Spain rejected on Thursday as damaging an opposition claim that the central bank is concealing problems faced by the country's banks in the wake of the global credit crunch.Eduardo Zaplana, third ranked in Spain's opposition conservative Popular Party (PP), said on Wednesday some banks and savings banks faced liquidity problems and Spanish authorities were not telling Spaniards the truth.
"I believe they have difficulties, without doubt," Zaplana told Spanish national television in an interview, when asked if banks and savings banks faced problems.
Bank of Spain and government officials have repeatedly said the banking system is solvent due to strong reserves and a default rate that is among the lowest in Europe.
Economy Minister Pedro Solbes on Thursday told journalists Zaplana's comments showed "... irresponsibility, and a total lack of knowledge that does enormous damage to the Spanish financial system."Such assurances follow a string of analysts' reports forecasting problems at Spanish savings banks, or cajas, due to exposure to real estate and mortgage debt at the end of a housing boom and because of an economic slowdown.A sharp rise in unemployment and inflation has narrowed Spanish Prime Minister Jose Luis Rodriguez Zapatero's lead over the PP to between 1.5 and 5 percentage points in recent polls.Opposition leader Mariano Rajoy says the government has not prepared Spain for the end of its property boom and is hiding the country's vulnerability to tightening credit conditions.
Thursday, 21 February 2008
Standard Chartered yesterday abandoned a plan to bail out its $7.15bn (£3.68bn) structured investment vehicle
Kevin Logan, the senior US economist at Dresdner Kleinwort, said we are witnessing a chain reaction that began with rising mortgage defaults by low-income Americans 18 months ago. Mortgage-related derivatives have collapsed in value, endangering the creditworthiness of insurance companies that guarantee all sorts of bonds, including the auction-rate bonds issued by municipalities. "It is a contagion, and though you would like to think we are getting to the end of it, things just seem to keep popping up."The latest obscure corner of the credit market to hit trouble is the credit default swaps market, which investors use to buy protection from the risk of a default by corporate bonds. The cost of this protection soared to a record yesterday, amid rumours that packages of credit default swaps, called CPDOs, are being dumped by investors following warnings they may themselves default on their payouts.
In other signs that the credit crisis is far from over, Standard Chartered yesterday abandoned a plan to bail out its $7.15bn (£3.68bn) structured investment vehicle after market fears caused a plunge in the value of the fund's assets. The SIV, called Whistlejacket, was put into receivership last week. SIVs are funds that use short-term borrowing to buy longer, higher-yielding assets. The assets are used to back the debt that SIVs issue to investors. Deloitte, the receiver, is understood to have frozen all payments to Whistlejacket's senior debt holders. That debt will probably go into default today.
Meanwhile, a similar publicly quoted investment vehicle set up by KKR, called KKR Financial, said it was delaying paying its debt-holders and had begun restructuring talks with creditors.
Credit markets were thrown into fresh turmoil as the cost of protecting the debt of US and European companies against default surged to all-time highs
Credit markets were thrown into fresh turmoil as the cost of protecting the debt of US and European companies against default surged to all-time highs.
The sharp jump, which rivalled the sell-off at the height of last summer’s credit market turmoil, came as traders rushed to unwind highly leveraged positions in complex structured products.The sell-off was triggered partly by fears of more unwinding to come as investors rushed to exit before conditions worsen. As losses have snowballed, further unwinding has been triggered.
“There’s a domino effect taking place,” said Mehernosh Engineer, credit strategist at BNP Paribas.The cost of insuring the debt of the 125 investment-grade companies in the benchmark iTraxx Europe rose more than 20 per cent to as high as 136.9 basis points, before closing at 126.5bp. That compares with a level of about 51bp at the start of the year, according to data from Markit Group.This means buyers of protection through so-called credit default swaps are paying €126,500 ($185,780) annually to insure €10m worth of debt over five years.In the US, the situation was just as bad with the investment grade CDX index hitting a record wide of 165.5bp in morning trade – more than double its level at the start of the year.
The iTraxx Crossover index, which covers mainly junk-rated European debt, bust through the 600bp barrier – up from 343bp at the start of the year. The moves are expected to affect the cost of raising new debt in the bond markets. Credit default swaps act as a proxy for the amounts real companies have to pay to borrow in the bond markets.The way CDS spreads influence real borrowing costs has been illustrated this week by the situation at Credit Suisse.Investors who had agreed to buy a bond from the Swiss bank the day before it announced unexpected writedowns are already looking to renegotiate price terms after the news sent its CDS contracts higher.
One funding manager at a different European bank believes the influence of CDS prices is a case of the tail wagging the dog.“We feel we’re being unfairly penalised by the CDS market right now. It directly influences your cost of borrowing because investors up till now have wanted a return over CDS for any bonds issued,” he said.
The opacity of credit derivatives markets has contributed to problems. While most analysts and traders believe unwinding is taking place, few are sure of how much or by whom.
The sharp jump, which rivalled the sell-off at the height of last summer’s credit market turmoil, came as traders rushed to unwind highly leveraged positions in complex structured products.The sell-off was triggered partly by fears of more unwinding to come as investors rushed to exit before conditions worsen. As losses have snowballed, further unwinding has been triggered.
“There’s a domino effect taking place,” said Mehernosh Engineer, credit strategist at BNP Paribas.The cost of insuring the debt of the 125 investment-grade companies in the benchmark iTraxx Europe rose more than 20 per cent to as high as 136.9 basis points, before closing at 126.5bp. That compares with a level of about 51bp at the start of the year, according to data from Markit Group.This means buyers of protection through so-called credit default swaps are paying €126,500 ($185,780) annually to insure €10m worth of debt over five years.In the US, the situation was just as bad with the investment grade CDX index hitting a record wide of 165.5bp in morning trade – more than double its level at the start of the year.
The iTraxx Crossover index, which covers mainly junk-rated European debt, bust through the 600bp barrier – up from 343bp at the start of the year. The moves are expected to affect the cost of raising new debt in the bond markets. Credit default swaps act as a proxy for the amounts real companies have to pay to borrow in the bond markets.The way CDS spreads influence real borrowing costs has been illustrated this week by the situation at Credit Suisse.Investors who had agreed to buy a bond from the Swiss bank the day before it announced unexpected writedowns are already looking to renegotiate price terms after the news sent its CDS contracts higher.
One funding manager at a different European bank believes the influence of CDS prices is a case of the tail wagging the dog.“We feel we’re being unfairly penalised by the CDS market right now. It directly influences your cost of borrowing because investors up till now have wanted a return over CDS for any bonds issued,” he said.
The opacity of credit derivatives markets has contributed to problems. While most analysts and traders believe unwinding is taking place, few are sure of how much or by whom.
ACA may lose $34 billion on securities they guaranteed
U.S. bond insurers such as ACA may lose $34 billion on securities they guaranteed, Citigroup Global Markets said this month. They are likely to take losses of $32 billion on collateralized debt obligations backed partly by U.S. subprime mortgages, Citigroup said.ANZ had bought default protection on a portfolio of investment grade companies from ACA using a credit-default swap, a derivative used to speculate on corporate credit quality. After ACA was cut to non-investment grade, the bank was required to raise an ``individual provision'' of $200 million, it said.
bond insurer MBIA the company would no longer write guarantees using credit default swaps
The troubled bond insurer MBIA replaced its chief executive on Tuesday with its retired chairman, who said he would consider splitting up the company’s insurance business to restore confidence.
Gary C. Dunton, who took over as chief executive in 2004, resigned on Saturday, the company said. He was succeeded by Joseph W. Brown Jr., who preceded Mr. Dunton as chief executive and chairman. The move comes as New York insurance regulators have increased pressure on MBIA and two other bond insurers, the Financial Guaranty Insurance Company and the Ambac Financial Group, to draw up plans that would preserve their top credit ratings.
In a telephone interview, Mr. Brown said the company would no longer write guarantees using credit default swaps, a tradable insurance contract. And he said he was open to dividing MBIA’s insurance business into two parts: one for municipal bonds and another for mortgage-related securities.
“We are open to any beneficial ideas for all policy holders and shareholders,” he said. “Over the long term, the market has spoken — it doesn’t really matter what I say — that maybe these businesses shouldn’t be co-resonant as they have been.”
Under Mr. Dunton, MBIA had been more adamant that it did not need to make any substantive changes to its business, which he had said was fundamentally healthy but was suffering mostly because investors had lost confidence in it. Mr. Brown said he generally agrees with that assessment, but added that the company needs to do more to restore investors’ trust.
“We are not going anywhere. We are going to be here for a long time,” Mr. Brown, 58, said. “Our business has been bruised, there is no question about it.”
The New York insurance superintendent, Eric R. Dinallo, welcomed Mr. Brown’s appointment. In recent weeks, Mr. Dinallo has urged MBIA to consider a split of its insurance business or other structural changes that would persuade ratings agencies like Standard & Poor’s and Moody’s Investors Service to affirm the company’s triple-A rating — a seal of approval that the company needs to be able to write new insurance policies.
Wall Street banks and the guarantors have been meeting at the urging of Mr. Dinallo. On Friday, Financial Guaranty informed regulators that it wanted to pursue split of its insurance business. A group of bankers, lawyers and Ambac officials are also negotiating a breakup plan.
Insurance regulators have broken up companies under their supervision in the past when cataclysmic losses in one segment of the business threatened to overwhelm other healthier divisions. In the case of the bond guarantors, the split would isolate mortgage-related securities that are starting to experience higher-than-expected default rates from the far safer municipal bond business, where losses are expected to be minimal.
Shares of MBIA were down 1.4 percent, to $12.07, at 1 p.m. Ambac was down 1.8 percent, to $10.04.
Gary C. Dunton, who took over as chief executive in 2004, resigned on Saturday, the company said. He was succeeded by Joseph W. Brown Jr., who preceded Mr. Dunton as chief executive and chairman. The move comes as New York insurance regulators have increased pressure on MBIA and two other bond insurers, the Financial Guaranty Insurance Company and the Ambac Financial Group, to draw up plans that would preserve their top credit ratings.
In a telephone interview, Mr. Brown said the company would no longer write guarantees using credit default swaps, a tradable insurance contract. And he said he was open to dividing MBIA’s insurance business into two parts: one for municipal bonds and another for mortgage-related securities.
“We are open to any beneficial ideas for all policy holders and shareholders,” he said. “Over the long term, the market has spoken — it doesn’t really matter what I say — that maybe these businesses shouldn’t be co-resonant as they have been.”
Under Mr. Dunton, MBIA had been more adamant that it did not need to make any substantive changes to its business, which he had said was fundamentally healthy but was suffering mostly because investors had lost confidence in it. Mr. Brown said he generally agrees with that assessment, but added that the company needs to do more to restore investors’ trust.
“We are not going anywhere. We are going to be here for a long time,” Mr. Brown, 58, said. “Our business has been bruised, there is no question about it.”
The New York insurance superintendent, Eric R. Dinallo, welcomed Mr. Brown’s appointment. In recent weeks, Mr. Dinallo has urged MBIA to consider a split of its insurance business or other structural changes that would persuade ratings agencies like Standard & Poor’s and Moody’s Investors Service to affirm the company’s triple-A rating — a seal of approval that the company needs to be able to write new insurance policies.
Wall Street banks and the guarantors have been meeting at the urging of Mr. Dinallo. On Friday, Financial Guaranty informed regulators that it wanted to pursue split of its insurance business. A group of bankers, lawyers and Ambac officials are also negotiating a breakup plan.
Insurance regulators have broken up companies under their supervision in the past when cataclysmic losses in one segment of the business threatened to overwhelm other healthier divisions. In the case of the bond guarantors, the split would isolate mortgage-related securities that are starting to experience higher-than-expected default rates from the far safer municipal bond business, where losses are expected to be minimal.
Shares of MBIA were down 1.4 percent, to $12.07, at 1 p.m. Ambac was down 1.8 percent, to $10.04.
Wednesday, 20 February 2008
My forecast is for the complete decline of the UK housing market, the complete decline of the UK economy
The British are also feeding the market. The Bank of England has ordered two official rate cuts, not back to back though. My forecast is for the complete decline of the UK housing market, the complete decline of the UK economy built atop it, and the complete drubbing of the British pound sterling currency. When the pound sterling 20-week moving average crosses below the 50-wk MA (circled in green), technical traders will take the sterling currency down toward 187. My eventual forecast target is in the 175 neighborhood. A disaster comes to the UK, just like the Untied States. Think AngloSphere. The tough call is whether money exiting England will pursue the euro or USDollar. As problems crop up further in Europe, my bet is the money will chase the USTreasurys, crude oil, and gold.
Scam or Truth, HSBC Straining Under An "Unprecedented" Wave Of Fraud Activity?
If you're an HSBC customer, check your account, as there may be a wave of fraudulent activity hitting your bank. Two days ago we wrote about the guy in the U.S. who discovered his account had been drained by someone in Bulgaria. Later that day we received an email from Emily in NYC who was having similar problems, only her fraud-buddy was in California and Canada making withdrawals on her account.
HSBC Straining Under An "Unprecedented" Wave Of Fraud Activity?
Emily's fiancé wrote back to us today with an update, and according to Emily, the HBSC Fraud Investigator who spoke to her "said that their fraud department was so overwhelmed, it was 'still in the developing stage of how we're going to handle' it. I asked if she knew how many customers were affected and she stated 'We don't even know.'"
First, here's Emily's original email from two days ago:
I am sitting here in amazement after reading your post "HSBC Won't Tell You Someone in Bulgaria is Stealing $2,000 From You" because the exact same thing happened to me today, just substitute Pasadena and Canada for Bulgaria. I logged in to my personal internet banking this afternoon to review my account so that I could pay some bills. I noticed that my bank balance was about $3600 while my available balance was $300. There were no transactions listed after Friday, 2/15. I knew I had used my debit/atm card all weekend, all around Manhattan and Brooklyn. I called customer service and encountered, almost to a script, the same spiel as your reader from someone named "Dar". There was some sort of hold, but he couldn't get information about it. Eventually he found that there were two withdrawals of $500 each at a Wachovia bank that seemed suspicious. I confirmed that I had not made those withdrawals. He was not able to tell me what state the withdrawals were made in. I asked if the best thing to do would be to go to an HSBC ATM and take out the last $300 in my account, so that I wouldn't lose that too- he agreed. So, I left work early to get to the ATM. Dar advised that because today is a national holiday in the US, none of this information would process in my account until at least 6 am Tuesday, but that I would not be able to file a fraud report until WEDNESDAY! He had no answer for me when I asked why I hadn't been alerted to suspicious activity when my card had been used on opposite coasts and in ANOTHER COUNTRY all during the same weekend.
The ATM did not allow me to make any withdrawals. I tried various amounts from $300 down to $60 and each time got an error message that the "Amount Requested Exceeded the Limit". I called customer service again and this time was luckily connected to someone named Maria (and I hate to say this, but Maria, unlike Dar, sounded like a native English speaker). Maria went through various fraudulent transactions- $800 withdrawal in Pasadena, $500 twice in Canada, another $62 in Pasadena, as well as $1000 in Santa Monica. She was able to process a fraud report today- interesting, since Dar said that couldn't be done until Wednesday! My account will not be credited for 10-11 business days and I should receive a new card in 7-10 days. I also was able to immediately change my PIN. I was told that I would be able to withdraw the remaining amount from the branch tomorrow morning. (let's hope).
And here's the update sent in today, after Emily was finally able to get some more information from HSBC's fraud department:
On Tuesday morning, I went to a local branch to get additional information and withdraw the remaining balance in my account. The associate at the local branch was helpful and contacted the fraud department on my behalf. Eventually I was provided with the name of the Fraud Investigator handling my case. I tried calling her several times on Tuesday afternoon, but kept getting voicemail. I left a voicemail around 5 pm. I attempted to call her again this morning. When I got voicemail, I dialed a random extension, to try to get to speak to a person (there is no operator). I did get someone in the Internet Banking department, who was kind enough to get me connected to someone in the fraud department (after both he and I waited on hold for about 30 minutes- no exaggeration). I was connected to someone named Ella _____, who said that she only dealt with Fraud in applications, so therefore she wouldn't be able to help me. As I tried to explain the situation, Ms. _____ was hostile toward me and escalated the tone of the conversation unneccesarily. I attempted to deescalate the conversation by explaining that I was quite upset that almost my entire bank account had been drained, that I was having a very hard time reaching someone who could help me and that her tone was not exactly helpful. She was then able to connect me to the Investigator handling my case, Sharon _____.
Ms. _____ was kind and helpful and explained that the extent of this fraud was essentially unprecedented for HSBC. She said that their fraud department was so overwhelmed, it was "still in the developing stage of how we're going to handle" it. I asked if she knew how many customers were affected and she stated "we don't even know." I asked if the magnitude of the fraud would delay the bank's ability to get everyone's account credited. She assured me that the bank's first priority was to credit every affected customer within 10 days. She explained that the bank was "probably" going to forego its usual requirements of paperwork such as fraud affidavits for affected customers, because the fraud here was obvious.
Ms. _____ stated that HSBC was trying to contact its customers and would be sending a letter regarding the fraud, but that it was so widespread that it didn't have the manpower to make a phone call to each affected customer, particularly where the focus was on trying to get the accounts credited. She advised that I monitor my account daily to check for the credit, because I would likely not receive notification from HSBC about it.
I'm appreciative of the information that I was able to receive today, and the reassurance that HSBC's priority was to get accounts credited as quickly as possible. However, I am dumbfounded that it took me three days to get the "full story" from HSBC, due to no lack of effort on my part. I think that the media needs to be alerted of this fraud, as HSBC is not able to contact all of its customers. People may be affected and not even know it yet. I obviously plan to change banks after this debacle, but do want to see that this is made public.
HSBC Straining Under An "Unprecedented" Wave Of Fraud Activity?
Emily's fiancé wrote back to us today with an update, and according to Emily, the HBSC Fraud Investigator who spoke to her "said that their fraud department was so overwhelmed, it was 'still in the developing stage of how we're going to handle' it. I asked if she knew how many customers were affected and she stated 'We don't even know.'"
First, here's Emily's original email from two days ago:
I am sitting here in amazement after reading your post "HSBC Won't Tell You Someone in Bulgaria is Stealing $2,000 From You" because the exact same thing happened to me today, just substitute Pasadena and Canada for Bulgaria. I logged in to my personal internet banking this afternoon to review my account so that I could pay some bills. I noticed that my bank balance was about $3600 while my available balance was $300. There were no transactions listed after Friday, 2/15. I knew I had used my debit/atm card all weekend, all around Manhattan and Brooklyn. I called customer service and encountered, almost to a script, the same spiel as your reader from someone named "Dar". There was some sort of hold, but he couldn't get information about it. Eventually he found that there were two withdrawals of $500 each at a Wachovia bank that seemed suspicious. I confirmed that I had not made those withdrawals. He was not able to tell me what state the withdrawals were made in. I asked if the best thing to do would be to go to an HSBC ATM and take out the last $300 in my account, so that I wouldn't lose that too- he agreed. So, I left work early to get to the ATM. Dar advised that because today is a national holiday in the US, none of this information would process in my account until at least 6 am Tuesday, but that I would not be able to file a fraud report until WEDNESDAY! He had no answer for me when I asked why I hadn't been alerted to suspicious activity when my card had been used on opposite coasts and in ANOTHER COUNTRY all during the same weekend.
The ATM did not allow me to make any withdrawals. I tried various amounts from $300 down to $60 and each time got an error message that the "Amount Requested Exceeded the Limit". I called customer service again and this time was luckily connected to someone named Maria (and I hate to say this, but Maria, unlike Dar, sounded like a native English speaker). Maria went through various fraudulent transactions- $800 withdrawal in Pasadena, $500 twice in Canada, another $62 in Pasadena, as well as $1000 in Santa Monica. She was able to process a fraud report today- interesting, since Dar said that couldn't be done until Wednesday! My account will not be credited for 10-11 business days and I should receive a new card in 7-10 days. I also was able to immediately change my PIN. I was told that I would be able to withdraw the remaining amount from the branch tomorrow morning. (let's hope).
And here's the update sent in today, after Emily was finally able to get some more information from HSBC's fraud department:
On Tuesday morning, I went to a local branch to get additional information and withdraw the remaining balance in my account. The associate at the local branch was helpful and contacted the fraud department on my behalf. Eventually I was provided with the name of the Fraud Investigator handling my case. I tried calling her several times on Tuesday afternoon, but kept getting voicemail. I left a voicemail around 5 pm. I attempted to call her again this morning. When I got voicemail, I dialed a random extension, to try to get to speak to a person (there is no operator). I did get someone in the Internet Banking department, who was kind enough to get me connected to someone in the fraud department (after both he and I waited on hold for about 30 minutes- no exaggeration). I was connected to someone named Ella _____, who said that she only dealt with Fraud in applications, so therefore she wouldn't be able to help me. As I tried to explain the situation, Ms. _____ was hostile toward me and escalated the tone of the conversation unneccesarily. I attempted to deescalate the conversation by explaining that I was quite upset that almost my entire bank account had been drained, that I was having a very hard time reaching someone who could help me and that her tone was not exactly helpful. She was then able to connect me to the Investigator handling my case, Sharon _____.
Ms. _____ was kind and helpful and explained that the extent of this fraud was essentially unprecedented for HSBC. She said that their fraud department was so overwhelmed, it was "still in the developing stage of how we're going to handle" it. I asked if she knew how many customers were affected and she stated "we don't even know." I asked if the magnitude of the fraud would delay the bank's ability to get everyone's account credited. She assured me that the bank's first priority was to credit every affected customer within 10 days. She explained that the bank was "probably" going to forego its usual requirements of paperwork such as fraud affidavits for affected customers, because the fraud here was obvious.
Ms. _____ stated that HSBC was trying to contact its customers and would be sending a letter regarding the fraud, but that it was so widespread that it didn't have the manpower to make a phone call to each affected customer, particularly where the focus was on trying to get the accounts credited. She advised that I monitor my account daily to check for the credit, because I would likely not receive notification from HSBC about it.
I'm appreciative of the information that I was able to receive today, and the reassurance that HSBC's priority was to get accounts credited as quickly as possible. However, I am dumbfounded that it took me three days to get the "full story" from HSBC, due to no lack of effort on my part. I think that the media needs to be alerted of this fraud, as HSBC is not able to contact all of its customers. People may be affected and not even know it yet. I obviously plan to change banks after this debacle, but do want to see that this is made public.
Monday, 18 February 2008
Armageddon situation: ACA's bonds from A to CCC, a grade colloquially referred to as "junk".
"I would recommend all of you visit London and New York in the near future just to see the effect of what is really happening there," Mr Smith said. "This is a financial services bloodbath and I think the Australian banking system is in remarkably good shape in comparison."Turmoil from the US subprime crisis is gathering momentum, with ANZ Bank saying its dealings with companies strained by the global debacle will wipe away first-half profit growth. ANZ shares lost 6% on the announcement that the bank would have to hold back about $367 million from profit for the six months to March 31, most of it the result of dealings with companies struggling in the global credit market.
The shares closed $1.45 lower at $22.46. ANZ chief executive Mike Smith stressed that, were it not for the one-off provisions, profit would have grown by more than last year's 11.5%.This suggests at least $334 million profit growth before provisions.Mr Smith used that point to emphasise the underlying strength of Australia's banking sector in hard times.
ANZ will put aside $US200 million ($A220 million) as a provision against agreements it entered into with New York-based bond insurer ACA Capital, which has become imperilled as billions of dollars in loans given to people in the US with poor credit have failed.
Credit ratings agency Standard & Poor's in December cut its rating on ACA's bonds from A to CCC, a grade colloquially referred to as "junk".
The provision is taken against "credit default swaps" entered into between 2005 and February last year. Credit default swaps are "derivative" agreements investors use to protect themselves against debt defaults.
ANZ also added $90 million to its general provision that loans might fail because of its dealings with property manager Centro. Centro has fallen into strife as it tries to refinance $3.6 billion in debt in markets hit by the subprime fallout.
Mr Smith said accounting standards required the bank to account for the losses on the derivatives, though it was likely they would regain their value when conditions changed.
An ANZ spokesman said the companies represented included Fortune 500 companies in the US and Western Europe.
"For ANZ to experience an actual loss on this exposure, it would require a significant number of what is a large and well-diversified portfolio of corporate names to go belly-up around the world," Mr Smith said.
"If that happens, we're looking at an Armageddon situation.
"Really, we would be the last things you would have to worry about if that happened."
The shares closed $1.45 lower at $22.46. ANZ chief executive Mike Smith stressed that, were it not for the one-off provisions, profit would have grown by more than last year's 11.5%.This suggests at least $334 million profit growth before provisions.Mr Smith used that point to emphasise the underlying strength of Australia's banking sector in hard times.
ANZ will put aside $US200 million ($A220 million) as a provision against agreements it entered into with New York-based bond insurer ACA Capital, which has become imperilled as billions of dollars in loans given to people in the US with poor credit have failed.
Credit ratings agency Standard & Poor's in December cut its rating on ACA's bonds from A to CCC, a grade colloquially referred to as "junk".
The provision is taken against "credit default swaps" entered into between 2005 and February last year. Credit default swaps are "derivative" agreements investors use to protect themselves against debt defaults.
ANZ also added $90 million to its general provision that loans might fail because of its dealings with property manager Centro. Centro has fallen into strife as it tries to refinance $3.6 billion in debt in markets hit by the subprime fallout.
Mr Smith said accounting standards required the bank to account for the losses on the derivatives, though it was likely they would regain their value when conditions changed.
An ANZ spokesman said the companies represented included Fortune 500 companies in the US and Western Europe.
"For ANZ to experience an actual loss on this exposure, it would require a significant number of what is a large and well-diversified portfolio of corporate names to go belly-up around the world," Mr Smith said.
"If that happens, we're looking at an Armageddon situation.
"Really, we would be the last things you would have to worry about if that happened."
Thursday, 14 February 2008
IKB Deutsche Industrie Bank, fearing a "bank tsunami' if the struggling lender was allowed to fail.
crisis meeting came as rumours of hefty losses in German banks rocked the credit markets. Munich lender BayernLB admitted yesterday to losses of almost €1.9bn stemming from US sub-prime and the stock market slide - lower than claims among traders.
Germany faced its "Northern Rock moment" last night as top ministers and bankers thrashed out a rescue plan to save IKB Deutsche Industrie Bank, fearing a "bank tsunami' if the struggling lender was allowed to fail.
Politicians agreed to a €1.5bn (£1.11bn) taxpayer bail-out of the state-controlled bank as escalating losses from US sub-prime threatened to set off a confidence crisis, despite the failure of earlier cash infusions worth €6bn since July. A third of the new money will come from banks and private investors.
Finance minister: Peer Steinbrueck said failure of IKB "had to be prevented"
The debacle has threatened to drag down its much bigger sister-bank KfW, which holds a 38pc stake and is itself in distress. "We must be careful lest an IKB crisis turns into an KfW crisis," said Jurgen Koppelin, a KfW board memberIt unclear whether new money will be enough to stabilise the bank. It has unearthed a further €2bn in losses since the New Year. "The risk is that it may require much more money but IKB has to be saved or we could face a banking tsunami," said Mr Koppelin. The bank needs €500m immediately to stave off likely collapse.The emergency move by Berlin recalls actions by the UK authorities in September, when Northern Rock's meltdown risked toppling dominoes across the mortgage banking industry.Finance minister Peer Steinbrueck said a failure of IKB would have "widespread" knock-on effects for the banking system and had to be prevented. "It could create difficulties for confidence and economic growth," he said.
German banks have borrowed heavily from the European Central Bank's liquidity window, taking up 46pc of the total €430bn in December, although they account for just 26pc of the eurozone's asset base. The confidential data was revealed this week by Spain's government, irked by reports that Spanish banks have been on an ECB drip-feed.The escalating credit crisis in Europe comes amid ever clearer signs of an economic downturn. Industrial production in the eurozone fell 0.2pc in December, with a plunge of 4pc in Italy.Merrill Lynch's monthly survey of fund managers showed that the mood in Europe is now more pessimistic than during the depths of the dotcom crash. A majority think the ECB has tightened too hard, setting the stage for a hard-landing. More than 30pc have taken out hedge protection against a stockmarket slide over the next three months. "The four-year love affair with European equities is now at an end," said the report.Standard & Poor's warned yesterday of soaring default rates in pockets of Europe's credit system. Some 8.3pc of all loans taken out for leveraged buy-outs are already in default or have breached their covenants, typically because the ratio of cash flow to debt has fallen below safe levels. It warned that half of all LBO debt in Europe could default.
In Berlin, a growing chorus has called for the resignation of Ingrid Matthaus-Maier, KfW's board chief and a Social-Democrat politician. "She must be held accountable for botched crisis management and should step down," said Michael Fuchs, chair of the Bundestag's finance committee. He said it was astonishing that we still do not know the full extent of IKB's losses six months after the crisis erupted in August.
KfW has already lost €5bn since August propping up IKB, bearing the brunt of the rescue costs. It is now trying to sell its stake altogether.
Germany faced its "Northern Rock moment" last night as top ministers and bankers thrashed out a rescue plan to save IKB Deutsche Industrie Bank, fearing a "bank tsunami' if the struggling lender was allowed to fail.
Politicians agreed to a €1.5bn (£1.11bn) taxpayer bail-out of the state-controlled bank as escalating losses from US sub-prime threatened to set off a confidence crisis, despite the failure of earlier cash infusions worth €6bn since July. A third of the new money will come from banks and private investors.
Finance minister: Peer Steinbrueck said failure of IKB "had to be prevented"
The debacle has threatened to drag down its much bigger sister-bank KfW, which holds a 38pc stake and is itself in distress. "We must be careful lest an IKB crisis turns into an KfW crisis," said Jurgen Koppelin, a KfW board memberIt unclear whether new money will be enough to stabilise the bank. It has unearthed a further €2bn in losses since the New Year. "The risk is that it may require much more money but IKB has to be saved or we could face a banking tsunami," said Mr Koppelin. The bank needs €500m immediately to stave off likely collapse.The emergency move by Berlin recalls actions by the UK authorities in September, when Northern Rock's meltdown risked toppling dominoes across the mortgage banking industry.Finance minister Peer Steinbrueck said a failure of IKB would have "widespread" knock-on effects for the banking system and had to be prevented. "It could create difficulties for confidence and economic growth," he said.
German banks have borrowed heavily from the European Central Bank's liquidity window, taking up 46pc of the total €430bn in December, although they account for just 26pc of the eurozone's asset base. The confidential data was revealed this week by Spain's government, irked by reports that Spanish banks have been on an ECB drip-feed.The escalating credit crisis in Europe comes amid ever clearer signs of an economic downturn. Industrial production in the eurozone fell 0.2pc in December, with a plunge of 4pc in Italy.Merrill Lynch's monthly survey of fund managers showed that the mood in Europe is now more pessimistic than during the depths of the dotcom crash. A majority think the ECB has tightened too hard, setting the stage for a hard-landing. More than 30pc have taken out hedge protection against a stockmarket slide over the next three months. "The four-year love affair with European equities is now at an end," said the report.Standard & Poor's warned yesterday of soaring default rates in pockets of Europe's credit system. Some 8.3pc of all loans taken out for leveraged buy-outs are already in default or have breached their covenants, typically because the ratio of cash flow to debt has fallen below safe levels. It warned that half of all LBO debt in Europe could default.
In Berlin, a growing chorus has called for the resignation of Ingrid Matthaus-Maier, KfW's board chief and a Social-Democrat politician. "She must be held accountable for botched crisis management and should step down," said Michael Fuchs, chair of the Bundestag's finance committee. He said it was astonishing that we still do not know the full extent of IKB's losses six months after the crisis erupted in August.
KfW has already lost €5bn since August propping up IKB, bearing the brunt of the rescue costs. It is now trying to sell its stake altogether.
Monday, 11 February 2008
Spanish Costas hit by weak pound.
The pound’s weakness is having a detrimental effect on tourism.Many UK holidaymakers are shunning the Costas because of current exchange rates and travel firms say it has prompted many to opt for countries that are not in the single currency.Holidaymakers in Benidorm confirm the trend.“We think it’s stopping people from booking holidays to Euro countries. We recently booked to go to Egypt in August and that holiday has worked out cheaper than being in Benidorm, and we’ve only been here three days!” said Mr and Mrs Langley from Chester, who added: “Our friends back home are now choosing to go to Bulgaria and Croatia because you get more for your money.”Exchange offices are obviously feeling British holidaymakers’ discontent.Pedro Martínez from Eurochange in Benidorm’s Calle Ibiza told CBN: “I would say that 100 per cent of people that walk into this shop moan about the exchange rate. When they are in the UK they see they can exchange for 1.25, and here its 1.30, so they think it’s not too bad. But they realise they’re not getting as much as they thought or used to get. What they don’t realise is that last summer the exchange rate was nearly 1.50.
The value of A.I.G.'s portfolio of credit default swaps fell by $6 billion
The value of A.I.G.'s portfolio of credit default swaps fell by $6 billion in October and November, according to a regulatory filing. Previously, the company announced that its value had dropped by just $1.1 billion in that period. It hasn't yet determined their decline for the full fourth quarter. The disclosure underscores the uncertainty surrounding the value of collateralized debt obligations and other credit instruments that have declined as defaults on mortgage payments have increased. The swaps in A.I.G.'s portfolio are contracts based on the risk of default on securities like C.D.O.'s. (Here is an explanation of C.D.O.'s)Indeed, many economists believe that the $120 billion in write-downs that investment banks have already disclosed may just be the beginning of worldwide credit losses stemming from the subprime mortgage crisis. Over the weekend, German finance minister Peer Steinbrück said that the finance leaders from the Group of Seven nations expect the losses to reach $400 billion. Other economists put the figure as high as $500 billion, but the U.S. Federal Reserve is still estimating that the losses will reach only $150 billion. "There remains a risk that further shocks may lead to a recurrence of the acute liquidity pressures experienced last year," the Financial Stability Forum indicated in a report presented to the finance leaders in Tokyo. "It is likely that we face a prolonged adjustment, which could be difficult."
Jerome Kerviel
Jerome Kerviel guilty or not guilty
Jerome Kerviel, the 31-year-old French trader who caused a 4.9 billion euro loss for Societe Generale, was taken into custody on Friday following a request to have the trader placed in detention. According to the state prosecutor’s office, Kerviel should be held in custody “to avoid any consultation with possible accomplices or conspirators.”A second broker, who has not been named, was questioned on Thursday and faced judges on Saturday. He was later released but has been made an assisted witness to the case. The broker worked for Fimat, a subsidiary of Societe Generale, and is alleged to have known about Kerviel’s trades. “What is known at the moment,” said Jean Viel, a lawyer for Societe Generale, “is that the two traders were friends, in communication.” Police found dozens of instant messaging conversations between the two traders on Kerviel’s computer. Earlier in the week, Kerviel gave his first interview since the Societe Generale losses were made public on 24th January. Speaking to AFP at his lawyer’s office in Paris, Kerviel admitted to getting “a bit carried away” and falsifying e-mails, but refused to be considered solely responsible. “I accept my share of responsibility,” he said, “but I will not be made a scapegoat for Societe Generale.”France’s finance minister Christine Lagarde delivered an 11-page report to the French government on Monday, urging banks to invest more in “efficient internal control systems” to reinforce the security of market operations and reduce the risk of fraud. Lagarde also suggested that fines should be increased for the breach of state banking commission regulations. Societe Generale declared in a statement that new measures have been, or soon will be, implemented to “detect and prevent” the “controls that were successfully evaded by this fraud”.
Jerome Kerviel, the 31-year-old French trader who caused a 4.9 billion euro loss for Societe Generale, was taken into custody on Friday following a request to have the trader placed in detention. According to the state prosecutor’s office, Kerviel should be held in custody “to avoid any consultation with possible accomplices or conspirators.”A second broker, who has not been named, was questioned on Thursday and faced judges on Saturday. He was later released but has been made an assisted witness to the case. The broker worked for Fimat, a subsidiary of Societe Generale, and is alleged to have known about Kerviel’s trades. “What is known at the moment,” said Jean Viel, a lawyer for Societe Generale, “is that the two traders were friends, in communication.” Police found dozens of instant messaging conversations between the two traders on Kerviel’s computer. Earlier in the week, Kerviel gave his first interview since the Societe Generale losses were made public on 24th January. Speaking to AFP at his lawyer’s office in Paris, Kerviel admitted to getting “a bit carried away” and falsifying e-mails, but refused to be considered solely responsible. “I accept my share of responsibility,” he said, “but I will not be made a scapegoat for Societe Generale.”France’s finance minister Christine Lagarde delivered an 11-page report to the French government on Monday, urging banks to invest more in “efficient internal control systems” to reinforce the security of market operations and reduce the risk of fraud. Lagarde also suggested that fines should be increased for the breach of state banking commission regulations. Societe Generale declared in a statement that new measures have been, or soon will be, implemented to “detect and prevent” the “controls that were successfully evaded by this fraud”.
Costadelcouscous
Costa del Couscous.
The three, all of whom have moved to Essaouira in the past year, are among tens of thousands of European citizens now moving to what is becoming the hottest retirement destination in the world: the "Costa del Couscous".
"Once everyone spoke about the Cote d'Azur, then the Costa del Sol, now it is Morocco," said Anne Locquet, an estate agent in Essaouira. "They are pouring in. More and more every day."
Although British, Italian and Spanish immigrants are among the wave of newcomers, the vast majority are French. Attracted by the sun, cheap property and tax breaks, their numbers have rocketed in the past three years. There are cheap flights, and French is widely spoken in the former colony that retains strong cultural links - couscous was recently voted the most popular single dish in France.
a former fighter pilot who recently arrived in the city of Fez, said that he was leaving behind a "sad and expensive" France.
In Marrakesh, local authorities say that they have issued 8000 residence permits to French nationals, many retired.
The Institut Francais, the French Government's cultural centre in the city, is now tailoring parts of its programme to suit elderly citizens. In Meknes, a small industrial city near Fez, in the north of Morocco, 1000 foreigners - most of them from France - have now registered with the town hall. As only a fraction register, the total number of retired French in Morocco is not known, but some estimates put it as high as 50,000.
"It has exploded exponentially," said Laurent Paul Alteresco, director of Repimmo.com, an estate agency that offers retirement properties in Morocco. "We get 30,000 [website] visitors and 400 serious inquiries a week."
Monique Benotman, a former teacher from Jura has been in Essaouira for 18 months. She said she wanted "some sun and to do some good" and now teaches French to poor children in the streets around her flat in the old part of the city.
Evelyne Feraud, from Aix-en-Provence in the south of France, has launched a jewellery workshop, targeting her compatriots who visit Essaouira as tourists. "The problem in France is tax and all the regulation. It is much easier here. Provence is beautiful but expensive. If I could have all I have here back home, I would have stayed there - but I can't."
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Subprime
Germany's finance minister Peer Steinbruck put the G7's latest estimate of subprime losses at $400bn, according to the Financial Times. The problem with this estimate is that neither he nor any of his G7 colleagues seem to have any idea where the losses are, or how they arrived this number. The G7's increasingly strained optimism on global economic growth also appears increasingly stretched. Mario Draghi, governor of the Bank of Italy and head of the Financial Stability Forum, said the next two weeks would be crucial as the first audited accounts are coming in. Draghi also said that it may be that public sector would have to step in to recapitalise the banking system.
Il Sole 24 ore reports from Tokyo that Draghi said there were so far no signs of a credit crunch in the euro area, as the availability of credit remains strong.
Meanwhile, there are signs that conditions on the credit market have been worsening dramatically since the beginning of the year. The CDO markets has effected evaporated, with only three contracts traded in January, worth $1.3bn. This compares with 37 deals worth $22bn in January 2007, according to an FT report quoting Morgan Stanley.
Il Sole 24 ore reports from Tokyo that Draghi said there were so far no signs of a credit crunch in the euro area, as the availability of credit remains strong.
Meanwhile, there are signs that conditions on the credit market have been worsening dramatically since the beginning of the year. The CDO markets has effected evaporated, with only three contracts traded in January, worth $1.3bn. This compares with 37 deals worth $22bn in January 2007, according to an FT report quoting Morgan Stanley.
UK payments association Apacs reports that internet banking fraud increased by almost 45 per cent between 2005 and 2006.
Mr Neate states: "25, 30 years ago the only thing you carried around with you that was important was your cheque book. Then you started having a banker's card.
"Now, your personal identity online is so precious and people can take it over if you lose it."
MySpace should ensure that telephone numbers and addresses are not displayed on personal profiles, he explains.
And those who leave networking websites should ensure their profile is completely closed down so that sensitive details do not linger unpoliced in cyberspace, the expert adds.
UK payments association Apacs reports that internet banking fraud increased by almost 45 per cent between 2005 and 2006.
people are increasingly using online banking to pull off cyber frauds.
kerviel was able to conceal trading of $116.8 billion in fictitious accounts — and get away without any alarms being raised because of his deep knowledge of the working of the bank’s systems.
This happened despite the fact that the bank had installed all the relevant alarms and firewall software to capture unusual trading patterns. It had 2,000 people in the compliance department.
What has happened at Societe Generale raises questions about the safety of banking procedures. Some critics are also debating the overdependence on computer-based banking systems.
Now, investigations are on and Kerviel is being interrogated. But some basic questions do arise about how such a fraud could go unnoticed for such a long time.
Most top banks have been at the forefront in implementing the Basel 2 norms, which are meant to cover operational risks in banking. That a single employee with his knowledge of the system and with a few passwords, which should not have been with him, could get away with a fraud of this magnitude suggests two things—either he was an expert at hacking and breaking into the passwords of his colleagues, or his colleagues colluded with him and provided their passwords.
Banks have gone online with a vengeance in the past 10 years. They use more computer infrastructure and functions to manage operations as well as their back-office functions and compliance. Efficiency has vastly improved, both across the world and in India.
But the wrong sort of people are increasingly using online banking to pull off cyber frauds. Many incidents of cyber crimes and cyber attacks go unreported because banks fear they will lose face — and goodwill.
Investors are abandoning the leveraged-loan market
Investors are abandoning the leveraged-loan market just as they have with other assets in the credit markets during times of distress.
In the past week, UBS Securities circulated a list of loans for sale totaling $264.9 million, and Wachovia Securities did the same, for $446 million -- small amounts in the more than half-a-trillion dollar leveraged-loan market, but loaded with meaning for investors who suspect it is a sign subprime-like problems have arrived in corporate debt.
Like mortgage bonds, leveraged loans often were bought and repackaged into securities called collateralized loan obligations.
In the past week, UBS Securities circulated a list of loans for sale totaling $264.9 million, and Wachovia Securities did the same, for $446 million -- small amounts in the more than half-a-trillion dollar leveraged-loan market, but loaded with meaning for investors who suspect it is a sign subprime-like problems have arrived in corporate debt.
Like mortgage bonds, leveraged loans often were bought and repackaged into securities called collateralized loan obligations.
700m (£521.3m) support initiative for small and medium-sized businesses
The European Commission has launched a new 700m (£521.3m) support initiative for small and medium-sized businesses as part of its strategy to help bolster economic growth and safeguard member states from future threats of turmoil in the global financial markets.
The EC's new SME support system, called the Enterprise Europe Network, aims to offer a "one-stop-shop", where entrepreneurs across Europe can seek advice and benefit from a range of business support services on offer by the EC.
Its launch is a direct response to the region's darkening growth prospects, acknowledged last week by Jean-Claude Trichet, the European Central Bank's president, who at the same time opened the door to interest rate cuts in the coming months.
The EC's new SME support system, called the Enterprise Europe Network, aims to offer a "one-stop-shop", where entrepreneurs across Europe can seek advice and benefit from a range of business support services on offer by the EC.
Its launch is a direct response to the region's darkening growth prospects, acknowledged last week by Jean-Claude Trichet, the European Central Bank's president, who at the same time opened the door to interest rate cuts in the coming months.
Sunday, 10 February 2008
The news just keeps getting worse. We are now told that we are nowhere close to the end of the writedowns by banks all over the world.
The news just keeps getting worse. We are now told that we are nowhere close to the end of the writedowns by banks all over the world. Goldman Sachs now estimates that the total loss in the mortgage security world will total $400 billion (this includes more than just subprime mortgages), up from an estimated $200 billion only a few quarters ago. And that is if home prices only fall about 20% on average.
And that probably assumes normal default patterns. The Wall Street Journal noted today that Fitch has warned of an additional $139 billion in mortgage-related losses from individuals who are simply walking away from mortgages where the homes have lost value. They are doing this in advance of foreclosure proceedings. Fitch expects that losses will be 26% of the value on subprime loans made in 2007.
But returning to the rise in spreads, this also means that subprime credit cards, subprime auto loans, and subprime student loans will start costing a lot more, or become less available. There are tens of millions of subprime credit cards. And their cost is going to go up. But here I refer not to the borrower but to the lender.
Defaults on credit cards are rising. 7.6% of all credit cards loans were 60 days past due in December. Credit card debt is sold to various investors as bundled securities, just as mortgages were. If delinquencies rise, then the rates that investors want must rise to cover the defaults. Interest rates are going to rise on all but the highest-rated credit card debt.
And that probably assumes normal default patterns. The Wall Street Journal noted today that Fitch has warned of an additional $139 billion in mortgage-related losses from individuals who are simply walking away from mortgages where the homes have lost value. They are doing this in advance of foreclosure proceedings. Fitch expects that losses will be 26% of the value on subprime loans made in 2007.
But returning to the rise in spreads, this also means that subprime credit cards, subprime auto loans, and subprime student loans will start costing a lot more, or become less available. There are tens of millions of subprime credit cards. And their cost is going to go up. But here I refer not to the borrower but to the lender.
Defaults on credit cards are rising. 7.6% of all credit cards loans were 60 days past due in December. Credit card debt is sold to various investors as bundled securities, just as mortgages were. If delinquencies rise, then the rates that investors want must rise to cover the defaults. Interest rates are going to rise on all but the highest-rated credit card debt.
UBS’ wealth management group was one of 19 people arrested by Brazilian police in connection with an anti-money laundering investigation
A banker from UBS’ wealth management group was one of 19 people arrested by Brazilian police in connection with an anti-money laundering investigation that is also targeting the rival Swiss bank Credit Suisse and AIG, the US insurer.
UBS confirmed that a Swiss employee in its wealth management and business banking division had been detained.
It said that the bank was looking into the matter but declined to name the banker concerned or comment further.
The arrest was made during an investigation into an alleged scheme that allowed Brazilian companies to avoid taxes by laundering money through Swiss banks and the US insurance group, a detective from Brazil’s federal police said.
Clariden Leu, a private banking subsidiary of Credit Suisse, confirmed that one of its employees had also been detained. Credit Suisse decline to comment.
In a statement, a federal judge named UBS, Credit Suisse and AIG as the financial institutions under investigation.
AIG said that it was “not aware of any wrongdoing by any AIG employee”.
Brazilian police said that they arrested 19 people and recovered more than $4 million in cash during raids on 44 sites across the country yesterday.
None of the 19 — two Swiss nationals and 17 Brazilians — has been charged. Under Brazilian law they can be held for five days without charge.
Police said that they are seeking the arrest of another foreigner who is currently outside Brazil although they did not give further details.
UBS confirmed that a Swiss employee in its wealth management and business banking division had been detained.
It said that the bank was looking into the matter but declined to name the banker concerned or comment further.
The arrest was made during an investigation into an alleged scheme that allowed Brazilian companies to avoid taxes by laundering money through Swiss banks and the US insurance group, a detective from Brazil’s federal police said.
Clariden Leu, a private banking subsidiary of Credit Suisse, confirmed that one of its employees had also been detained. Credit Suisse decline to comment.
In a statement, a federal judge named UBS, Credit Suisse and AIG as the financial institutions under investigation.
AIG said that it was “not aware of any wrongdoing by any AIG employee”.
Brazilian police said that they arrested 19 people and recovered more than $4 million in cash during raids on 44 sites across the country yesterday.
None of the 19 — two Swiss nationals and 17 Brazilians — has been charged. Under Brazilian law they can be held for five days without charge.
Police said that they are seeking the arrest of another foreigner who is currently outside Brazil although they did not give further details.
135 people and four French banks including already embattled Societe Generale went on trial in Paris on Monday on charges they abetted a money launder
135 people and four French banks including already embattled Societe Generale went on trial in Paris on Monday on charges they abetted a money laundering operation between France and Israel. The case reached court as Societe Generale is reeling from billions of dollars in trading losses announced last month. Those losses are the subject of a separate, unrelated investigation. "It will be intresting to see in which direction the court goes on this." said Michael Hearns an anti money laundering specialist from launderingmoney.com
In the money laundering trial, the defendants include 142 people or entities including Societe Generale, the French unit of Barclays PLC, the National Bank of Pakistan and Societe Marseillaise de Credit. Societe Generale CEO and Chairman Daniel Bouton and other senior bank executives are among the defendants.
The case centers on five networks, four made up of shopkeepers and companies and the fifth various Israeli associations.
Prosecutors say the banks failed to properly monitor checks drawn on French accounts that were subsequently cashed in Israel. The cash was then returned to France. Suspicious transactions reportedly rarely exceeded 2,250 euros (currently worth $3,335).
While charges vary, individuals, if convicted, could face up to 10 years in prison and heavy fines. The banks risk heavy fines.
Societe Generale is accused of having laundered some 32 million euros, Barclays France close to 24 million euros, National Bank of Pakistan and Societe Marseillaise de Credit about 2.6 million euros.
Societe Generale issued a statement saying that bank employees never "knowingly participated" in any money laundering. The alleged scheme came to light in 1997 when seven banks, including Societe Generale, filed complaints against some of those suspected of involvement. Dozens of people were convicted in that case
In the money laundering trial, the defendants include 142 people or entities including Societe Generale, the French unit of Barclays PLC, the National Bank of Pakistan and Societe Marseillaise de Credit. Societe Generale CEO and Chairman Daniel Bouton and other senior bank executives are among the defendants.
The case centers on five networks, four made up of shopkeepers and companies and the fifth various Israeli associations.
Prosecutors say the banks failed to properly monitor checks drawn on French accounts that were subsequently cashed in Israel. The cash was then returned to France. Suspicious transactions reportedly rarely exceeded 2,250 euros (currently worth $3,335).
While charges vary, individuals, if convicted, could face up to 10 years in prison and heavy fines. The banks risk heavy fines.
Societe Generale is accused of having laundered some 32 million euros, Barclays France close to 24 million euros, National Bank of Pakistan and Societe Marseillaise de Credit about 2.6 million euros.
Societe Generale issued a statement saying that bank employees never "knowingly participated" in any money laundering. The alleged scheme came to light in 1997 when seven banks, including Societe Generale, filed complaints against some of those suspected of involvement. Dozens of people were convicted in that case
UBS is reeling from $18 billion in writedowns
Regulators have blocked an application by UBS for a banking licence in India, dealing a second significant setback to the Swiss bank in the country in three months, as authorities investigate an alleged $8 billion (£4 billion) money-laundering racket.
The Reserve Bank of India (RBI) said yesterday that preliminary approval for a rare branch licence that was granted to UBS last year and would have laid a foundation for a big new wealth-management business had been “put on hold pending an investigation”.
It is understood that the Indian Finance Ministry is behind the move and blocked UBS because of what it sees as the bank’s lack of co-operation in an investigation of alleged money-laundering by Hasan Ali Khan, a controversial businessman best known for his passion for racehorses. Mr Khan is accused of breaching India’s currency controls on a huge scale.
A source close to the process said: “There is a political imperative to bring Mr Khan to book.”
In June the ministry’s enforcement directorate registered a case against Mr Khan under India’s Prevention of Money Laundering Act. Investigators claimed to have uncovered documents showing that Mr Khan, a man of apparently relatively modest means, held as much as $8 billion in illicit cash in accounts purportedly registered at a Zurich branch of UBS. Officials said that they had sought confirmation — or “direct evidence” — from UBS by writing to the Swiss authorities, a request at odds with Switzerland’s banking privacy laws. A spokesman for UBS said it was co-operating fully with the Indian authorities.
Mr Khan, who could not be contacted yesterday, is said to have denied that he held a Swiss account.
The effective revoking of its only Indian branch licence — even before the branch had opened — is the second regulatory slapdown for UBS in India since December, when the group failed to gain clearance for its bid to buy part of Standard Chartered Bank’s mutual funds business. At that time, the RBI effectively counted down the clock on the $118 million deal in a move also thought to be linked to the Khan investigation, sources said. A senior Bombay banker said: “It’s not unknown for Indian regulators to be agenda-driven.”
Standard Chartered said its contract with UBS had expired and that it was moving on to find a new purchaser. "With the recent set backs that UBS has encountered this past year, this can only compile their problems." said Michael Hearns an anti money laundering specialist.
UBS is reeling from $18 billion in writedowns linked to the sub-prime crisis in the United States, from which it has emerged as the worst-hit of Europe’s banks. UBS, which runs a brokerage and investment banking in India, first applied for a branch licence in 2004.
The Reserve Bank of India (RBI) said yesterday that preliminary approval for a rare branch licence that was granted to UBS last year and would have laid a foundation for a big new wealth-management business had been “put on hold pending an investigation”.
It is understood that the Indian Finance Ministry is behind the move and blocked UBS because of what it sees as the bank’s lack of co-operation in an investigation of alleged money-laundering by Hasan Ali Khan, a controversial businessman best known for his passion for racehorses. Mr Khan is accused of breaching India’s currency controls on a huge scale.
A source close to the process said: “There is a political imperative to bring Mr Khan to book.”
In June the ministry’s enforcement directorate registered a case against Mr Khan under India’s Prevention of Money Laundering Act. Investigators claimed to have uncovered documents showing that Mr Khan, a man of apparently relatively modest means, held as much as $8 billion in illicit cash in accounts purportedly registered at a Zurich branch of UBS. Officials said that they had sought confirmation — or “direct evidence” — from UBS by writing to the Swiss authorities, a request at odds with Switzerland’s banking privacy laws. A spokesman for UBS said it was co-operating fully with the Indian authorities.
Mr Khan, who could not be contacted yesterday, is said to have denied that he held a Swiss account.
The effective revoking of its only Indian branch licence — even before the branch had opened — is the second regulatory slapdown for UBS in India since December, when the group failed to gain clearance for its bid to buy part of Standard Chartered Bank’s mutual funds business. At that time, the RBI effectively counted down the clock on the $118 million deal in a move also thought to be linked to the Khan investigation, sources said. A senior Bombay banker said: “It’s not unknown for Indian regulators to be agenda-driven.”
Standard Chartered said its contract with UBS had expired and that it was moving on to find a new purchaser. "With the recent set backs that UBS has encountered this past year, this can only compile their problems." said Michael Hearns an anti money laundering specialist.
UBS is reeling from $18 billion in writedowns linked to the sub-prime crisis in the United States, from which it has emerged as the worst-hit of Europe’s banks. UBS, which runs a brokerage and investment banking in India, first applied for a branch licence in 2004.
rating downgrades for bond insurers hurt by the subprime slump ``could be a tsunami-like event.''
The G-7 also pledged to act on the recommendations of the Financial Stability Forum of regulators, which yesterday proposed measures to prevent a repeat of the credit crisis.
Deutsche Bank AG Chief Executive Officer Josef Ackermann said Feb. 7 rating downgrades for bond insurers hurt by the subprime slump ``could be a tsunami-like event.''
Italy's Draghi, who drafted the report, said banks should publish more information about their losses and improve risk management.
The report also said authorities must address ``potential conflicts of interest'' at credit-rating companies and improve understanding of banks' off-balance sheet positions, according to the statement.
The G-7 asked the International Monetary Fund and the Basel, Switzerland-based Financial Stability Forum to report at the next meeting in April ``on their respective roles in identifying potential vulnerabilities and enhancing early warning capabilities,'' the statement said.
Deutsche Bank AG Chief Executive Officer Josef Ackermann said Feb. 7 rating downgrades for bond insurers hurt by the subprime slump ``could be a tsunami-like event.''
Italy's Draghi, who drafted the report, said banks should publish more information about their losses and improve risk management.
The report also said authorities must address ``potential conflicts of interest'' at credit-rating companies and improve understanding of banks' off-balance sheet positions, according to the statement.
The G-7 asked the International Monetary Fund and the Basel, Switzerland-based Financial Stability Forum to report at the next meeting in April ``on their respective roles in identifying potential vulnerabilities and enhancing early warning capabilities,'' the statement said.
Saturday, 9 February 2008
Investors are liquidating holdings as fears about corporate and commercial property bubble set to bust as debt reached new heights in Europe
Commercial property ballon set to burst. Investors are liquidating holdings as fears about corporate and commercial property debt reached new heights in Europe, according to Financial Times on Saturday.
The markets were gripped by worries that economic weakness would affect corporate profits, leveraged buy-outs and commercial property, which is said to "represent an escalation of the crisis that began with concerns about U.S. sub-prime mortgages."
Mutual funds that invest in loans have been hit with redemptions, forcing them to dump some of their holdings, while hedge funds that bet on the likelihood of buy-out deals have also been among the casualties.
The turmoil has also put pressure on banks and other investors who are holding 200 billion U.S. dollars of leveraged loans that they had been hoping to sell, the report said.
The markets were gripped by worries that economic weakness would affect corporate profits, leveraged buy-outs and commercial property, which is said to "represent an escalation of the crisis that began with concerns about U.S. sub-prime mortgages."
Mutual funds that invest in loans have been hit with redemptions, forcing them to dump some of their holdings, while hedge funds that bet on the likelihood of buy-out deals have also been among the casualties.
The turmoil has also put pressure on banks and other investors who are holding 200 billion U.S. dollars of leveraged loans that they had been hoping to sell, the report said.
Friday, 8 February 2008
French police are looking at a second trader in connection with the trading scandal
French police are looking at a second trader in connection with the trading scandal that cost Société Générale $7.1 billion in losses.
An unidentified employee of the brokerage firm Newedge has been questioned over possible ties to Jérôme Kerviel, who has been accused of betting more than $70 billion in unauthorized trades on European stock market indexes. Newedge, formerly known as Fimat, had been a unit of Société Générale. Its offices were searched by police on Thursday, according to Reuters.
The Financial Times is reporting that the Newedge employee is Moussa Bakir, a 32-year-old sales trader. Kerviel used the broker, then Fimat, to process some of his trades.
The widening of the investigation comes as the Paris prosecutor is seeking to have Kerviel put in detention, contending that he may try to flee.
Kerviel, who has been free since January 28, has been accused of breach of trust and computer tampering, but he has not been charged with fraud.
The Times of London says that if prosecutors can show that others aided the trader, they "may have new grounds to press fraud charges." Société Générale maintains that Kerviel acted alone.
"The entire mechanism of the fraud needs to be verified, and for the moment we only have the evidence provided by Société Générale," said Ulrika Weiss, spokeswoman for the prosecutor, according to the BBC.
Kerviel has said he will not be made a "scapegoat" by Société Générale.
An unidentified employee of the brokerage firm Newedge has been questioned over possible ties to Jérôme Kerviel, who has been accused of betting more than $70 billion in unauthorized trades on European stock market indexes. Newedge, formerly known as Fimat, had been a unit of Société Générale. Its offices were searched by police on Thursday, according to Reuters.
The Financial Times is reporting that the Newedge employee is Moussa Bakir, a 32-year-old sales trader. Kerviel used the broker, then Fimat, to process some of his trades.
The widening of the investigation comes as the Paris prosecutor is seeking to have Kerviel put in detention, contending that he may try to flee.
Kerviel, who has been free since January 28, has been accused of breach of trust and computer tampering, but he has not been charged with fraud.
The Times of London says that if prosecutors can show that others aided the trader, they "may have new grounds to press fraud charges." Société Générale maintains that Kerviel acted alone.
"The entire mechanism of the fraud needs to be verified, and for the moment we only have the evidence provided by Société Générale," said Ulrika Weiss, spokeswoman for the prosecutor, according to the BBC.
Kerviel has said he will not be made a "scapegoat" by Société Générale.
Irish Banking Crisis
Irish banks, it seems, are particularly vulnerable to changing sentiment about the state of the Irish economy. With the domestic housing market, a big driver of earnings in the past, now slowing appreciably, the shares have been knocked.
With Bank of Ireland's latest figures, investors "took fright" - the description of Davy, Bank of Ireland's former broking subsidiary - at news that the bank had made an additional Euros 30m charge for loan losses.
Emer Lang, Davy's chief bank analyst, said the annualised impairment charge at 23 basis points of average loans was "still relatively low but investors clearly fear there could be worse to come".
The shares, which topped out in February, are "discounting an outright Irish recession which in our view is unlikely to happen," said Davy
The broker said it was adjusting its forecasts for all three big Irish banks - Bank of Ireland, Allied Irish Banks and Irish Life & Permanent. Irish Life, it says, has a particularly acute ongoing funding problem.
The exception is Anglo Irish Bank, the specialist corporate lender, which reports full-year results on November 28.
Scott Rankin, of Davy, forecasts Anglo Irish will "meet, if not slightly exceed, market guidance". The question for investors in Anglo Irish is what will be the impact of the slowing Irish property market on the bank's 2009 results.
In groping for a bank to measure Anglo Irish against, some analysts have in the past suggested Northern Rock comes closest. But David Drumm, chief executive, believes this completely misunderstands the model. Anglo Irish is not involved in residential mortgages. It is a specialist business lender. It is not dependent on interbank funding, which has been one of the reasons for Northern Rock's liquidity problems. Anglo Irish is a net lender to the interbank market, says Mr Drumm. It relies on personal corporate depositors in Ireland, the UK and from its Austrian bank subsidiary to fund two-thirds of its loan book. Mr Drumm is straining at the leash to be able to tell the bank's story. "It's so frustrating. I can't wait," he says.
He feels the enforced silence of the current closed period, with several hedge funds engaged "in all soWorried investors fighting through the blizzard of bad news surrounding the residential and commercial property markets have started to desert commercial property funds in growing numbers, leaving serious questions to be asked about whether the funds will able to meet the calls for cash.
"I think the longer the negative sentiment goes on, the more likely it is that you will see the exit strategies on these funds closed," says Darius McDermott, the managing director of Chelsea Financial Services, an independent financial adviser. "What investors should understand is that commercial property is a great asset class for the long term but is not something you want to buy or sell on price momentum."
The questions being asked of the retail funds follow on from a similar problem being faced by institutional funds over the past few weeks. Since The Sunday Telegraph broke the story that Schroders, the fund manager, had warned investors that it might be unable to fulfil redemptions within the normal three-month window, UBS and RREEF, part of Deutsche Bank, have also imposed restrictions on withdrawals.
For institutional investors with deeper pockets and longer time horizons, these restrictions, although serious, are not catastrophic. But a similar situation arising in the retail fund community could lead to widespread panic among investors.
"If the liquidity levels in these funds fall much further, managers will start to get very worried," says one property fund manager, who asked not to be named. "They are trapped between an illiquid property market and the highly liquid structure they offer investors. In markets such as these, the two just don't tally."
The concern is mirrored among IFAs. McDermott says: "We have been very cautious on property for a number of years. The problem is that when the door is locked on this market you cannot get your money out - or, if you do, you do not want the prices being offered."
With Bank of Ireland's latest figures, investors "took fright" - the description of Davy, Bank of Ireland's former broking subsidiary - at news that the bank had made an additional Euros 30m charge for loan losses.
Emer Lang, Davy's chief bank analyst, said the annualised impairment charge at 23 basis points of average loans was "still relatively low but investors clearly fear there could be worse to come".
The shares, which topped out in February, are "discounting an outright Irish recession which in our view is unlikely to happen," said Davy
The broker said it was adjusting its forecasts for all three big Irish banks - Bank of Ireland, Allied Irish Banks and Irish Life & Permanent. Irish Life, it says, has a particularly acute ongoing funding problem.
The exception is Anglo Irish Bank, the specialist corporate lender, which reports full-year results on November 28.
Scott Rankin, of Davy, forecasts Anglo Irish will "meet, if not slightly exceed, market guidance". The question for investors in Anglo Irish is what will be the impact of the slowing Irish property market on the bank's 2009 results.
In groping for a bank to measure Anglo Irish against, some analysts have in the past suggested Northern Rock comes closest. But David Drumm, chief executive, believes this completely misunderstands the model. Anglo Irish is not involved in residential mortgages. It is a specialist business lender. It is not dependent on interbank funding, which has been one of the reasons for Northern Rock's liquidity problems. Anglo Irish is a net lender to the interbank market, says Mr Drumm. It relies on personal corporate depositors in Ireland, the UK and from its Austrian bank subsidiary to fund two-thirds of its loan book. Mr Drumm is straining at the leash to be able to tell the bank's story. "It's so frustrating. I can't wait," he says.
He feels the enforced silence of the current closed period, with several hedge funds engaged "in all soWorried investors fighting through the blizzard of bad news surrounding the residential and commercial property markets have started to desert commercial property funds in growing numbers, leaving serious questions to be asked about whether the funds will able to meet the calls for cash.
"I think the longer the negative sentiment goes on, the more likely it is that you will see the exit strategies on these funds closed," says Darius McDermott, the managing director of Chelsea Financial Services, an independent financial adviser. "What investors should understand is that commercial property is a great asset class for the long term but is not something you want to buy or sell on price momentum."
The questions being asked of the retail funds follow on from a similar problem being faced by institutional funds over the past few weeks. Since The Sunday Telegraph broke the story that Schroders, the fund manager, had warned investors that it might be unable to fulfil redemptions within the normal three-month window, UBS and RREEF, part of Deutsche Bank, have also imposed restrictions on withdrawals.
For institutional investors with deeper pockets and longer time horizons, these restrictions, although serious, are not catastrophic. But a similar situation arising in the retail fund community could lead to widespread panic among investors.
"If the liquidity levels in these funds fall much further, managers will start to get very worried," says one property fund manager, who asked not to be named. "They are trapped between an illiquid property market and the highly liquid structure they offer investors. In markets such as these, the two just don't tally."
The concern is mirrored among IFAs. McDermott says: "We have been very cautious on property for a number of years. The problem is that when the door is locked on this market you cannot get your money out - or, if you do, you do not want the prices being offered."
Zombie Companies haunt the markets as Europe heads into recession.
“High-yield spreads, which measure the risk premium between junk-rated debt and safe government bonds, have also risen by about 100 basis points this year, while leveraged loans are trading well below par.
Some bankers say secondary market prices for leveraged loans are assuming corporate default levels last seen during the Great Depression of the 1930s.
The picture is mirrored in the high-yield bond market. As Martin Fridson, chief executive of research service Fridson Vision, says: “Never before have we seen high yield spreads around 600 or 700 basis points over Treasuries with default rates so low.
“When spreads reached their current levels during the last two cycles, the economy entered a recession exactly eight months later. With rates so low, it means we’re anticipating a lot more pain than we already have.”
Mark Kiesel, portfolio manager at Pimco, says: “The credit market has definitely priced in the pain early this time,” although he stresses the high-yield market has not yet fully priced in a recession. “During the last recession, high-yield spreads reached 1,000 basis points.”
The Financial Times article concludes with theories on the current low default rates, these range from the massive amount of registered companies, the inability to properly measure a default rate and the refinancing of debt prior to the onslaught of the credit crunch mid 2007. With massive amounts of credit that was uses to expand in the company market, it has been suggested defaults could pause as a wave of *’zombie’ companies emerge.
It’s a very good article from the Financial Times online dealing with the credit markets next step in decline and the fact that most bankers, traders in someways have already factored in massive defaulting on company debt.
Generally there appears to be a lot of confusion, lies, apprehension and denial in accepting that the world 1. is going to slow to the point of recession, 2. the US is already in a recession and may enter even a severe recession.
The markets speak for themselves, so it would be advisable to keep an eye on the futures, stocks, FX markets; and be aware of the global fear factor, global recessionary conditions and global credit crunch.
*Zombie Companies (from investorpedia):
“Zombie
In the supernatural world, a zombie is a reanimated corpse infused with the magical energy of voodoo.
Zombies in the investing world aren’t that different from their supernatural cousins. They are companies that are insolvent or on the brink of insolvency, but are still operating as if nothing’s wrong. Although zombies are in or close to Chapter 11 - which allows a business to continue to operate while restructuring its debt - a zombie company is perceived as not having a chance. Therefore, much like the supernatural zombie, the corporate zombie doesn’t know that it’s already dead. As an investor, you should avoid zombie companies like you would avoid the living dead.”
Some bankers say secondary market prices for leveraged loans are assuming corporate default levels last seen during the Great Depression of the 1930s.
The picture is mirrored in the high-yield bond market. As Martin Fridson, chief executive of research service Fridson Vision, says: “Never before have we seen high yield spreads around 600 or 700 basis points over Treasuries with default rates so low.
“When spreads reached their current levels during the last two cycles, the economy entered a recession exactly eight months later. With rates so low, it means we’re anticipating a lot more pain than we already have.”
Mark Kiesel, portfolio manager at Pimco, says: “The credit market has definitely priced in the pain early this time,” although he stresses the high-yield market has not yet fully priced in a recession. “During the last recession, high-yield spreads reached 1,000 basis points.”
The Financial Times article concludes with theories on the current low default rates, these range from the massive amount of registered companies, the inability to properly measure a default rate and the refinancing of debt prior to the onslaught of the credit crunch mid 2007. With massive amounts of credit that was uses to expand in the company market, it has been suggested defaults could pause as a wave of *’zombie’ companies emerge.
It’s a very good article from the Financial Times online dealing with the credit markets next step in decline and the fact that most bankers, traders in someways have already factored in massive defaulting on company debt.
Generally there appears to be a lot of confusion, lies, apprehension and denial in accepting that the world 1. is going to slow to the point of recession, 2. the US is already in a recession and may enter even a severe recession.
The markets speak for themselves, so it would be advisable to keep an eye on the futures, stocks, FX markets; and be aware of the global fear factor, global recessionary conditions and global credit crunch.
*Zombie Companies (from investorpedia):
“Zombie
In the supernatural world, a zombie is a reanimated corpse infused with the magical energy of voodoo.
Zombies in the investing world aren’t that different from their supernatural cousins. They are companies that are insolvent or on the brink of insolvency, but are still operating as if nothing’s wrong. Although zombies are in or close to Chapter 11 - which allows a business to continue to operate while restructuring its debt - a zombie company is perceived as not having a chance. Therefore, much like the supernatural zombie, the corporate zombie doesn’t know that it’s already dead. As an investor, you should avoid zombie companies like you would avoid the living dead.”
Attempted loan fraud worth of dozens of billions CZK.
Police in southern Bohemia detected an attempted loan fraud worth of dozens of billions CZK.
The police arrested a married couple from the Písek region in the southern part of the Czech Republic. The couple tried to obtain a bank guarantee of 3.5 billion USD (almost 82 billion CZK) allegedly to finance their private airline company.
The couple backed up their intention by using a non-existent American bank. The whole fraud was stopped in Switzerland shortly before the contracts were to be signed.
"The Swiss bank did not implement the transcation due to suspicion of providing false information and counterfeit documents, stated South Bohemian police in its press release.
"South Bohemian police filed a criminal prosecution against a 54-year old man as the chairman and 43-year old woman as the vice-chairwoman of the Board of Directors of a stock company registered in Písek for fraud attempt," stated Jana Kameníková of Czech police.
The police arrested a married couple from the Písek region in the southern part of the Czech Republic. The couple tried to obtain a bank guarantee of 3.5 billion USD (almost 82 billion CZK) allegedly to finance their private airline company.
The couple backed up their intention by using a non-existent American bank. The whole fraud was stopped in Switzerland shortly before the contracts were to be signed.
"The Swiss bank did not implement the transcation due to suspicion of providing false information and counterfeit documents, stated South Bohemian police in its press release.
"South Bohemian police filed a criminal prosecution against a 54-year old man as the chairman and 43-year old woman as the vice-chairwoman of the Board of Directors of a stock company registered in Písek for fraud attempt," stated Jana Kameníková of Czech police.
Scotland's largest financial crime
Victims lost at least £225,000 through claims that were never met after the firm folded. Liquidators assessed its assets at just over £50,000 and its liabilities at £2.5 million.
Walker, formerly of Marchwell House, in Penicuik, admitted committing a £10,945,000 fraud.
Lord Carloway told Walker that he would have jailed him for six years for the offence, but the sentence would be reduced because of his guilty plea.
John "Jack" Walker perpetrated one of Scotland's largest financial crimes after thousands of insurance policies were sold through his firm which were not underwritten.
A judge jailed Walker, 59, for four years and 10 months in 2006 for the "extensive and deliberate fraud".
The Crown raised confiscation proceedings against him seeking to recover proceeds of crime.
A two-day hearing in the action was due to begin at the High Court in Edinburgh today when it was announced a settlement had been reached.
Simon Gilbride, counsel for Walker, told the court: "I am pleased to say the matter has been found to be capable of resolution."
Walker, formerly of Marchwell House, in Penicuik, admitted committing a £10,945,000 fraud.
Lord Carloway told Walker that he would have jailed him for six years for the offence, but the sentence would be reduced because of his guilty plea.
John "Jack" Walker perpetrated one of Scotland's largest financial crimes after thousands of insurance policies were sold through his firm which were not underwritten.
A judge jailed Walker, 59, for four years and 10 months in 2006 for the "extensive and deliberate fraud".
The Crown raised confiscation proceedings against him seeking to recover proceeds of crime.
A two-day hearing in the action was due to begin at the High Court in Edinburgh today when it was announced a settlement had been reached.
Simon Gilbride, counsel for Walker, told the court: "I am pleased to say the matter has been found to be capable of resolution."
Societe Generale, hit by a $7.3 billion trading scandal, has alerted the French authorities of suspected money-laundering
Societe Generale, the French banking giant hit by a $7.3 billion trading scandal, has alerted the French authorities to a case of suspected money-laundering through the bank involving two Russian businessmen, a French newspaper said Tuesday.
The bank passed the French Finance Ministry its findings from an internal investigation last week, after it noticed suspicious transactions involving several accounts, which were being used to channel hundreds of millions of euros into real estate projects in and around Paris, Le Parisien reported.
SocGen’s investigators found about 800 accounts held with the bank that were registered to front men or companies acting on behalf of two brothers, the paper said.
The French authorities are currently reviewing the evidence, and will investigate whether the bank had adequate anti-fraud controls in place, the paper said.
A spokeswoman for the French Finance Ministry confirmed Tuesday that an investigation was ongoing, but refused to provide further details, citing the confidentiality of the case.
The bank passed the French Finance Ministry its findings from an internal investigation last week, after it noticed suspicious transactions involving several accounts, which were being used to channel hundreds of millions of euros into real estate projects in and around Paris, Le Parisien reported.
SocGen’s investigators found about 800 accounts held with the bank that were registered to front men or companies acting on behalf of two brothers, the paper said.
The French authorities are currently reviewing the evidence, and will investigate whether the bank had adequate anti-fraud controls in place, the paper said.
A spokeswoman for the French Finance Ministry confirmed Tuesday that an investigation was ongoing, but refused to provide further details, citing the confidentiality of the case.
Thursday, 7 February 2008
disclosure order was that it was directed not to the alleged fraudster, but to the fraudster’s bank
The recent decision of Justice James Spence in Isofoton S.A. v. The Toronto-Dominion Bank should be of interest to anyone who suspects they may have been the victim of fraud. In that case, Justice Spence granted a Norwich order to obtain the banking records of a party suspected of defrauding the applicant of over $3 million. The unique nature of the disclosure order was that it was directed not to the alleged fraudster, but to the fraudster’s bank. The disclosure order was made to assist the applicant in investigating the fraud and determining what happened to its funds.
The article also illustrates the need for due diligence research prior to entering into an agreement with a previously unknown supplier. Once the victim realised that the supplier was not acting in good faith, they hired a PI who determined that the the supplier was a company without the assets necessary to deliver the contracted goods.
The article also illustrates the need for due diligence research prior to entering into an agreement with a previously unknown supplier. Once the victim realised that the supplier was not acting in good faith, they hired a PI who determined that the the supplier was a company without the assets necessary to deliver the contracted goods.
Hotellier Stanley Tollman, 77, and his wife Beatrice, 75, fighting extradition.
The US has won a partial victory in its legal battle to extradite an ex-Chelsea FC director charged over banking fraud.
Hotellier Stanley Tollman, 77, and his wife Beatrice, 75, deny a £45m bank and tax fraud first alleged 16 years ago.
The High Court in London has upheld the argument that his extradition would not be "oppressive" because of the length of time since the alleged offence.
Hotellier Stanley Tollman, 77, and his wife Beatrice, 75, deny a £45m bank and tax fraud first alleged 16 years ago.
The High Court in London has upheld the argument that his extradition would not be "oppressive" because of the length of time since the alleged offence.
Fraud is now most common over the internet
Fraud is now most common over the internet, where almost 2 in 5 have fallen prey to fraudulent scams. Alarmingly, nearly 1 in 5 people have also had their cards cloned from ATMs and Chip and PIN machines, highlighting the importance of exercising vigilance with your cards and personal details at all times. ... "Card fraud is a serious concern that is still common despite preventative measures put in place to combat this ,including Chip and PIN,” said Zoe Manton, head of Card Protection at CPP. “Fraud levels increased by 26% in the first six months of 2007 compared to the same period in 2006, to reach £264m.”
Manton said that although we are regularly told to report our lost and stolen cards immediately, on average we are taking nearly ten hours to tell our banks and card companies. The good news is that 56.7% of respondents said they now check their bank statements thoroughly to pick up on any suspicious activity
Manton said that although we are regularly told to report our lost and stolen cards immediately, on average we are taking nearly ten hours to tell our banks and card companies. The good news is that 56.7% of respondents said they now check their bank statements thoroughly to pick up on any suspicious activity
credit-default swap indexes in the U.S. and Europe reached the highest in two weeks
The risk of companies defaulting rose after reports showing contraction in the U.S. service industry and a tightening of lending standards by banks.
Benchmark credit-default swap indexes in the U.S. and Europe reached the highest in two weeks, a sign of eroding investor confidence in corporate creditworthiness. Contracts tied to the bonds of student lender SLM Corp. rose the most in two weeks after Standard & Poor's cut its credit rating two levels. Real- estate broker Realogy Corp. moved further into distressed levels on concern it won't be able to weather the housing-market slump.
Financial companies are reluctant to lend because they may face losses exceeding $265 billion on securities linked to subprime mortgages, Standard & Poor's said last week. Banks also are saddled with about $220 billion of high-yield, high-risk loans and bonds, according to Barclays analysts. Most of the debt was committed to fund leveraged buyouts.
"If lending standards do not loosen then this is very bad news for the rest of the economy," said Jim Reid, head of fundamental credit research at
Benchmark credit-default swap indexes in the U.S. and Europe reached the highest in two weeks, a sign of eroding investor confidence in corporate creditworthiness. Contracts tied to the bonds of student lender SLM Corp. rose the most in two weeks after Standard & Poor's cut its credit rating two levels. Real- estate broker Realogy Corp. moved further into distressed levels on concern it won't be able to weather the housing-market slump.
Financial companies are reluctant to lend because they may face losses exceeding $265 billion on securities linked to subprime mortgages, Standard & Poor's said last week. Banks also are saddled with about $220 billion of high-yield, high-risk loans and bonds, according to Barclays analysts. Most of the debt was committed to fund leveraged buyouts.
"If lending standards do not loosen then this is very bad news for the rest of the economy," said Jim Reid, head of fundamental credit research at
10 million people may default on repayments for mortgages, credit cards or personal loans by the end of the year.
10 million people may default on repayments for mortgages, credit cards or personal loans by the end of the year.
A forecast from one of Britain's biggest accountancy firms, says that "the merry-go-round of credit is about to stop", as millions of people realise their take-home pay is not enough to service their debts.
Britain is more indebted than any other country in Europe
According to KPMG, 22 per cent of those adults with debts - equating to 6.6 million - are already finding it difficult to meet their repayments.
However, 35 per cent - or 10.6 million - are worried they will find it even more difficult to pay back their debts in a year.
The figures come from a KPMG survey conducted by YouGov and commissioned by the ITV documentary Repossession,
A forecast from one of Britain's biggest accountancy firms, says that "the merry-go-round of credit is about to stop", as millions of people realise their take-home pay is not enough to service their debts.
Britain is more indebted than any other country in Europe
According to KPMG, 22 per cent of those adults with debts - equating to 6.6 million - are already finding it difficult to meet their repayments.
However, 35 per cent - or 10.6 million - are worried they will find it even more difficult to pay back their debts in a year.
The figures come from a KPMG survey conducted by YouGov and commissioned by the ITV documentary Repossession,
Consumer confidence in the U.K. is at the lowest in almost four years
Consumer confidence in the U.K. is at the lowest in almost four years, mortgage lender Nationwide Building Society said today, fueling concern that a spending slowdown will crimp corporate earnings. In the U.S., where rising mortgage defaults and a freeze in some areas of credit markets are causing banks to tighten their lending standards, the Institute for Supply Management reported yesterday that service industries shrank the most since the last recession in 2001.
Credit-default swaps tied to General Motors Corp., the biggest automaker, rose 37 basis points to 832 basis points, the most in four weeks, according to CMA Datavision in London.
Contracts on GMAC LLC, the automobile and mortgage lender formerly owned by GM, rose 15 basis points to 828 basis points. The Detroit-based company yesterday posted a $724 million fourth- quarter loss as more than one of every 10 homeowners fell behind on their mortgage payments
Credit-default swaps tied to General Motors Corp., the biggest automaker, rose 37 basis points to 832 basis points, the most in four weeks, according to CMA Datavision in London.
Contracts on GMAC LLC, the automobile and mortgage lender formerly owned by GM, rose 15 basis points to 828 basis points. The Detroit-based company yesterday posted a $724 million fourth- quarter loss as more than one of every 10 homeowners fell behind on their mortgage payments
Credit default swap (CDS) market predicting widespread defaults
One reason most banks have not been panicking about the growth in sub-prime debt is that there's a new instrument for hedging against default by big-name creditors. But price signals currently being sent by the credit default swap (CDS) market are generally more pessimistic than those from equities, even in the same companies. And the rising price of CDSs has led to fears that big banks – and those lending to them - may have viewed this as an easy way to insure against default, leading to more reckless lending than if the insurance had not been available.
What it is
An agreement by a bondholder to make scheduled payments to another party, who pays out if the bond is subject to a rescheduling or default. Payment is linked to the fall in the bond's resale price after the adverse event, and is not made if the event does not occur. The swap, written (and resaleable) in the over-the-counter derivatives market, offers a form of insurance against default, transferring risk to a specialist writer of CDSs.
The market has grown rapidly, with CDSs issued against an estimated $45,000 billion worth of bonds in the six months to June, as banks use them to hedge their exposure, especially when lending to customers with credit ratings below the top investment grade.
The recent behaviour of CDSs suggests a misalignment between the expectations of equity and debt investors, and in pricing on their respective markets. That rings alarm bells, because such misalignments have tended to precede big stock market corrections – including the recently commemorated Crash of 87.
The price of CDSs has been rising, on both sides of the Atlantic. That means lenders are seeing a rising risk of default on the bonds they buy. It contrasts with the expectation of share buyers, who have been bidding share prices to near-record levels in New York, London and elsewhere, implying an expectation of rising profitability.
Demand for CDSs has risen because more bondholders and bank lenders want to insure themselves against repayment difficulties – and because speculators who expect more defaults have piled into the market, amplifying its upward movement. One reason some analysts fear that US banks’ bad news won’t be confined to Q3 2007, despite the big write-offs recently reported, is that some may successfully have disguised the extent of their sub-prime losses by buying instruments – including CDSs - that take default risk off the balance sheet.
As CDS investors tend to hold cash covering only the riskiest portion of a company’s debt, they can be forced to raise more capital at short notice if a fall in the debt price goes deeper and wider than anticipated. Credit research group Creditsights calculated last month that adverse debt market price movements "could cause market flows of up to $345bn of CDS protection buying should unwind provisions be triggered." Unwinding is a problem because the market for credit swaps has become substantially more liquid than that for many of the underlying bonds.
In an ironic piece of market feedback, CDSs can be subjected to the same sort of packaging as the collateralised debt obligations (CDOs) whose collapse in value started the present apprehension in the bond markets. Where large corporations issue senior debt with a very high credit rating and other debt with lower ratings, it is possible to sell a CDS in an AAA-rated corporation which actually covers lower-grade tranches with higher default risk.
What it is
An agreement by a bondholder to make scheduled payments to another party, who pays out if the bond is subject to a rescheduling or default. Payment is linked to the fall in the bond's resale price after the adverse event, and is not made if the event does not occur. The swap, written (and resaleable) in the over-the-counter derivatives market, offers a form of insurance against default, transferring risk to a specialist writer of CDSs.
The market has grown rapidly, with CDSs issued against an estimated $45,000 billion worth of bonds in the six months to June, as banks use them to hedge their exposure, especially when lending to customers with credit ratings below the top investment grade.
The recent behaviour of CDSs suggests a misalignment between the expectations of equity and debt investors, and in pricing on their respective markets. That rings alarm bells, because such misalignments have tended to precede big stock market corrections – including the recently commemorated Crash of 87.
The price of CDSs has been rising, on both sides of the Atlantic. That means lenders are seeing a rising risk of default on the bonds they buy. It contrasts with the expectation of share buyers, who have been bidding share prices to near-record levels in New York, London and elsewhere, implying an expectation of rising profitability.
Demand for CDSs has risen because more bondholders and bank lenders want to insure themselves against repayment difficulties – and because speculators who expect more defaults have piled into the market, amplifying its upward movement. One reason some analysts fear that US banks’ bad news won’t be confined to Q3 2007, despite the big write-offs recently reported, is that some may successfully have disguised the extent of their sub-prime losses by buying instruments – including CDSs - that take default risk off the balance sheet.
As CDS investors tend to hold cash covering only the riskiest portion of a company’s debt, they can be forced to raise more capital at short notice if a fall in the debt price goes deeper and wider than anticipated. Credit research group Creditsights calculated last month that adverse debt market price movements "could cause market flows of up to $345bn of CDS protection buying should unwind provisions be triggered." Unwinding is a problem because the market for credit swaps has become substantially more liquid than that for many of the underlying bonds.
In an ironic piece of market feedback, CDSs can be subjected to the same sort of packaging as the collateralised debt obligations (CDOs) whose collapse in value started the present apprehension in the bond markets. Where large corporations issue senior debt with a very high credit rating and other debt with lower ratings, it is possible to sell a CDS in an AAA-rated corporation which actually covers lower-grade tranches with higher default risk.
"You can imagine a whole swathe of internet boiler-rooms being created among people who can make more money from internet crime than herding goats,"
The OLPC XO is a toughened, stripped-down laptop weighing 1.3kg that uses a 433Mhz AMD chip, 2GB flash drive and mesh Wi-Fi to create a local area network. The Linux-based OLPC, which is about to be tested by Microsoft for use with XP, can connect to the internet and has three USB ports.
Intel's Classmate is built with a 900Mhz Celeron M chip which can run Windows XP or Linux, uses Wi-Fi and has a 2GB Flash drive for the Windows variant and a 1GB Flash drive for the Linux version. The 1.4kg Classmate comes with two USB ports and costs between £115 and £150.
The Asus Eee PC range is less rugged. There are four 7in models weighing 920g and sporting an Intel Celeron processor. Their Flash drives range from 2GB to 8GB, with between 512MB and 1GB of Ram. They have three high-speed USB 2.0 ports and Wi-Fi. All run Linux and can run Windows XP, and cost around £200.
Acer, Gigabyte, Lenovo and Everex have all announced low-cost laptops that can compete in this area.
"You can imagine a whole swathe of internet boiler-rooms being created among people who can make more money from internet crime than herding goats," says Sunner, who points to the fact that Africa already has the highly technologically literate Nigerian 419 group, one of the oldest cyber-crime organisations.
The latter are very dangerous, says a former head of the UK's now disbanded West African Organised Crime Unit. "They are organised like a business. They are already building most of the bogus bank sites on the web. If you ship computers to Nigeria then a lot of them will inevitably make their way to 419. I mentioned this to someone who is still monitoring 419 and they said 'you might as well shut down the internet and go back to pen and ink'."
Sunner, meanwhile, notes the dangers that the machines represent to Africa's own emerging internet infrastructure. "There are a lot of viruses are already heading for Africa and China and the consequences of spam can be terrible if you do not have much bandwidth," he says.
Both Intel and OLPC point out that the laptops will often only have intermittent connectivity. That might lower the risk of getting infected - or the chances of getting security upgrades.
But the bleak picture may be avoidable, says Rolf Roessing, a security expert for KPMG. "If we are to bring IT to Africa then it will not work unless we bring security with it. Computer security in the west grew because of a loss of innocence and there are still weaknesses in the developed world because of a lack of awareness. If you bring IT to developing countries then you have to develop awareness, too."
Intel's Classmate is built with a 900Mhz Celeron M chip which can run Windows XP or Linux, uses Wi-Fi and has a 2GB Flash drive for the Windows variant and a 1GB Flash drive for the Linux version. The 1.4kg Classmate comes with two USB ports and costs between £115 and £150.
The Asus Eee PC range is less rugged. There are four 7in models weighing 920g and sporting an Intel Celeron processor. Their Flash drives range from 2GB to 8GB, with between 512MB and 1GB of Ram. They have three high-speed USB 2.0 ports and Wi-Fi. All run Linux and can run Windows XP, and cost around £200.
Acer, Gigabyte, Lenovo and Everex have all announced low-cost laptops that can compete in this area.
"You can imagine a whole swathe of internet boiler-rooms being created among people who can make more money from internet crime than herding goats," says Sunner, who points to the fact that Africa already has the highly technologically literate Nigerian 419 group, one of the oldest cyber-crime organisations.
The latter are very dangerous, says a former head of the UK's now disbanded West African Organised Crime Unit. "They are organised like a business. They are already building most of the bogus bank sites on the web. If you ship computers to Nigeria then a lot of them will inevitably make their way to 419. I mentioned this to someone who is still monitoring 419 and they said 'you might as well shut down the internet and go back to pen and ink'."
Sunner, meanwhile, notes the dangers that the machines represent to Africa's own emerging internet infrastructure. "There are a lot of viruses are already heading for Africa and China and the consequences of spam can be terrible if you do not have much bandwidth," he says.
Both Intel and OLPC point out that the laptops will often only have intermittent connectivity. That might lower the risk of getting infected - or the chances of getting security upgrades.
But the bleak picture may be avoidable, says Rolf Roessing, a security expert for KPMG. "If we are to bring IT to Africa then it will not work unless we bring security with it. Computer security in the west grew because of a loss of innocence and there are still weaknesses in the developed world because of a lack of awareness. If you bring IT to developing countries then you have to develop awareness, too."
Serious and Organised Crime Agency (SOCA) serious lapses in security
Documents belonging to an elite crime-fighting team - including one headed 'threats to the UK' - have been discovered strewn across a field by a woman walking her dog.
The papers were being stored in an officer's car was taken by thieves from outside a Greater Manchester house.
And a laptop taken from the same vehicle, containing password-protected and encrypted information, is missing after the raid.
The computer and documents belonged to an officer from the Serious and Organised Crime Agency (SOCA), an intelligence-led body that focuses on areas like drug-trafficking and money-laundering.
SOCA has launched an investigation into how the items were stolen and are reviewing their security procedures.
The papers were being stored in an officer's car was taken by thieves from outside a Greater Manchester house.
And a laptop taken from the same vehicle, containing password-protected and encrypted information, is missing after the raid.
The computer and documents belonged to an officer from the Serious and Organised Crime Agency (SOCA), an intelligence-led body that focuses on areas like drug-trafficking and money-laundering.
SOCA has launched an investigation into how the items were stolen and are reviewing their security procedures.
European banks are about to report earnings, and the outlook isn't pretty.
European banks are about to report earnings, and the outlook isn't pretty.
Analysts are predicting write-downs for an array of problems, including exposure to debt backed by struggling U.S. bond insurers, high-yield corporate loans, commercial-mortgage securities, and "alt-A" U.S. mortgages that rank a step above subprime loans in risk.
Jon Peace, banking analyst at Lehman Brothers, expects €3 billion ($4.4 billion) of write-downs when Deutsche Bank AG reports today. That's in addition to €2.2 billion in write-downs already taken.
Commercial-mortgage backed securities are a mounting problem.
Analysts are predicting write-downs for an array of problems, including exposure to debt backed by struggling U.S. bond insurers, high-yield corporate loans, commercial-mortgage securities, and "alt-A" U.S. mortgages that rank a step above subprime loans in risk.
Jon Peace, banking analyst at Lehman Brothers, expects €3 billion ($4.4 billion) of write-downs when Deutsche Bank AG reports today. That's in addition to €2.2 billion in write-downs already taken.
Commercial-mortgage backed securities are a mounting problem.
``Softness in Europe could be happening sooner than people think,''
``Softness in Europe could be happening sooner than people think,'' said Shaw Wu, an analyst with American Technology Research in San Francisco.
Cisco, based in San Jose, California, fell $2.06 to $21.02 in late trading. If that decline is repeated today, it would be the biggest drop since the day after Cisco's last quarterly results in November, when the stock fell the most in more than three years. Other networking-equipment makers, including Juniper Networks Inc. and JDS Uniphase Corp., also declined yesterday in extended trading.
U.S. and Europe
U.S. orders grew 12 percent, compared with 13 percent in the previous period, Chambers said. European orders slowed to 8 percent from 20 percent as telephone companies cut spending.
``That's good, but that's not great,'' Chambers said in an interview. ``If you add the U.S. and Europe together, that's 70 percent of my business.''
Slower sales in Europe sparked concern that a U.S. slump will cross the Atlantic. Investors had counted on international revenue to prop up domestic orders.
It's hard to tell if the economy will have a ``soft landing,'' Chambers said. ``I don't think anybody really knows, including the key economists.''
Cisco, based in San Jose, California, fell $2.06 to $21.02 in late trading. If that decline is repeated today, it would be the biggest drop since the day after Cisco's last quarterly results in November, when the stock fell the most in more than three years. Other networking-equipment makers, including Juniper Networks Inc. and JDS Uniphase Corp., also declined yesterday in extended trading.
U.S. and Europe
U.S. orders grew 12 percent, compared with 13 percent in the previous period, Chambers said. European orders slowed to 8 percent from 20 percent as telephone companies cut spending.
``That's good, but that's not great,'' Chambers said in an interview. ``If you add the U.S. and Europe together, that's 70 percent of my business.''
Slower sales in Europe sparked concern that a U.S. slump will cross the Atlantic. Investors had counted on international revenue to prop up domestic orders.
It's hard to tell if the economy will have a ``soft landing,'' Chambers said. ``I don't think anybody really knows, including the key economists.''
Wednesday, 6 February 2008
So why did the 25 member states admit Bulgaria and Romania in 2007
So why did the 25 member states admit Bulgaria and Romania in 2007, even though most knew that the judiciaries were not independent, corruption was rampant and accountability weak?
Commission officials said this week that it was better to have these countries inside than outside the EU, adding that delays would slow the peaceful democratization and that reforms would lose momentum. In other words, as the Bulgarian interior minister explained, or rather complained, in an interview, reforms were being introduced, not for the sake of building a better state, but because the EU had insisted.
In defense of its decision, the commission says the 2007 enlargement was the first in which the accession treaties contained "safeguard measures."
They include withholding EU structural and agricultural funds if they are poorly administered. Although EU diplomats in both countries bemoan the corruption in the Agriculture Ministry, the rollback of reforms and procurement procedures, Brussels has taken no action, issuing only warnings. "The safety clauses are instruments," a commission official said. "The biggest stick is not necessarily the tool but the credibility of that country vis-à-vis the other member states."
That is open to question, given the performance of the other eight former Communist countries of Eastern Europe that joined the EU in 2004. Before they did, Günter Verheugen, then the enlargement commissioner, said that "this was the best-prepared enlargement ever." If compared to Greece, maybe. But compared to Spain, Portugal, Sweden, Austria, Finland, hardly.
As soon as the East European countries joined, reforms slowed, according to the World Bank and the European Bank for Reconstruction and Development.
Corruption, particularly economic corruption caused by the rapid privatization of state-owned enterprises in which Communist managers acquired assets cheaply and in dubious circumstances, was present well before enlargement. After enlargement, with EU pressure lifted, corruption increased in Latvia and Lithuania, Poland and Hungary, according to nongovernmental organizations, including Transparency International.
Commission officials said this week that it was better to have these countries inside than outside the EU, adding that delays would slow the peaceful democratization and that reforms would lose momentum. In other words, as the Bulgarian interior minister explained, or rather complained, in an interview, reforms were being introduced, not for the sake of building a better state, but because the EU had insisted.
In defense of its decision, the commission says the 2007 enlargement was the first in which the accession treaties contained "safeguard measures."
They include withholding EU structural and agricultural funds if they are poorly administered. Although EU diplomats in both countries bemoan the corruption in the Agriculture Ministry, the rollback of reforms and procurement procedures, Brussels has taken no action, issuing only warnings. "The safety clauses are instruments," a commission official said. "The biggest stick is not necessarily the tool but the credibility of that country vis-à-vis the other member states."
That is open to question, given the performance of the other eight former Communist countries of Eastern Europe that joined the EU in 2004. Before they did, Günter Verheugen, then the enlargement commissioner, said that "this was the best-prepared enlargement ever." If compared to Greece, maybe. But compared to Spain, Portugal, Sweden, Austria, Finland, hardly.
As soon as the East European countries joined, reforms slowed, according to the World Bank and the European Bank for Reconstruction and Development.
Corruption, particularly economic corruption caused by the rapid privatization of state-owned enterprises in which Communist managers acquired assets cheaply and in dubious circumstances, was present well before enlargement. After enlargement, with EU pressure lifted, corruption increased in Latvia and Lithuania, Poland and Hungary, according to nongovernmental organizations, including Transparency International.
UBS's application for a banking licence in India blocked
Regulators have blocked UBS's application for a banking licence in India as the country's Finance Ministry probes an alleged $8 billion (£4 billion) money laundering racket that it says was masterminded by a high-profile Indian stud farm owner.
The Reserve Bank of India said that preliminary approval for a much sought-after Indian branch licence that was granted to UBS last year has now been "put on hold" pending an investigation.
It is understood that India's Finance Ministry is behind the move and blocked UBS because of what it regards as the bank's lack of co-operation in a probe of alleged money laundering by Hasan Ali Khan, a controversial businessman best known in India for his stud farm in Pune, near Bombay.
"There is a political imperative to bring Mr Khan to book," one source close to the process said.
The Reserve Bank of India said that preliminary approval for a much sought-after Indian branch licence that was granted to UBS last year has now been "put on hold" pending an investigation.
It is understood that India's Finance Ministry is behind the move and blocked UBS because of what it regards as the bank's lack of co-operation in a probe of alleged money laundering by Hasan Ali Khan, a controversial businessman best known in India for his stud farm in Pune, near Bombay.
"There is a political imperative to bring Mr Khan to book," one source close to the process said.
London is Europes hotspot for credit and debit card fraud
London is Europes hotspot for credit and debit card fraud with nearly a third of people in the capital falling victim to the crime, figures show.
Around 28% of people who live in London have now suffered from credit or debit card fraud, followed by 25% of people in Birmingham, according to life assistance firm The CPP Group.
At least one in five people have been the victim of card fraud in Bristol, Manchester, Cardiff and Glasgow, while 19% of people in Nottingham, Leeds and Norwich and 18% of people in Edinburgh have also suffered.
Four out of 10 people affected said the fraud had occurred over the internet, while one in five people thought their card had been cloned at an ATM or in a chip and Pin machine.
The group, which questioned 2,257 people, said 38% of consumers spotted the problem while going through their bank statements, but 36% did not realise their card was being misused until they were contacted by their bank or credit card company.
Zoe Manton, head of card protection at CPP, said: "Card fraud is a serious concern that is still common despite preventative measures put in place to combat this including chip and Pin.
"Fraud levels increased by 26% in the first six months of 2007 compared to the same period in 2006, to reach £264 million, a figure that confirms fraud is still a problem
Around 28% of people who live in London have now suffered from credit or debit card fraud, followed by 25% of people in Birmingham, according to life assistance firm The CPP Group.
At least one in five people have been the victim of card fraud in Bristol, Manchester, Cardiff and Glasgow, while 19% of people in Nottingham, Leeds and Norwich and 18% of people in Edinburgh have also suffered.
Four out of 10 people affected said the fraud had occurred over the internet, while one in five people thought their card had been cloned at an ATM or in a chip and Pin machine.
The group, which questioned 2,257 people, said 38% of consumers spotted the problem while going through their bank statements, but 36% did not realise their card was being misused until they were contacted by their bank or credit card company.
Zoe Manton, head of card protection at CPP, said: "Card fraud is a serious concern that is still common despite preventative measures put in place to combat this including chip and Pin.
"Fraud levels increased by 26% in the first six months of 2007 compared to the same period in 2006, to reach £264 million, a figure that confirms fraud is still a problem
United Kingdom the Surveillance Society
Organisations such as MI5 and MI6, GCHQ and the Serious Organised Crime Agency use bugging and tapping as everyday tools of their trade. But surveillance and interception are also increasingly used by police forces across the country. The rural West Mercia Constabulary, for example, recently advertised for 'substantive constables' to fill posts in its Covert Authorities Bureau.
"In prisons, Category A prisoners routinely have their phone calls taped and a police intelligence unit is based at Prison Service headquarters.
"As you go about your daily activities, you can be followed by men or women from the Office of Fair Trading, the Health & Safety Executive and the Rural Payments Agency. The Charity Commission, the Food Standards Agency and the Royal Pharmaceutical Society of Great Britain can seek authorisation to conduct surveillance operations against those they suspect of wrongdoing.
"Every one of the 474 local authorities in the country has the same right and can seek permission to examine your phone records, text messages and e-mail history.
"Sir Christopher Rose, the Surveillance Commissioner, reported a rise in the number of local authorities using their powers of surveillance. 'Covert activity is still most often used by departments that deal with trading standards and with antisocial behaviour and by those that administer benefits,' he said in his annual report."
"In prisons, Category A prisoners routinely have their phone calls taped and a police intelligence unit is based at Prison Service headquarters.
"As you go about your daily activities, you can be followed by men or women from the Office of Fair Trading, the Health & Safety Executive and the Rural Payments Agency. The Charity Commission, the Food Standards Agency and the Royal Pharmaceutical Society of Great Britain can seek authorisation to conduct surveillance operations against those they suspect of wrongdoing.
"Every one of the 474 local authorities in the country has the same right and can seek permission to examine your phone records, text messages and e-mail history.
"Sir Christopher Rose, the Surveillance Commissioner, reported a rise in the number of local authorities using their powers of surveillance. 'Covert activity is still most often used by departments that deal with trading standards and with antisocial behaviour and by those that administer benefits,' he said in his annual report."
Britains new phone intercepts law
THE British government is considering whether to adopt Australian laws allowing intercepted private phone calls and emails to be used as evidence in serious criminal and terrorism court cases.
Britain is one of only a handful of countries which still bans the use of information gathered by secret intercepts, such as phone taps, to be presented as evidence before a jury.
An independent report presented to the government overnight (AEDT), and backed by Prime Minister Gordon Brown, recommended the ban be dropped, as long as strict safeguards are put in place.
The report examined systems used in a range of countries, including Canada, the United States, Ireland, Spain, France and Australia.
It highlighted Australia's intercept evidence laws, describing them as "a compelling example" of how they can be used to combat serious crime.
In Australia a suspect's private emails, text messages and phone calls can all be monitored, as well as those of anyone they have been in contact with.
The report noted that an Australian Government report found that intercepts had often resulted in guilty pleas and led to 1486 convictions for drug offences, murder and organised crime in 2005/2006.
Britain is one of only a handful of countries which still bans the use of information gathered by secret intercepts, such as phone taps, to be presented as evidence before a jury.
An independent report presented to the government overnight (AEDT), and backed by Prime Minister Gordon Brown, recommended the ban be dropped, as long as strict safeguards are put in place.
The report examined systems used in a range of countries, including Canada, the United States, Ireland, Spain, France and Australia.
It highlighted Australia's intercept evidence laws, describing them as "a compelling example" of how they can be used to combat serious crime.
In Australia a suspect's private emails, text messages and phone calls can all be monitored, as well as those of anyone they have been in contact with.
The report noted that an Australian Government report found that intercepts had often resulted in guilty pleas and led to 1486 convictions for drug offences, murder and organised crime in 2005/2006.
José Luis Rodríguez Zapatero, has said that Spain is ‘better prepared’ than elsewhere in Europe to face the financial crisis
The Spanish Prime Minister, José Luis Rodríguez Zapatero, has said that Spain is ‘better prepared’ than elsewhere in Europe to face the financial crisis. He joined the call of his Minister for Tax and Finance, Pedro Solbes, in making a call for calm.
Speaking at the Socialist party headquarters in Calle Ferraz in Madrid, Zapatero said there were objective reasons to keep calm. He said Spain was travelling in the ‘safe boat of the Spanish economy’, although he did admit that Spain was not immune to the globalised world.
The Partido Popular spokesman for the economy, Manuel Pizarro, speaking about the recent falls on the market, said that the party was over and now it was time for the hangover. He said no party goes on forever.
The IBEX 35 responded well to the emergency 0.75% cut in interest rates in the United States yesterday, and ended Tuesday up 1.69% at 12,839.70.
Speaking at the Socialist party headquarters in Calle Ferraz in Madrid, Zapatero said there were objective reasons to keep calm. He said Spain was travelling in the ‘safe boat of the Spanish economy’, although he did admit that Spain was not immune to the globalised world.
The Partido Popular spokesman for the economy, Manuel Pizarro, speaking about the recent falls on the market, said that the party was over and now it was time for the hangover. He said no party goes on forever.
The IBEX 35 responded well to the emergency 0.75% cut in interest rates in the United States yesterday, and ended Tuesday up 1.69% at 12,839.70.
Islamic investment bank in the United Kingdom.
QIB's European subsidiary, European Finance House (EFH), has received authorisation from the Financial Services Authority to operate as an Islamic investment bank in the United Kingdom.
The European Financial House will provide Shari'ah compliant financial services to corporate clients, primarily in the UK and Continental Europe, as well as clients in the GCC.
The Financial Services Authority licence authorises the European Finance House to operate as a fully fledged bank including authorisation to operate in the personal banking sector.
The European Financial House will provide Shari'ah compliant financial services to corporate clients, primarily in the UK and Continental Europe, as well as clients in the GCC.
The Financial Services Authority licence authorises the European Finance House to operate as a fully fledged bank including authorisation to operate in the personal banking sector.
Credit default swap (CDS) spreads to the risk-free interest rate that a bank can expect to pay in the market for 5-year loans.
Riskiest of all the major banks is HBOS, with a senior 5-year debt premium of 78 basis points (0.78% above the 5-year gilt yield of 4.3%, i.e. 5.1%). 5.1% is therefore what they have to pay the market for funds. (If they’re paying you much less that’s not a good risk/reward). RBS, Santander (Abbey National) and Barclays aren’t much better but HSBC and Lloyds are considered by the market to be the safest. If you can get a good rate from either of these banks, then given the risks the market thinks you’re taking, that’s a good deal and you should be able to sleep well at night.
I haven’t mentioned the ex-building societies yes just because they are in a group of their own. Alliance & Leicester and Bradford & Bingley both have 5-year CDS spreads that are flashing major warning signs. When these banks give you a higher savings rate, it’s not because they’re being generous, it’s because they have to compete for funds with rather more secure institutions.
Alliance & Leicester is being made to pay 200 basis points (2%) over the odds for 5-year money (i.e. about 6.33%) so no wonder they are offering savers in excess of 6% - they have to in order to get any funds at all. The implication is that a high savings rate from Alliance & Leicester reflects a higher risk that you won’t get your money back. Such fears obviously only apply to people with very large sums because the system insures savers up to a certain amount (£35,000). Still, I don’t think you want to have your life savings in a bank that the bond market views with such suspicion. The same goes for Bradford & Bingley.
Here too, the spread over risk-free 5-year money is very nearly 2%. The credit market won’t lend to BB/ over 5 years unless BB/ pays nearly 6.3%.
The question you have to ask yourself is: should you accept anything less?
Then, there are the foreign banks who are offering us internet savings accounts. The basic rule of thumb here is: if they’re ING, they’re no worse a risk than a UK high Street bank. If they’re Irish, they’re likely to be over leveraged and a bit more of a worry(especially Anglo Irish Bank). But if they’re Icelandic, then be afraid; these banks are starting to be priced for bankruptcy risk and it’s not clear what protection UK savers might have with these foreign accounts.
Kaupthing is now having to pay almost 6% more than 5-year government bond yields (i.e. 10.2%) to raise funds. Kaupthing’s savings account pays just 6.5% AER, which doesn’t even come close to compensating us for the risk I’d say. The markets seem to be telling us that there is a very real default risk here. Glitnir Bank is not much better and even Landsbanki (owner of the popular Icesave internet banking business) has to pay the credit markets 3.2% more than risk-free rates and 2.45% more than ING does, for funds.
Given that Icesave pays 6.3% on their easy access internet savings account and ING pays 5.15%, perhaps shopping around for the highest savings rate right now is not actually the best thing to do. Perhaps, just perhaps, we should pay more attention to the risk side of the equation too.
So who’s best on the risk/reward basis? Lloyds TSB has the lowest current CDS spread (0.6%) of any UK bank and the third lowest of any European bank (after Fortis and BNP). For one year, Lloyds’ internet account is paying 5.75% (dropping to 4.75% after one year is up) as long as you have £100,000 to save. This looks like the safest place to park your savings for the time being if the credit markets are anything to go by.
I haven’t mentioned the ex-building societies yes just because they are in a group of their own. Alliance & Leicester and Bradford & Bingley both have 5-year CDS spreads that are flashing major warning signs. When these banks give you a higher savings rate, it’s not because they’re being generous, it’s because they have to compete for funds with rather more secure institutions.
Alliance & Leicester is being made to pay 200 basis points (2%) over the odds for 5-year money (i.e. about 6.33%) so no wonder they are offering savers in excess of 6% - they have to in order to get any funds at all. The implication is that a high savings rate from Alliance & Leicester reflects a higher risk that you won’t get your money back. Such fears obviously only apply to people with very large sums because the system insures savers up to a certain amount (£35,000). Still, I don’t think you want to have your life savings in a bank that the bond market views with such suspicion. The same goes for Bradford & Bingley.
Here too, the spread over risk-free 5-year money is very nearly 2%. The credit market won’t lend to BB/ over 5 years unless BB/ pays nearly 6.3%.
The question you have to ask yourself is: should you accept anything less?
Then, there are the foreign banks who are offering us internet savings accounts. The basic rule of thumb here is: if they’re ING, they’re no worse a risk than a UK high Street bank. If they’re Irish, they’re likely to be over leveraged and a bit more of a worry(especially Anglo Irish Bank). But if they’re Icelandic, then be afraid; these banks are starting to be priced for bankruptcy risk and it’s not clear what protection UK savers might have with these foreign accounts.
Kaupthing is now having to pay almost 6% more than 5-year government bond yields (i.e. 10.2%) to raise funds. Kaupthing’s savings account pays just 6.5% AER, which doesn’t even come close to compensating us for the risk I’d say. The markets seem to be telling us that there is a very real default risk here. Glitnir Bank is not much better and even Landsbanki (owner of the popular Icesave internet banking business) has to pay the credit markets 3.2% more than risk-free rates and 2.45% more than ING does, for funds.
Given that Icesave pays 6.3% on their easy access internet savings account and ING pays 5.15%, perhaps shopping around for the highest savings rate right now is not actually the best thing to do. Perhaps, just perhaps, we should pay more attention to the risk side of the equation too.
So who’s best on the risk/reward basis? Lloyds TSB has the lowest current CDS spread (0.6%) of any UK bank and the third lowest of any European bank (after Fortis and BNP). For one year, Lloyds’ internet account is paying 5.75% (dropping to 4.75% after one year is up) as long as you have £100,000 to save. This looks like the safest place to park your savings for the time being if the credit markets are anything to go by.