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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...

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