Standard
and Poor’s report that 2015 will be worst in history for bank fines for
outright criminality!
According to a report by Standard & Poor’s, Royal
Bank of Scotland, Lloyds, HSBC and Barclays will pay more in fines for
mis-selling (institutionalised fraud) and market manipulation in 2015 than in
any year to date.
S&P predicts that the big four’s bill for misconduct
fines and compensation for PPI and interest rate product mis-selling will hit
almost £14bn this year.
RBS, HSBC and Barclays are still expecting to be hit with
fines for foreign exchange manipulation this year, while RBS is due to receive
a multi-billion pound fine for mis-selling mortgage-backed securities.
S&P believes that this will be the biggest year yet
for litigation fines, meaning a record combined pay-out from RBS, Barclays,
HSBC and Lloyds. The four banks have borne £42bn in conduct and litigation
charges in the last five years, but can expect £19bn more in the next two,
according to S&P.
Yesterday’s Daily Telegraph Business section ran a
shocking story that not only confirmed these figures, but also set out the
statistics for financial criminality in all the British banks for the past 5
years.
In it he notes that S&P now believe that bank fines
are now a ‘way of life’.
The statistics for these fines and the crimes they
represent make for sorry reading, and the list below identifies the worst
offenders and the crimes they committed.
Before reading, reflect, all these offences were admitted
from the start – the banks effectively pleaded guilty to these crimes without
any contested trials. This is a level of criminality which is so vast and so
damaging that I believe the next Government needs to seek a Royal Commission to
enquire into this level of blatant thieving.
If crime of this level of seriousness was being admitted
in any other business of public sector industry, the Government would be calling
for major anti-crime initiatives, police task forces would be deployed, and
heads would be rolling across the sector, and people would be going to prison.
1. UBS: £233,814,000 (FX rate fixing)
This huge,
nearly a quarter of a billion pound-fine is actually a 30 per cent discount
because all the five banks involved in the forex scandal pleaded guilty early
in the investigative process. Combined with its fine from US financial regulator
the Commodity Futures Trading Commission (CTFC), its total fines were a massive
£503m.
2. Citibank: £225,575,000 (FX rate fixing)
Much like
UBS and the other banks involved in the forex rate-fixing scandal, Citibank rolled
over early in the case. It was also received a £194.6m fine from the CFTC.
3. J.P MorganChase: £222,166,000 (FX rate
fixing)
This bank
has featured almost every year for the past five years. However, this is the
largest fine the bank has ever received, with combined total fines of £417m
over the scandal, including £195m from the CFTC.
4.RBS: £217,000,000 (FX rate fixing)
RBS total
fines over the forex rate fixing scandal were £399m including £182m by the
CFTC.
5. HSBC: £216,363,000 (FX rate fixing)
HSBC has
confirmed it has set aside $378m (£249m) aside for fines - although combined
with penalties from the US regulator, HSBC’s total over the rate fixing scandal
hit £389m.
6. Lloyds and Bank of Scotland: £105,000,000
(Libor)
2014’s
other major financial scandal was Libor, where several banks (Lloyds among
them) colluded to fix the London Interbank Offered Rate (Libor) - the rate at
which banks lend to each other.
7. RBS, Natwest and Ulster Bank: £42,000,000
(Failing to provide adequate IT systems)
8. Barclays.
£37,745,000 (failing to properly protect £16bn of clients’ custody
assets)
Barclays
isn't the only bank to feature twice on this list- but it does so while also
being investigated for both the Libor and forex - more fines are expected to
follow. The bank was fined by the FCA in September when it failed to protect
funds a client had entrusted to them in custody.
9. HomeServe: £30,647,400 (mis-sold insurance
policies)
The only
non-bank to make the top 10 this year HomeServe, which was slapped with a
massive £30m fine after it was found it had not only mis-sold insurance to its
clients, but also failed to investigate claims in a timely manner.
10. Barclays: £26,033,500 (failing to manage
conflict of interests)
What these figures demonstrate is an era of
Organised Crime on a hitherto unimaginable scale. It is clear that these banks,
in order to maintain the level of revenues they required to support their
over-inflated share prices, had to engage in wholesale criminality to make
their numbers.
How is it that no-one has gone to prison for these
crimes. How is it that bank senior executives have not been called to account?
Every time we see a Parliamentary Committee
sitting in judgement on these creatures, we see them slipping, sliding, evading
the questions, sometimes being economical with the truth, sometimes downright
lying, but never any question of anyone being required to resign.
While these statistics reflect an unacceptable
level of organised crime within these banks, they also reflect an almost
complete absence of any kind of pro-active activity on the part of the regulators.
The role of all law enforcement agencies, (and
financial regulators do perform a policing function, no matter how much they
may deny it and seek to wriggle out of their responsibilities for ‘policing’
the market), is to prevent crime in their market, industry or social sector.
Crime prevention is a pro-active science,
where those charged with the duties of regulating the market should be adopting
integrated and pro-active techniques and strategies to identify and disrupt
such activities in the market, in the first place.
Waiting until the horse has bolted and the cat
is out of the bag (how I do love a mixed metaphor), is futile. It means that
the regulators are always responding after the event, and always too little,
too late!
These latest statistics must be a clarion call
to Government, because these fines are being loaded on to the shoulders of the
shareholders, and they are not impacting on the most egregious criminals
themselves, the banks and their management.
We simply cannot go on watching this pantomime
being played out, where fines, the size of which would pay to support the NHS
for years to come, are being levied against criminal enterprises who show no
signs of conforming to law.
As a matter of course, any bank director whose
institution is fined sums of this magnitude should be facing the wrath of the
English Courts as well as the demands o out-of-pocket shareholders.
The SFO and the City of London Police should be
harmonizing their approaches to these criminal allegations, and should be
working out a list of those they would wish to interview.
In no other walk of life would such dishonest and
egregious business practices be tolerated.
This must now become a priority for Government
– It already is an electoral issue for me!
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