City of London: World's organised crime capital.
Ian Fraser: Shredded, The Rise & Fall of RBS
http://www.youtube.com/watch?v=ZO6wp57DNO4
£1 trillion timebombs RBS must defuse
By Ian Fraser
Published: Sunday Herald - Date: 3 November 2013
<http://www.911forum.org.uk/board/http://www.ianfraser.org/1-trillion-timebombs-rbs-must-defuse/>http://www.ianfraser.org/1-trillion-timebombs-rbs-must-defuse/
It will not be broken up ... but the future is far
from plain sailing. By Ian Fraser
Ross McEwan: new RBS boss says bank's recovery
vital for UK economy - videoRoss McEwan had a
baptism of fire on Friday when he made his first
set-piece announcement as chief executive of
Royal Bank of Scotland. There were a few shreds
of good news, including that the Treasury has
decided against breaking up RBS into a "bad bank"
and a "good bank", and the fact that RBS had
managed to lift its core tier-1 capital ratio - a
measure of financial strength - to 11.6% from
9.1%. Rather than breaking up RBS, the Treasury
decided the Edinburgh-based institution in which
it owns an 81% stake is to create an "internal
bad bank" - essentially a re-brand of its
existing "non-core" division - to house £38
billion of toxic loans, and that these have been
earmarked for accelerated run-off over the next two years.
Much of the rest of Friday's announcement was
negative. McEwan - who ran RBS's retail banking
arm for a year before becoming its chief
executive - said the new internal bad bank meant
RBS would have to take some £4.5bn in impairment
charges in the fourth quarter of 2013, implying a
full-year loss. He also said that RBS had made a
loss of £634 million in the third quarter. And an
independent review into the bank's small business
lending led by Sir Andrew Large confirmed what
was widely suspected: that the bank's approach to
small business lending is dysfunctional, and that
it must do better. What was not so obvious from
Friday's string of announcements, however, was
that a number of enormous landmines continue to
lurk just under the surface of the bank's Fred
Goodwin-ordered blue-and-amber carpets. Here is a
selection of these unexploded bombs - the
litigation risks and legacy issues that McEwan still needs to try and defuse.
UK: PPI mis-selling - Estimated liability: £2.65 billion
RBS has set aside £2.65 billion in provisions to
cover the cost of compensating customers to whom
it mis-sold payment protection insurance (PPI).
This often redundant product was highly lucrative
for the banks but was useless to many of the
people who bought it. The bank now has 1,800
staff working full-time on PPI redress. It threw
an additional £250 million into the compensation pot on Friday.
UK: Rights issue class action - Liability: up to £13 billion
The bank is fighting the UK's largest ever class
action case in the High Court. The suit comes
from 13,000 RBS investors who allege that the
bank duped them into putting £12.3 billion into a
rights issue in April 2008. On 30 July, the RBoS
Shareholders Action Group was ordered to
amalgamate its £4.3 billion claim with those of
two other investor groups. A QC's opinion last
year found that asset-management firms that
bought into the rights issues that fail to
participate in the action could risk being sued
by investors. The bank said: "RBS considers its
has substantial and credible legal and factual defences to these claims."
UK: Card and identity protection insurance -
Estimated liability: £200 million (based on RBS's market share)
The bank misled customers into buying insurance
for their credit cards and identity theft
insurance from London-based Card Protection Plan.
On 22 August, the FCA declared that CPP and RBS,
alongside 12 other banks and credit card issuers,
had agreed to a £1.3 billion compensation scheme.
UK and Ireland: IT meltdown - Estimated liability: up to £300 million
On 19 June 2012, RBS suffered one of the worst IT
meltdowns in banking history, with millions of
customers locked out of their accounts for days
and customer transactions going awry. The bank
has promised to reimburse customers for any
losses they suffered and paid out £175 million in
2012. The incident is also the subject of
regulatory inquiries in both the UK and Ireland,
and RBS may also face claims for damages through the courts.
UK: "Systemic abuse" in restructuring and
recovery - Estimated liability: up to £5 billion
Allegations of "systemic institutionalised fraud"
in RBS's recovery and restructuring division
(West Register and Global Restructuring Group)
are being investigated by a number of civil and
criminal UK authorities. Lawrence Tomlinson,
chairman of Leeds-based LNT Group and
entrepreneur-in-residence at the Department for
Business Innovation and Skills, alleges: "This is
a massive scandal. It's about the bank creating
situations that put people into a corner where it
can hit them with outrageous fees and transformed
into zombie companies." He is providing 300-400
case studies to business secretary Vince Cable.
UK: Interest rate swaps mis-selling - Liability:
up to £1.5 billion (if FCA fines RBS)
In February, RBS booked a £750 million provision
to cover compensation for small businesses to
which it mis-sold interest-rated hedging
products, a figure that experts believe may be
too low. After initially denying it had done
anything wrong, the bank now says it will provide
"fair and reasonable redress" to eligible
customers under a redress scheme agreed with the
FCA. Speaking on the BBC's Panorama last month,
FCA chief executive Martin Wheatley warned the
regulator may also fine banks involved in the scandal.
EU: Credit default swaps anti-competitive
behaviour - Estimated liability: unknown
EU cartel-busters are investigating RBS's role in
the credit default swap (CDS) market and handed
the bank a statement of objections in July. The
EC has raised concerns that a number of banks,
plus data provider Markit and industry group the
International Swaps and Derivatives Association
may have jointly blocked exchanges from entering
the CDS market. RBS said: "At this stage, the RBS
group cannot estimate reliably what effect the
outcome of the investigation may have on the group, which may be material."
Singapore: Benchmark rigging - Estimated liability: £500 million-£600 million
RBS was one of 20 banks penalised by the Monetary
Authority of Singapore in June for rigging Sibor
(the Singapore Interbank Offered Rate) and other
benchmarks between 2007 and 2011. RBS has set
aside additional statutory reserves with MAS of
Singapore $1 billion-$1.2bn (£500 million-£600m)
and has been forced to improve its systems and controls in Singapore.
US: SEC "Wells" notice for -defective residential
mortgage-backed securities - Estimated liability: unknown
The US Securities and Exchange Commission slapped
a "Wells" notice on RBS on 28 March, giving
notice of its intention to sue. The suit relates
to allegedly faulty mortgage-backed securities
dating from 2007. The SEC started its probe in
September 2010, when it asked RBS for information
concerning residential mortgage-backed securities
underwritten by US subsidiaries of RBS in the
period September 2006 to July 2007.
US: Defective mortgage bond issuance - Estimated
liability: $4 billion-$6 billion
RBS, through Greenwich Capital, sold $32 billion
of allegedly defective mortgage-backed securities
to American state-owned mortgage giants Fannie
Mae and Freddie Mac. Now the Federal Housing
Finance Agency (FHFA) is suing RBS over these the
bonds. The FHFA alleges that RBS routinely
breached mortgage-lending rules and bullied
surveyors into inflating property valuations.
Overall, RBS is being sued for $91bn of
mortgage-backed securities and has been named as
defendant in 45 lawsuits related to mortgage-backed securities.
US: Weak anti-money-laundering controls -
Estimated liability: up to $1.5 billion
On 27 July 2011, RBS was hit with a
cease-and-desist order by the US Federal Reserve
over violations of money-laundering laws. This
required RBS to improve risk management and
compliance to ensure does not get used as
"washing machine" for the laundering of funds for
countries subject to US economic blockade, such
as Iran. RBS is "continuing to co-operate" with
inquiries led by the Department of Justice and
has "conducted disciplinary proceedings against a number of employees".
US: Mortgages - loan repurchases and indemnities
- Estimated liabilities: $750 million
When bundling mortgages into mortgage-backed
securities, the bank's M&IB arm (formerly GBM)
and Citizens asked issuers of the underlying
mortgages to provide certain warranties. In
instances where issuers refused, M&IB tended to
issue the "representations and warranties"
itself. In such cases, the bank is liable to
repurchase the bonds or else "indemnify certain
parties against losses". Between early 2009 and
June 2013, RBS received $741 million in
repurchase demands, which it is striving to
resist. The bank said: "The volume of repurchase
demands is increasing and is expected to continue to increase."
US: Credit default swaps anti-competitive
behaviour - Estimated liability: unknown
In May and August 2013, RBS and other banks were
sued in anti-trust class action suits filed in
courts in Illinois and New York state. The
complaints allege that RBS broke competition law
in the market for credit default swaps, driving
up bid-offer spreads. The bank admits the cases
could lead to "investigatory or other action
being taken by governmental and regulatory
authorities" and could have a "material adverse effect" on RBS group.
US: Other allegedly faulty securitisations - Estimated liability: unknown
In January 2011, the SEC launched a formal
inquiry into inadequate documentation relating to
RBS's US mortgage securitisations. This followed
subpoenas in 2007 of several players in the US
securitisation industry, focusing on information
underwriters obtained from independent firms that
performed due diligence on underlying loans. RBS
gave relevant documentation to the New York
attorney general in 2008. RBS said: "The
investigation is ongoing and the RBS Group
continues to provide the requested information."
Global: Libor - Estimated liability: RBS already
fined £390 million; the ultimate cost could be as high as £80 billion
On 6 February, the US Department of Justice and
the Commodity Futures Trading Commission (CFTC)
and the UK's Financial Services Authority fined
RBS $612m (£390m) fine for rigging Libor, the
benchmark interbank interest rate. Other banks
and brokers penalised for similar offences
include Barclays, UBS and Rabobank. RBS faces
further penalties from the EU and Canadian
Competition Bureau, plus civil claims from US
investors, the most recent of which came from
mortgage giant Fannie Mae last Thursday. Analyst
Sandy Chen has said if there was just 0.05%
mispricing in interbank rates over four years -
less than the 0.4% some class action lawsuits
allege - RBS faces possible damages of £80bn.
Global: ISDAfix - Estimated liability: unknown
Multiple agencies and regulators around the world
are investigating RBS for possible rigging of
IDSAfix, a benchmark used in the interest rate
swaps market. America's CFTC is examining about
one million emails and phone call recordings
related to the alleged manipulation, involving
traders from RBS and more than ten other global banks and brokerages.
Global: FX market rigging - Estimated liability: unknown
On Thursday it emerged that two of RBS's currency
traders have been suspended as part of an inquiry
by global regulators into suspected manipulation
of foreign exchange markets. The regulators,
which include the UK Financial Conduct Authority,
America's FBI and Switzerland's FINMA suspect
that global banks including RBS colluded to
manipulate exchange rates in the global, $5.3
trillion a day, foreign exchange markets. RBS has
provided the FCA with e-chats that a former
senior RBS dealer - Richard "Dick" Usher who left
the bank in 2010 - had with traders at other
banks. The traders' group was variously known as
"The Bandits" and "The Cartel".
Ross McEwan will address the Business in
Parliament conference in the Scottish Parliament on November 21-22
Ian Fraser's book Shredded: The Rise And Fall Of
The Royal Bank Of Scotland is published by
Birlinn on 6 March 2014. Price £20. This article
was first published in the Sunday Herald on 3 November 2013
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Please consider seriously the reason why these elite institutions are not discussed in the mainstream press despite the immense financial and political power they wield?
There are sick and evil occultists running the Western World. They are power mad lunatics like something from a kids cartoon with their fingers on the nuclear button! Armageddon is closer than you thought. Only God can save our souls from their clutches, at least that's my considered opinion - Tony
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