just the scoop, nice as that is. Horwitz and the Banker do a very good job explaining a somewhat complicated topic. This piece could have got bogged down in the details of the arcane world of captive mortgage reinsurance, but it doesn’t. That’s no small thing. There are a couple of other interesting points here, including this statement from Wells Fargo: Wells Fargo said in a written statement to American Banker that risk was split equitably under its contracts with mortgage insurers. It further denied that its captive mortgage reinsurance arrangements had ever been under HUD investigation. “It is simply not true that Wells Fargo has ever been the subject of a HUD investigation involving either our captive reinsurance programs or our relationships with any private mortgage insurance company,” the statement says. The Banker nicely places these graphs directly after a quote from the HUD investigation of Wells. It also reports that HUD found that “Nearly all loan files reviewed show borrowers with excessive coverage placed on their loan.” Banks gouged consumers on mortgage insurance because they were getting a taste. Actually, a 40 percent cut with 10 percent of the risk is more than a “taste.” “Half” would be more like it. At some point when you sit on a slam-dunk case like this long enough, it starts smelling pretty bad, particularly when your administration has bailed out and protected them at almost every turn, and you’ve recently been exposed pressuring other law-enforcement agencies to ease up on the banks.

American Banker Shows DOJ Sat On a Bank-Kickback Scandal

Jeff Horwitz has a big scoop in today’s paper, reporting on a HUD investigation that says banks forced mortgage insurers to pay them $6 bi...

Ailing Spanish bank CAM posts massive first-half loss

Spain's struggling Caja Mediterraneo (CAM), under state control since in July, Monday posted first-half losses of 1.136 billion euros ($1.602 billion). It also reported a non-performing loan ratio of 19 percent, far above the average of 6.416 percent for the sector in June. The Bank of Spain announced on July 22 that it would take control of the CAM through an injection of 2.8 billion euros and the opening of a 3.0 billion euro line of credit. It now plans to sell-off the ailing savings bank. On Friday, the business daily Cinco Dias said the CAM may need about 1.0 billion euros in additional public funds. The CAM was one of five Spanish banks that failed new European stress tests on July 15 to see if they can survive a major crisis. Spain's lenders, especially its regional savings banks which account for about half of all lending in the country, have been heavily exposed to bad debt since the collapse of the property sector at the end of 2008. The government and Bank of Spain have forced a wave of consolidation in the sector this year and are requiring banks to quickly increase the proportion of core capital they hold to above international norms. CAM, based in the eastern coastal region of Alicante which was one of the worst hit by the bursting of the property bubble, had been set to merge with three other savings banks but the deal fell through earlier this year.

Ailing Spanish bank CAM posts massive first-half loss

Spain's struggling Caja Mediterraneo (CAM), under state control since in July, Monday posted first-half losses of 1.136 billion euros ...

Bosses of banks saved by taxpayer earn more now than before crisis

The bosses of Britain’s bailed-out banks are paid more than they were before the credit crunch struck, a damning report reveals today. The chief executives of the country’s basket-case lenders earned an average basic salary of more than £1.1million last year before bonuses or other benefits. Shockingly, this figure is an increase on the £1million average from 2007 – the year that the financial crisis struck, crippling Britain and plunging the country into recession. Despite the fact that they have the job of salvaging the banks propped up with more than £65billion of taxpayers’ money, they are among the best-paid executives in this country. Their average wage is almost more than 40 times that of the country’s average of £26,000 and it dwarfs the £142,500-a-year salary earned by our Prime Minister. When bonuses and other perks are included bank chiefs enjoyed average total earnings of £3.7million last year – The damning findings by the country’s leading pay experts are likely to anger British taxpayers, who are sitting on losses of £34billion in RBS and Lloyds – or £1,300 per household.

Bosses of banks saved by taxpayer earn more now than before crisis

The bosses of Britain’s bailed-out banks are paid more than they were before the credit crunch struck, a damning report reveals today. Th...

Share slump hammers Euro banks

Stocks in Europe and Italian fixed-income securities were pummelled on concern about the euro zone's debt crisis. The benchmark Stoxx Europe 600 Index ended the day with a 4.1 per cent drop. US and Canadian financial markets were closed for the Labor Day holiday. Financial stocks led the decline in Europe as Deutsche Bank chief Josef Ackermann said profit in the banking sector would be curtailed for years because of the sovereign debt crisis and some banks would likely fail. "Prospects for the financial sector overall ... are rather limited," the CEO of Germany's top bank said on Monday. "The outlook for the future growth of revenues is limited by both the current situation and structurally." Deutsche Bank, Credit Suisse Group, Barclays, Societe Generale and Royal Bank of Scotland all shed more than 6.5 per cent, according to Bloomberg News. "Not a great start to the week. There is a lot going on for banks, especially in the light of a low-growth environment and the backdrop in the euro zone not improving," Mike Lenhoff, chief strategist at Brewin Dolphin, told Reuters. Investors also sold euros, buying gold and US dollars instead. The euro dropped 0.7 per cent against the greenback after German Chancellor Angela Merkel's Christian Democratic Union was defeated in an election in her home state, yet another indication voters are unhappy about her efforts to deal with the European debt crisis and reject plans to use more taxpayer money to help solve the problems of countries including Greece and Ireland. "Merkel's problem is that she fails to generate confidence in her policies and those of her coalition partner," Gero Neugebauer, a political science professor at the Free University in Berlin, told Bloomberg. "It's about the consistency of her statements" on bailouts for indebted euro countries. The US currency strengthened 0.66 per cent against a basket of its major counterparts. Investors are eyeing a German constitutional court ruling on Wednesday on claims that Berlin is breaking German law and European treaties by contributing to bailouts for Greece, Ireland and Portugal, according to Reuters. The court is not expected to rule against the contributions, but may add stipulations for dealing with future requests that will complicate the region's bailout plans. "People are pricing in the risk of European meltdown, rather than the likely outcome," Ian King, head of international equities at Legal & General, told Reuters. Against this backdrop, Group of Seven financial leaders are likely to agree later this week to keep monetary policy loose. The G7's finance ministers and central bankers meet on Friday in Marseilles, France to discuss potential to bolster the slowing global economy. Before then however, central bankers are meeting in Australia, Canada, the UK and Europe and may offer investors more perspective on the global outlook.

Share slump hammers Euro banks

Stocks in Europe and Italian fixed-income securities were pummelled on concern about the euro zone's debt crisis. The benchmark Stoxx...

Swiss bankers demand respect for law from US tax evasion investigators

Swiss bankers have rejected another UBS-style tax evasion deal following an ultimatum from the United States last week to turn over the names of more tax cheats. The US has turned up the heat on Switzerland after finding evidence that Credit Suisse and other banks allegedly helped its citizens to break the law by hiding their wealth from the tax authorities. The successful prosecution of UBS two years ago led to a Swiss-US treaty that severely dented Swiss banking secrecy laws by providing the names of nearly 5,000 bank clients.   But rather than burying the problem, the success of the deal has encouraged the US to pursue yet more banks – some of whom are rumoured to have illegally given UBS clients safe haven after Switzerland’s largest bank was caught out.   The Swiss Bankers Association (SBA) is desperate to avoid other banks facing a UBS situation and called on negotiators to find a solution this time that keeps secrecy intact. Law abiding SBA chairman Patrick Odier demanded a universal treaty binding on all countries rather than a raft of ad-hoc agreements between Switzerland and other states.   “The solution must be globally applicable, definitive and in line with current Swiss laws,” Odier said at the SBA’s annual conference in Zurich on Monday.   While accepting that Swiss banks must pay a penalty if they had broken foreign laws, Odier nevertheless denounced the latest demands from US deputy attorney-general James Cole as “too tough”.   “The US must recognise that legal certainty [of banking secrecy] is something that Switzerland must guarantee,” he said. “We cannot have one country refusing to respect the laws of another.”   The SBA pointed to the recent deals with Britain and Germany as a possible template. Under the terms of these treaties – yet to be rubber stamped – Swiss banks would pay withholding taxes on past and future earnings of foreign account holders.   Switzerland has also negotiated a new double taxation agreement with the US that is awaiting approval by the US authorities. UBS deal stands alone “I am very confident that we can find a common solution that would be in the interests of Swiss banks and the US,” SBA chief executive Claude-Alain Margelisch told swissinfo.ch.   “We solved the UBS case and I hope we find a definitive global solution for all Swiss banks. We must make sure that we do not have the same problem for a third time.”   Margelisch also dismissed the option of another UBS-style treaty despite that deal containing a paragraph that could force other Swiss banks to hand over client data if they were found to have broken US laws in the same way.   “The UBS case was special because it involved only one bank in a context that is not comparable with other Swiss banks,” Margelisch told swissinfo.ch. “I could not imagine that the Swiss parliament would be ready to pass another such treaty for the rest of the banking community during election year.”   But the latest signs coming from the US do not indicate that the Department of Justice (DoJ) is willing to compromise. Investigations have widened to around ten Swiss banks and Credit Suisse was recently served with official notice that it was being probed. Not bluffing Stories are also appearing in the media that the US negotiators are losing patience with their Swiss counterparts.   The fact that the second-highest ranking DoJ official, James Cole, has become publicly involved suggests to US tax lawyer Scott Michel that the US is not likely to withdraw its demands for new bank client data.   “It is a mistake to assume that when the DoJ makes a demand that they are bluffing,” Michel told swissinfo.ch. “There appears to be pent-up frustration that two years after the UBS case there is still evidence that other Swiss banks are helping US citizens hide their money away.”   He added: “The DoJ is not even asking for an exchange of information – a lengthy process involving case-by-case examination. They want a large batch of Swiss banking client information and they want it now.”   According to Michel, the US authorities appear to be building a legal basis to impose “draconian financial penalties” on Swiss banks that could dwarf UBS’s $780 million ($990 million) fine.   Swiss media are also reporting that the US would be prepared to start criminal legal proceedings against banks if they do not comply with their demands.

Swiss bankers demand respect for law from US tax evasion investigators

Swiss bankers have rejected another UBS-style tax evasion deal following an ultimatum from the United States last week to turn over the na...

Eurozone woe fuels fresh market chaos as banks bear the brunt of a global stock rout

Britain's banks bore the brunt of a global stock market rout amid escalating concerns over the eurozone debt crisis and further signs of strain in wholesale money markets. More than £10bn was wiped off the value of Britain’s five biggest lenders as key inter-bank borrowing costs climbed to levels not seen since the height of the 2008 crash. Royal Bank of Scotland lost an eighth of its value, tumbling 3.06p to 21.78p, amid fears that it could be facing a bill of as much as £3.7bn from US sub-prime mortgage lawsuits. Plunge: More than £10bn was wiped off the value of Britain’s five big banks Lloyds slumped 2.47p or 7.5pc to 30.65p while Barclays tumbled 11.05p to 154.15p. Following yesterday’s bloodbath, taxpayers are now sitting on a £37.6bn paper loss from their 83pc and 40pc stakes in RBS and Lloyds. Josef Ackermann, the chief executive of Deutsche Bank, warned that the current turmoil was reminiscent of the panic triggered by the collapse of Wall Street giant Lehman Brothers.

Eurozone woe fuels fresh market chaos as banks bear the brunt of a global stock rout

Britain's banks bore the brunt of a global stock market rout amid escalating concerns over the eurozone debt crisis and further signs ...

Athens, Rome Hold Europe to Ransom

Europe is engaged in a high-stakes game of brinkmanship that poses grave risks to the global economy. At last weekend's Villa d'Este Forum in Italy, European policy makers didn't hide their fury at Greece's back-sliding over promised structural reforms and spending cuts. At the same time, Italian ministers undermined the remaining credibility of Silvio Berlusconi's government with a series of complacent speeches. Given such a dangerous breakdown in trust within Europe, investors are right to fear the worst. Germany and its Northern European allies believe only intense market pressure can force weak economies to cut spending and improve competitiveness. But Greece has learned that whenever the crisis in Europe's periphery threatens to overwhelm the core, Europe will ignore previous broken promises and step up with a fresh bailout. Italy now appears to be making the same calculation. The government insists it will fulfill its commitment to balance the budget by 2013, but ministers show no appreciation of the urgent need for structural reforms to address the chronic weakness of an economy that grew on average 0.3% between 2001 and 2010 and experienced a 25% increase in unit labor costs relative to Germany over the same period. Instead, they talk incessantly of euro-zone bonds as a solution to misfortunes they blame largely on external forces. But Italy's dream of euro-zone bonds is likely to remain a fantasy until trust between member states is restored. This no longer depends simply on implementing austerity budgets. Structural reforms have now taken center stage because they are a test of whether the euro zone is worth saving at all: If countries refuse to improve competitiveness, then any attempted solutions to the immediate sovereign-debt crisis will prove short-lived. So what can be done about Greece and Italy? Athens rejects accusations it is dragging its feet but has promised to use a 10-day hiatus in talks with the European Central Bank and International Monetary Fund over progress toward its bailout targets to speed up reforms. If it fails to deliver again, European policy makers now talk darkly of a total loss of fiscal sovereignty. How this might work in practice isn't clear. As for Italy, some now believe its best hope lies with the ECB, which last month threw Rome a life line by agreeing to buy its bonds. If the ECB were to stop buying bonds, the subsequent rise in yields might bring down Mr. Berlusconi's administration, paving the way for President Giorgio Napolitano to appoint a technical government with the constitutional authority to make tough decisions. Then, at least, the long process of rebuilding the credibility of the euro zone's third-biggest economy could begin in earnest.

Athens, Rome Hold Europe to Ransom

Europe is engaged in a high-stakes game of brinkmanship that poses grave risks to the global economy. At last weekend's Villa d'Es...

US recession fears savage world financial markets

World stock markets took a beating Monday over fears that the U.S. economy was heading back into a recession just as the European debt crisis was heating up and the eurozone's economic indicators were slumping. A trader works on the floor of the New York Stock Exchange on Friday, Sept. 2, 2011 in New York. The jobs report was the weakest in almost a year. It renewed fears that the U.S. might slip back into recession. (AP Photo/Jin Lee) A man looks at an electronic stock board of a securities firm in Tokyo, Monday, Sept. 5, 2011. Asia-Pacific stocks took a beating early Monday after jobs data out of the U.S. last week revived fears of a recession in the world's largest economy. (AP Photo/Koji Sasahara) More business news In tough economy, multi-job holders grateful for balancing act Delta at center of FAA debate Turkish hackers hit UPS Recession over, jobs still elusive New owner for Atlanta Dream Delta Air Lines news, links Coca-Cola Co. news Health Care Reform coverage Read Henry Unger's Biz Beat blog Any troubles in the world's largest economy cast a long shadow over the markets, and a report Friday that the U.S. economy failed to add any new jobs in August caused European and Asian stock markets to sink sharply Monday. But the news from Europe was also discouraging. Wall Street, which was closed Monday due to the Labor Day holiday, braced for losses Tuesday after the yields in so-called peripheral eurozone countries — Greece, Italy and Spain — rose sharply against those of Germany, whose bonds are widely considered a safe haven. Although retail sales in the 17-nation eurozone rose unexpectedly in July, a survey of the services sector Monday showed a slowdown across the continent for the fifth consecutive month. The purchasing managers' index for the eurozone showed the services sector was still growing — unlike the manufacturing sector — but only barely. That will add pressure on the European Central Bank to keep interest rates on hold when it meets this week. "There's so much uncertainty, so much fear, that investors don't know what to do," said David Kotok, chairman and chief investment officer at Cumberland Advisors. "I don't remember the last time stocks were so cheap and nobody wanted them." Investors were also shaken by signs that the Italian government's commitment to its austerity program is wavering. Prime Minister Silvio Berlusconi's government has backtracked on some deficit-cutting measures, prompting EU officials to urge Italy to stick to its promised plan. The difference in interest rates between the Greek and benchmark German 10-year bonds, known as the spread, spiraled to new records on Monday, topping 17.3 percentage points. Yields on the Greek bonds were above 18 percent. Mario Draghi, the incoming chief of the European Central Bank, told a conference in Paris that among the common currency's problems was a lack of coordinated fiscal policies and that the solution was more integration. He dismissed the idea of eurobonds — debt issued jointly by the eurozone countries. Some have argued this would help weaker countries borrow more easily because they wouldn't have to pay such high interest rates. But stable countries like Germany would likely see their rates rise. Instead, Draghi suggested the eurozone should adopt rules that would require more budget discipline. Renewed jitters over the eurozone debt crisis also contributed to the slump in financial stocks amid concerns the banks would need to raise new capital. Deutsche bank closed down 8.9 percent in Frankfurt, while Societe Generale in Paris shed 8.6 percent. The U.S. unemployment crisis has prompted President Barack Obama to schedule a major speech Thursday night to propose steps to stimulate hiring. Until then, however, traders coming back from the U.S. holiday weekend will have little to hold onto. The August jobs figure was far below economists' already tepid expectations for 93,000 new U.S. jobs and renewed concerns that the U.S. recovery is not only slowing but actually unwinding. U.S. hiring figures for June and July were also revised lower, only adding to the gloom. Many traders have already pulled out of any risky investments — such as stocks, particularly financial ones, the euro and emerging market currencies — and pile into safe havens: U.S. Treasuries, the dollar, the Japanese yen and gold. With Wall Street closed, investors focused their selling in Asia and Europe, where the equity losses Monday were some of the heaviest this year. "We've got some rough riding ahead," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago, adding he was "concerned that we could see a second wave of selling when most traders are back at their desks." Dow futures were down 1.8 percent at 11,010 points while the broader S&P 500 futures were 2.0 lower at 1,145.70. After Asian indexes closed lower, with the Japan's Nikkei 225 shedding 1.9 percent, European shares booked sharp losses. Britain's FTSE 100 closed the day down 3.6 percent to 5,102.58. Germany's DAX slumped a massive 5.3 percent to 5,246.18, and France's CAC-40 tumbled 4.7 percent to 2,999.54. The health of the U.S. economy is crucial for the wider world because consumer spending there accounts for a fifth of global economic activity. The U.S. imports huge amounts from Japan and China and is closely linked at all levels with the European market. The U.S. has seen a slump in consumer and business sentiments. Traders were hoping for signs that the Federal Reserve might take action at its September meeting to support the economy — perhaps a third round of bond purchases, dubbed quantitative easing III or QE3, analysts said. "Right now the possibility has increased," said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. "I think they have to do something. The markets are expecting QE3." Banking stocks were among the hardest hit Monday, partly because the U.S. government on Friday sued 17 financial firms for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed. Among those targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. Large European banks including The Royal Bank of Scotland, Barclays Bank and Credit Suisse were also sued. In Asia, Australia's S&P/ASX 200 followed the broaden trend to close down 2.4 percent and South Korea's Kospi slid 4.4 percent. Hong Kong's Hang Seng slid 3 percent. Benchmarks in Singapore, Taiwan, New Zealand and the Philippines also were down. Shanghai's benchmark Composite Index down 2 percent to 2,478.74, its lowest close in 13 months. The Shenzhen Composite Index lost 2.4 percent. In currencies, the euro weakened to $1.4100 from $1.4187 in New York late Friday. The dollar was roughly flat at 76.87 yen. Last month, the dollar fell under 76 yen, which was a new post-World War II high for the Japanese currency. Benchmark oil for October delivery was down $2.12 to $84.33 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $2.48 to settle at $86.45 on Friday. In London, Brent crude for October delivery was down $1.63 at $110.70 on the ICE Futures exchange.

US recession fears savage world financial markets

World stock markets took a beating Monday over fears that the U.S. economy was heading back into a recession just as the European debt cri...

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