RBS rounds off good week for UK banks by returning to profit

RBS shares fell slightly, closing down 1.5pc at 51.2p, despite the bank‘s announcement that it would book an £850m gain on the £2.03bn sale of its Global Merchant Services business to private equity firms Advent International and Bain Capital.
Joseph Dickerson, Execution Noble’s UK banks analyst, called the results “lacklustre” as he warned RBS faced growing problems from its investment banking arm, which reported an increase in impairments, compared to a trend for lower charges at other major banks.
The large tax charge taken over the half was another concern, and compared with a £412m net gain in the same period in 2009.
RBS blamed the increase on the fact that most of its profits were earned in high tax jurisdictions such as the UK and US, while its losses came through in lower tax countries like Ireland and Holland.
In particular the bank took a £363m tax charge against bad loans mainly in Ireland, while its total foreign tax bill of £338m compared with a bill of just £47m last year.
Bruce Van Saun, chief financial officer of RBS, said the bank recognised the problem and would be moving some assets out of the Netherlands for tax purposes.
Global Banking and Markets, which houses RBS’s investment banking operation, continued to be the main source of the bank’s profits, making a pre-impairment profit of £2.74bn for the half, down 42pc year-on-year.
By contrast, profits from UK retail banking and UK corporate banking were up on 2009, with the UK retail bank’s profits rising 28pc on the same period at £1.1bn.
RBS said it is was on course to exit the UK Government’s Asset Protection Scheme in 2012, and Mr Hester said the start of the sale of the state’s 84pc holding in the bank would be beneficial not just for the business, but the wider economy.
“We’d like them to dispose of it as soon as they [the Government] are ready to. It would be a powerful symbol to the taxpayer that they’ll get their money back and a broader symbol of the UK’s recovery,” he said.
Despite the profits, RBS is currently barred by the European Union from making dividend payments becuae it received a bail out.
Like its peers, RBS insisted that it was experiencing strong demand for new lending from UK business and said it had £45bn of undrawn overdraft facilities. It added its efforts to lend more were being hampered by repayments from existing customers.
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Goldman Sachs: Bonus tax costs company $600m

By
Becky Barrow
Last updated at 12:44 AM on 21st July 2010

The average worker at Goldman Sachs is on course to scoop a pay and bonus package of  £360,000 this year, it emerged yesterday.
At this level, the average worker at the banking giant earns more in a year than most people earn after 15 years of work.
It is further evidence of the U.S. investment bank living up to its nickname of ‘Goldmine Sacks.’
Last year, the firm paid its workers an average of £308,000.

Fair? Some staff at the global banking giant will receive more this year than the average worker does in almost 15

Figures published yesterday reveal this figure is on target to hit £360,000 this year, a generous £52,000 pay rise, or 16.6 per cent, if the next six months are similar to the first half of the year. In reality, many get a fraction of this figure  -  but many others, including some of its London-based stars, get a package which runs into seven or eight figures. A TUC spokesman said: ‘Goldman Sachs proves beyond doubt that we are not all in this together. Austerity is clearly just for the little people.’ It comes as the majority of UK workers have either had a pay cut, pay freeze, or have lost their job following a recession caused partly by the banking industry. News of the size of the payouts comes just days after Goldman Sachs was landed with a huge penalty by the American financial regulator. It received a £356million bill after agreeing a face-saving deal with the Securities and Exchange Commission following explosive allegations that it had misled its investors. The figures, for the three months to the end of June, also showed revenues dropped sharply to £5.8billion, compared with the same period last year. Lord Oakeshott, Liberal Democrat Treasury spokesman, said: ‘Goldman’s deserve a gold medal for arrogance and greed. ‘How can they put the average payout to all their staff  -  secretaries as well as stars  -  up by a sixth to £360,000 when their profits have fallen and the world has to tighten its belt?’Only weeks after they were fined by the U.S. financial regulator, will they never learn about reputational risk?’

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Record £33.3m fine for JP Morgan for failing to protect clients’ money

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By
Daily Mail Reporter
Last updated at 2:00 PM on 3rd June 2010

Investment banking giant JP Morgan was fined a record £33.3 million today over its failure to ring-fence billions of pounds of client money.The fine - the largest ever imposed by the Financial Services Authority (FSA) - was imposed after JP Morgan failed to segregate client cash from its own money during a period that spanned nearly seven years.The FSA said if JP Morgan had become insolvent during this time, substantial amounts of client money would have been at risk of loss.
HIT HARD: The Financial Services Authority have imposed its biggest ever fine on banking giant JP Morgan for risking clients’ assets
Its fine represented just 1% of the average amount of money unsegregated, according to the FSA.Today’s fine surpasses the mammoth £17 million penalty imposed on Royal Dutch Shell in 2004 for market abuse.Margaret Cole, FSA director of enforcement and financial crime, said the penalty sent out “a strong message” to firms that they need to segregate client money.Rules regarding client money have come to the fore following the collapse of Lehman Brothers during the financial crisis.Its demise brought the global banking industry to its knees, serving as a stark reminder of the implications of a bank failure on the financial system.The FSA sent out a warning shot to the industry last year after discovering that a number of firms had not been segregating client money adequately.It has set up a new unit within the regulator to specifically supervise client money and added it had “several more cases in the pipeline”.But the FSA stressed that JP Morgan self-reported the breach - a move that saw its fine reduced by 30%. It would otherwise have faced a fine of £47.6 million.Ms Cole said: “The FSA has repeatedly emphasised the importance of ensuring that client money is adequately protected. Despite being one of the largest holders of client money in the UK, JP Morgan Securities failed to do so.”This penalty sends out a strong message to firms of all sizes that they must ensure client money is segregated in accordance with FSA rules. Firms need to sit up and take notice of this action.”
PRICE TO PAY: JP Morgan has been fined a record £33.3 million by the Financial Services Authority
JP Morgan alerted the FSA after discovering last July that its UK arm JP Morgan Securities had not been segregating client money held overnight by its futures and options business since November 2002.The error happened following the merger of JP Morgan and Chase Manhattan in late 2000, after which the bank had to integrate a large number of different systems and processes.During the time of the breach, JP Morgan held anywhere between 1.9 billion US dollars (£1.3 billion) and 23 billion dollars (£15.7 billion) of client money - generally cash from other banks and City institutions.The FSA assured that no clients of JP Morgan suffered losses as a result of the breach, nor was there any incorrect financial reporting by the bank.But the regulator said the potential loss of such large amounts of client money posed a significant threat to the wider banking system.Sally Dewar, FSA managing director of risk, said: “It is crucial that firms are compliant with the FSA’s client money and assets rules.”Adhering to these rules not only ensures greater protection of clients but of financial stability as a whole. The creation of a specific unit means that firms need to raise their game as the FSA’s focus on this area will continue to intensify.”JP Morgan declined to comment.

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George Osborne urges G20 to take immediate action on deficits

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It follows an emergency conference call between the world’s leading seven
finance ministers on Friday, in which Mr Osborne warned that any delay in
tackling the deficits risked a repeat of the market chaos of recent weeks.

A Treasury insider said: “Those countries have to show real leadership on
this. We need to use the G20 to turn the focus on the big medium-term risk,
which is sovereign debt. The conference call also dealt with market issue
and touched on the German short-selling ban.

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Angela Merkel calls for tough regulation on banks

It was the second day of a hard-line stance from the German government, after
it prompted
investor dismay with a ban on the short-selling of European
government debt and banks.

The euro fell for most of the day amid continued economic uncertainty in the
eurozone and the proposed crackdown on financial regulation. However, in
late trading it rose rapidly, gaining almost 4 cents to touch 1.2598, on
speculation of intervention by the Swiss central bank.

“We will campaign for a tax on financial transactions. It is clear that
this is something that will not be agreed at our first dinner [in Canada].
But I don’t think it would ruin the financial markets if we found agreement
on a global tax,” Ms Merkel added.

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RBS sees £713m operating profit

Royal Bank of Scotland has reported operating profits of £713m in the first three months of 2010, up from a £1.35bn loss for the same quarter last year.

The profit came after what the bank called “one of the most significant corporate restructuring” ever made.

After one-off costs, including £500m paid into a government-backed insurance scheme for bad debts, RBS reported a pre-tax loss of £21m.

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Greece rescue talks ‘nearing end’

The European Union (EU) is on the verge of agreeing the details of an emergency plan to rescue Greece’s economy, a senior official has said.

EU Commissioner for Economic and Monetary Affairs Olli Rehn said leaders were “about to conclude talks” on the package.

His comments came as European markets rose after two days of sharp falls on concerns about Greece’s debt crisis.

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Obama’s medicine is an economic poison

By David Buik






Published: 7:27PM BST 03 Apr 2010

His arrival for the G20 meeting at the Excel Centre in London last April
supposedly heralded a dramatic change for the global banking community. The
world was going to put the recession behind them. Our political masters, the
central bankers and advisors, would settle down and deliver us from the
rubble of financial destitution, which emanated from the banking crisis,
which of course created the worse recession since 1929. Every bank would
soon be subject to a radical change in regulatory requirements with the
injection of fresh capital at the head of the agenda, with infinitely
tougher parameters to trade.

Since then we have been waiting. The silence has been deafening. The number of
proposals on regulation submitted by the US, the UK and the eurozone would
easily have filled two Encyclopaedia Britannicas. What do we have to show
for it? Nothing. A coterie of cynics felt that global regulation was not
achievable.

By having the same goals and attempting to avoid regulation arbitrage,
individual regulatory bodies – preferably the central banks of the US, UK,
EU and Japan – could have come close to reaching that goal by their
own individual efforts, while closely liaising with each other.

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HSBC’s Stuart Gulliver gets £9m bonus as investment banking drives profits

By Harry Wilson, Financial Services Correspondent

Published: 1:38PM GMT 01 Mar 2010






HSBC Hldgs

Mr Gulliver, who in addition to running HSBC’s Global Banking and Markets
business and its asset management arm is also head of the bank’s operations
in Europe and the Middle East, has been paid the stock bonus in addition to
his basic annual salary of £800,000.

Global Banking and Markets provided the majority of HSBC’s profits in 2009
after what the bank said was an “exceptionally strong” year for the
business. Profits before tax in GBM reached £6.9bn, equal to more than 100pc
of the group total, which was hit by impairments on loss-making assets.

Mr Gulliver is one of three HSBC employees to receive a bonus worth £9m,
according to the bank’s annual report, though the other are not named.

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HSBC’s £7bn profits to offer insight into Asian economy

By Harry Wilson

Published: 9:57PM GMT 28 Feb 2010

Expectations are high for the bank, which has been regarded as “safe haven”,
and it is not likely to disappoint as it unveils pre-tax profits of at least
£7bn, with some analysts forecasting as much as £11bn.

However, those looking for a big payout from HSBC on the back of its success
could be in for a disappointment, with most City watchers expecting the
dividend to come in towards 22p.

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