by Ronan Coburn | Feb 15, 2016 | Banking Inquiry 2014
Consequential Hedging Losses denial in cases for mis-sold products, have become center stage, particularly with their ‘Ugly Sister’ – the Banks’ Conflicts of Interest. In 2012, the UK Financial Conduct Authority (FCA) identified failings in the way that some banks sold structured collars, swaps, simple collars and cap products, which are collectively referred to as Interest rate Hedging Products [IRHPs]. The nine Banks involved agreed to review their sales of IRHP made to what are described as ‘Unsophisticated Customers” since 2001. There is no equivalent Irish scheme in place, although there have been instances of Consequential losses denial in Hedging cases, and related Banks’ Conflicts of Interest. The full review started in May 2013. The UK banks have nearly completed their reviews, having sent a redress determination letter to 18,100 businesses and paid over £2.1 billion in redress, including £464 million to deal with consequential hedging losses. The nine banks that are reviewing their sales of IRHPs are: Allied Irish Bank (UK), Bank of Ireland, Barclays, Clydesdale & Yorkshire Banks, Co-operative Bank, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander UK Out of these, four have had major commercial financing operations here in Ireland, but there is no equivalent Scheme in place for negatively affected Ireland-based commercial Borrowers. To give a perception that outcomes are fair and reasonable, the banks’ review of every case is overseen by an Independent Reviewer; AIB GB uses its own Auditors – Deloitte, as an allegedly Independent Reviewer. However on 20th June 2013 Allied Irish Banks, plc. (AIB) announces the appointment of the same Deloitte as Independent Group Auditor. This is a...
by Ronan Coburn | Oct 10, 2015 | Banking Inquiry 2014
FIFA., stands for Fédération Internationale de Football Association (translated from French to International Federation of Association Football; Zurich, Switzerland). It also stands for Fraud, Investigations, Fibs and Abuses. Apparently, the series of investigations were initially spurred by the core Forensic Accounting activity of Asset Tracing, in pursuing substantially overdue tax returns. This echoes the US Federal Authorities’ prosecution & jailing of Al Capone for tax evasion in 1931. Interestingly the Judge, at the time, refused to let Al Capone plead guilty for a lighter sentence. 79-year-old Sepp Blatter said that the US arrests and charges – which accused a total of 18 executives of 47 counts of money laundering, racketeering and tax evasion linked to kickbacks totalling more than $150m over two generations – were timed to damage his chances of re-election. Blatter isn’t all wrong and the Investigators from Switzerland and the US aren’t all correct. last week Mr. Blatter stated that “There are signs that cannot be ignored. The Americans were the candidates for the World Cup of 2022 and they lost. The English were the candidates for 2018 and they lost, so it was really the English media and the American movement.” His attack on the US authorities and the British media, which also extended to what he called a hate campaign by European football governing body Uefa, echoes Russian president Vladimir Putin’s claim that the arrests were an attempt to undermine Blatter and de-stabilise the 2018 World Cup. The US involvement in spurring the Swiss authorities to make the initial 7-arrests, raised the issue of the world economic & political power in the shape of...
by Ronan Coburn | Oct 10, 2015 | Banking Inquiry 2014
The Troika of the European Commission, European Central Bank & International Monetary Fund whom history will judge unfavourably, are part of the festering problem that is Greece. Even the IMF now owns-up to the established fact that the Troika has mishandled the problem of Greece, in admitting that the policies rigidly imposed were principally wage cuts & uncompromising austerity, with negligible attention to reform of state structures or product markets. Syriza’s main challenge is the residue of the scorched earth austerity policies of the previous 6-years. Reducing its GDP by 26%, and youth unemployment up to 62%. This position is described in a recent book entitled, ‘The Rape of Greece’, by Nadia Valavani, Syriza’s deputy finance minister. The EU-Troika forced a bankrupt country to take on additional credit packages, allowing foreign banks to effectively ‘dump’ their bonds onto Greek taxpayers, and trap the Greek population in sovereign debt slavery. As in Ireland, this process was expediently called a ‘rescue’ or ‘bailout’. Leaked IMF minutes for May 2010 stated that Troika loans to Greece, “may be seen not as a rescue of Greece, which will have to undergo a wrenching adjustment, but as a bailout of Greece’s private debt holders’. Syriza’s Manifesto, the Thessaloniki Programme demands cancellation of “the greater part” of Greece’s public debt. Understandably and justifiably it seeks a “European Debt Conference”, at which it would have plenty to say for itself. Mr Varoufakis recently told Paul Mason (Channel-4): “ you can’t have a monetary union that pretends it can survive by simply lending more money to debtor countries on condition that they must shrink their income”. This...
by Ronan Coburn | Oct 10, 2015 | Banking Inquiry 2014
Having just returned from a trip to the Land of Ice & Fire, that is Iceland – a country that is finally lifting controls imposed during its Banking Crisis management in 2008, I couldn’t escape the aura of regeneration, honesty & freshness that revealed itself during my stay. Earlier this summer, Katrín Júlíusdóttir the Icelandic Finance Minister announced the end of capital controls –or limitations on what people there can do with their money– imposed after the 2008 crash. While other countries are still suffering from flat inflation and badly behaved, but contrite bankers eye-balling Tribunals’ Investigators, Minister Júlíusdóttir has announced a 39 per cent tax on investors looking to take their money overseas. This summer Iceland imposed the tax to prevent it haemorrhaging money as it loosens bank laws imposed six years ago, when Iceland made the shocking decision to let its banks go bust. Rather than maintaining the value of the Krona artificially, Iceland chose to accept inflation in a lesson to leading global nations on Icelandic Economics. This pushed prices higher at home but helped exports abroad – in contrast to many countries in the EU, which are now fighting deflation, or prices that keep decreasing year on year. Iceland also allowed bankers to be prosecuted as criminals – in contrast to the US and Europe, where banks were fined, but chief executives escaped punishment. The chief executive, chairman, Luxembourg ceo., and second largest shareholder of Kaupthing, an Icelandic bank that collapsed, were sentenced in February to between four and five years in prison for market manipulation and economic fraud. “Why should we have a part...
by Ronan Coburn | Sep 8, 2015 | Banking Inquiry 2014, Topical in Irish Banking Sector, Tracker Mortgages' Scandal
Because of a series of Bad Calls made over the previous 15-years, in a Tsunami of reckless lending activities the exposures to Bank balance sheets became such that the majority of Tracker Mortgages were a major source of recurring business losses. This has been particularly true of Permanent TSB., and its enforced commencement of its Tracker Mortgage Redress Scheme. To counter-balance this, the Banks [collectively and individually] evolved a Customer Handling Strategy whereby affected Borrowers were cajoled, by-hook-or-by-crook to forfeit their rights as Tracker Mortgage Borrowers. As a direct consequence of being very deliberately inveigled into moving-off Trackers, without being appraised of their Rights as Consumers at the time, Borrowers (to date, and into the future) have been charged very substantial volumes of mortgage interest. Indeed it has been demonstrated that in the case of Permanent TSB., more than 22-affected Home Owners actually had to under a forced-sale of their Private Residences. Scale of Tracker Scandal: Recent media estimates indicate that what is now legitimately referred to as the Tracker Scandal is expected to cost PermanentTSB, alone at least €35m in reimbursements to customers together with an additional €20m in Central Bank fines. Such mortgages are a carry-over from the pre-2008 Banking boom when Irish banks could borrow virtually unlimited amounts from mainland European banks at or close to official ECB rates (see Previous Blog on Government & Banks acted in consort to fuel reckless lending). Those days are long gone, and Irish Banks have been caught ‘with-their-trousers-down’ but the tracker contracts remain in force, with the recently-released Central Bank statistics showing that 47% of all mortgaged owner-occupied...
by Ronan Coburn | Apr 27, 2015 | Banking Inquiry 2014
Germany’s Deutsche Bank has been fined a record $2.5bn (£1.7bn) for rigging Libor, ordered to fire seven employees and accused of being obstructive towards regulators in their investigations into the global manipulation of the benchmark rate. The penalties on Germany’s largest bank also involve a guilty plea to the Department of Justice (DoJ) in the US and a deferred prosecution agreement. The regulators released a cache of emails, electronic messages and phone calls showing the attempts to move the rate used to price £3.5tn of financial contracts (meaning Loan Agreements for individuals and corporates globally). Deutsche Bank is a multinational business whose Net Worth is larger than the shrinking Greek economy. However look at the ‘calling to account’ of the Greeks versus the $2.5BN fine on Deutsche & then business-as-usual afterwards. This substantial fine is financed from Deutsche’s illegally generated revenues. Yanis Varoufakis @yanisvaroufakis FDR, 1936: “They are unanimous in their hate for me; and I welcome their hatred.” A quotation close to my heart (& reality) these days 10:49 AM – 26 Apr 2015 The Guardian reported Navinder Singh Sarao, the British financial trader accused of making $40m (£27m) by manipulating US stockmarkets and in the process contributing to the 2010 “flash crash”, invested £2m of his profits in a company linked to a former court of appeal judge, a City grandee, a pair of private equity tycoons and a media entrepreneur. The fresh details of how Navinder Singh Sarao’s trading profits appear to have filtered into more mainstream parts of the City have emerged after a week in which the previously obscure trader was propelled on to...
