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Lunchtime Links: The stupidity of Jon Corzine, the power of an MBA from HBS, the possibility that British banks will leave London to avoid this new levy increase

Today, further details have emerged suggesting the extent to which Jon Corzine was out of control at MF Global. Bloomberg reports that he actually bet $11.5bn on European sovereign debt in an effort to increase profitability at MF Global – more than twice the amount he disclosed to investors.

Having engineered the trades himself, Corzine – the CEO- apparently regularly left meetings to check the markets and would, “prowl the trading room.”

MF Global’s risk management team allegedly attempted to get a handle on things by asking for daily prices of credit-default swaps on sovereign debt, but failed. MF Global’s directors didn’t want to question Corzine’s judgement, an anonymous source told Bloomberg, because: “Directors believed that rejecting the trades would have been an affront to the veteran trader and would have been tantamount to firing him.”

Either everyone at MF Global is taking this opportunity to blame Corzine, or he should have known a lot better. Or both.

Separately, Harvard Business School MBAs are still massively in demand. Poetsandquants points out that there were 708 Harvard MBAs in the 2011 job market and that 1,549 organisations wanted to hire them.

Separately still, having realized that it now needs to borrow an additional 111bn between now and 2015/2016 and that the 2.6bn it wanted to raise through the banking levy isn’t happening as hoped, the British government has today decided to raise the banking levy – again.

Robert Peston has the best analysis so far of the implications. You need to know that:

1) This is the third UK banking levy increase this year. In February, the government scrapped a lower phase-in rate; in the March it increased the standard rate. According to the Wall Street Journal, the levy is now being increased from 0.078% of a bank’s total liabilities, to just under 0.1%.

2) Big British banks will be hit much harder than others. The levy applies all British banks’ borrowings on a worldwide basis. For other banks, it only applies to their UK liabilities.

3) Barclays, Standard Chartered and HSBC could therefore save money by shifting their domiciles. Peston speculates that Temasek, Standard Chartered’s largest shareholder, could now oblige it to move to Singapore. HSBC said recently that the $2.5bn cost of meeting the existing levy and ICB ringfencing requirements was too high, suggesting the latest increase could tip the balance in pushing it to Hong Kong.

And, in other news:

The governor of the Bank of England warned last night that the banking system may not be strong enough to withstand a eurozone meltdown. (This is Money)

If the euro breaks up, the Basel III timetable will likely be suspended. (WSJ)

A fraction of MF Global’s missing customer money (about $200m) has turned up at JPMorgan Chase in Britain. (Dealbook)

Standard Chartered plans organic growth in corporate finance and trade finance in Africa. (Bloomberg)

UKFI: Place of job safeness. (Guardian)

“Nomura’s overseas strategy looks half-baked,” and, “They are taking money from their best business and putting it into overseas investment banking, where they have no edge.” (Financial Times)

David Mayhew, 71, is stepping down at Cazenove after 42 years. (Financial Times)

Half Santander’s middle-aged bankers at heart disease risk. (Businessweek)

When Antonio Horta-Osório comes back to work, he will have less to do and may find a new chief operating officer to help him. (Financial Times)

Things I didn’t know about the CFA exam. (Dealbreaker)

A field guide to your office nemesis. (The Awl)

Comments (1)

Comments
  1. Corzine probably thought it’s still 1997 given the way he was taking risks without the fear of having to answer to anyone.

    On a side note I feel risk management should be made autonomous so they are free to ask tough questions of senior management which they probably do not currently given those same senior bankers pay their salaries.

    I feel sorry for all those employees who lost their means of living due to a few greedy people.

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