After damaging reports about rate fixing investigations in overnight lending markets across the world, investment banks are facing a new bruising, with news that the EU has charged several banks with blocking access to exchanges to the credit derivatives market. Reuters reports that the European Commission’s decision could result in stiff fines for the banks, which include Citigroup and Goldman Sachs.
The Commission said Monday that several banks along with financial data company Markit and the International Swaps and Derivatives Association (ISDA), had barred Deutsche Boerse and the Chicago Mercantile Exchange from the credit default swaps (CDS) business between 2006 and 2009. The credit derivative swaps market, worth more than USD$13 trillion so far this year, comprises products that allow an investor to bet on whether a company or country will default on its bonds within a fixed period of time.
The other banks charged are Bank of America Merrill Lynch, Barclays, Bear Stearns, BNP Paribas, Morgan Stanley, Credit Suisse, Deutsche Bank, HSBC, JPMorgan, UBS, and RBS.
The valuations of China’s banks are near to their all-time low, says Bloomberg, thanks to the knock-on effect of default concerns related to the country’s credit risk. Bloomberg says investor disenchantment with Chinese banks reflects concern that a crackdown on shadow banking and measures to direct new credit away from repaying old loans and toward boosting economic productivity will undermine earnings and trigger a surge of bad loans. “The golden era of banking is over,” Mike Werner, an analyst at Sanford C. Bernstein & Co tells Bloomberg. “Investors have to recognise that more market discipline is going to be imposed upon the banks.”
A former JPMorgan Chase M&A advisor has embarked on a risky router of challenging the UK markets regulator, which has proposed a near half million pound fine for his insider trading. Bloomberg reports that Ian Hannam was seeking more bidders for one of his clients, Heritage Oil when he told an investor that another potential acquirer had made an offer. Hamman’s emails formed the basis of a proposed 450,000-pound civil market-abuse fine he faces. But he is fighting back. Hannam says his communications were in the “best interest” of his client, and will take on the Financial Conduct Authority’s proposed sanction at a court hearing in London starting today.
Hong Kong needs to offer cheaper and better listing services to prepare for the competition with stock exchanges across the border when Beijing finally unshackles the yuan. Charles Lee Yeh-kwong, former chairman of the Stock Exchange of Hong Kong, told the South China Morning Post that when China removes its capital controls and the yuan becomes freely convertible, for international investors, there would be no difference between Hong Kong and Shanghai or Shenzhen.
Wells Fargo Asset Management is recruiting in Hong Kong to expand its distribution reach in Asia. The group, which has been in the city for 40 years, is looking to increase take-up of its funds by institutions and private banks.
Bank of Tokyo-Mitsubishi has appointed Randy Chafetz as its first non-Japanese executive officer. Chafetz is relocating from New York, where he was head of corporate and investment banking for the Americas since 2008, to Tokyo. Finance Asia reports that BTMU is looking to increases its overseas market share.
Reuters reports that two top managers of the scandal-plagued Vatican bank resigned on Monday following the arrest of a high-ranking cleric with close ties to the financial institution. Director Paolo Cipriani and deputy-director Massimo Tulli stepped down three days after the Vatican was rocked by the arrest of Monsignor Nunzio Scarano, who is accused of plotting with two other people to smuggle 20 million euros into Italy from Switzerland.
The Financial Times reports that the Winkelvoss twins, who famously claim that Mark Zuckerberg stole the idea for Facebook from them, plan to list an exchange-traded product for Bitcoin, the virtual currency. Cameron and Tyler Winkelvoss have set up Math-Based Asset Services (in reference to the currency’s cryptographical origins) to manage a Bitcoin portfolio and give shareholders exposure to the price of the currency. But there is no guarantee any exchange will accept the product.
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