Citing relative valuation, Credit Suisse removes its Buy rating on U.S. Bancorp (USB).
In other news, yesterday the bank moved to boost its Chicago presence, inking a deal to buy the Charter One Bank franchise from RBS. USB will acquire about $5.3B of deposits, $1.1B of loans, 94 branches, and 800 employees for a deposit premium of about $315M, or 6% - doubling its market share in the city.
The SEC and the special inspector general for TARP (Sigtarp) are reportedly probing several major banks over whether they deliberately mis-priced residential mortgage bonds after the financial crisis hit.
The suspicion is that traders exploited the fog of the crisis to cheat clients by buying or selling the debt at artificially high or low prices from 2009-2011.
Most of the usual suspects are under investigation, including JPMorgan (JPM), Barclays (BCS), Citigroup (C), Deutsche Bank (DB), Goldman Sachs (GS), Morgan Stanley (MS), Royal Bank of Scotland (RBS) and UBS (UBS).
U.S. District Judge Harold Baer has widened the scope of class-action litigation over the sale of over $34B in mortgage bonds.
Investors can now join together to sue Citigroup (C), Goldman Sachs (GS) and UBS (UBS) over an estimated $11.9B worth of paper. They can also proceed with a case against RBS (RBS) involving $22.5B worth of debt.
Reuters reports the DOJ is getting set to file civil fraud charges against Citigroup (C) and Merrill Lynch (BAC) over MBS sales made during the financial crisis. In addition, probes of RBS and Credit Suisse (CS) are said to be "progressing."
The report comes a month after JPMorgan reached a $13B settlement with the DOJ and other agencies
As flagged, the EU Commission has fined international banks €1.71B for the manipulation of inter-bank interest rates, including.
The banks fined are Citigroup (C) [€70M], Deutsche Bank (DB) [€726M], Royal Bank of Scotland (RBS) [€391M], JPMorgan (JPM) [€79.9M] and Societe Generale (SCGLF) [€446M].
UBS (UBS), Barclays (BCS) and Citigroup helped expose the cartels and so received immunity for their violations. UBS avoided a fine of €2.5B and Barclays €690M, while Citigroup's was €55M lower as a result.
The EU has opened proceedings against HSBC (HSBC) and Credit Agricole (CRARF), as well as against JPMorgan (JPM), for Euribor infractions. JPM's fine is for Tibor violations. (PR)
The EU Commission will reportedly fine a group of leading multinational banks €1.7B for rigging inter-bank interest rates in what would be the largest antitrust penalty that the commission has ever levied.
The banks to be fined include all the old favorites - Citigroup (C), Deutsche Bank (DB), Royal Bank of Scotland (RBS), JPMorgan (JPM) and Barclays (BCS), as well as Societe Generale (SCGLF).
The banks have admitted liability in return for a 10% reduction in their punishment.
However, HSBC (HSBC) and Credit Agricole (CRARF) are contesting the proposed sanctions from the EU and are set to be formally charged today.
UBS (UBS), which paid $1.5B to U.S. and U.K. authorities for similar sins, is escaping a penalty, as it alerted the EU to the Libor and Tibor cases.
EU Competition Commissioner Joaquin Almunia is due to announce the penalties at a press conference at 5:30 ET.
HSBC (HSBC -1%) is the downside outlier in a green U.K. banking sector after Nomura downgrades to Hold.
In other U.K. banking news, RBS is forced to issue an apology for another technical glitch which left customers unable to access their accounts through ATMs, or pay for purchases with debit cards.
CEO Hester: "Last night’s systems failure was unacceptable ... For decades, RBS failed to invest properly in its systems. It will take time, but we are investing heavily in building IT systems our customers can rely on.”
The British government is reportedly set to accuse RBS (RBS) of forcing "vibrant" small businesses into financial trouble, "squeezing them for exorbitant fees and charges, and ultimately seizing their assets to swell its own vast property empire."
The allegations are part of a report by businessman Lawrence Tomlinson, who is a key adviser to Business Secretary Vince Cable. The report is due to be released tomorrow.
“The bank clamped down on this big time. I think we were even going slightly overboard on this,” says one senior banker after a number of lenders including Barclays (BCS), Citigroup (C), and RBS banned the use of most chat rooms amid probes into rate manipulation.
Most of the rooms in question are those where traders from competing banks participate - it's these on paper conversations where investigators are likely to draw the fuel for their anti-competitive practice charges. JPMorgan (JPM) is reportedly examining whether these conversations should instead be carried out over the phone.
Goldman has no issue with the strategy of creating an internal bad bank and divesting Citizens, but an increase in RBS's target capital ratio "reduces the potential upside" in the stock, making the shares a Hold.
Amid multiple probes over collusion and market manipulation for benchmark pricing from interest rates to foreign exchange, JPMorgan (JPM) and Credit Suisse (CS) are considering barring employees from using online chat rooms, reports the WSJ. RBS, Barclays (BCS), UBS, and Citigroup (C) are reviewing chat-room use and the methods of controlling and monitoring such.
For thousands of traders worldwide, chat room use is likely the equivalent of having a smart phone - it's hard to imagine life without it. Likewise, it's not difficult to imagine the locker-room nature of what goes in rooms with titles like "The Bandits Club" and "The Cartel" - where a joke about the ability to manipulate a currency rate likely wouldn't play well in front of a jury.
The bank could be fined by year's end, reports Bloomberg, and, according to a source, is expected to settle in exchange for a 10% discount on the penalty.
At issue is a probe into the rigging of yen-based Libor ((Tibor)) submissions. Japanese regulators in 2011 ordered CItigroup (C) and UBS to suspend some operations after the banks' staff were found to have attempted to influence the rate. Tom Hayes - a former trader at both banks - is facing criminal charges in the U.K.
Separately, Credit Agricole (CRARY) and HSBC (HBC) have walked away from the EU settlement table as it relates to charges over the rigging of Euribor. Barclays (BCS), Deutsche Bank (DB), JPMorgan (JPM), RBS, and SocGen (SCGLY) remain in settlement talks and fines could come as soon as next month.
Set to be fined, reports Reuters, are Deutsche Bank (DB), JPMorgan (JPM), HSBC (HBC), RBS, Credit Agricole (CRARY), and SocGen (SCGLY). At issue is the supposed rigging of the benchmark European short-term interest rate, Euribor. Not being fined, says a source, is Barclays, which has had its issues with Libor.
Some banks have already agreed to settle in exchange for a 10% haircut in their fines, while others are still in negotiations over the size of their penalty. EU rules allow fines for up to 10% of a company's global revenue in these cases, but something much further down the scale seems likely here.
Banks need to be careful about admitting guilt as part of any settlement as it then opens them up to investor lawsuits.
In addition to Euribor, the EU has ongoing investigations into benchmark rates tied to the yen and Swiss franc.
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RBS vs. ETF Alternatives
Royal Bank of Scotland Group (The) PLC is an international banking and financial services company. The Company through its subsidiaries provides banking products and services to personal, commercial and large corporate and institutional customers.