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Global Bank Misconduct Bill Closes in on Quarter Trillion

2nd June 2015 | Shareholders and customers foot an enormous bill for malfeasance but jail sentences still a distant mirage

The recent news cycle for global banking has been dominated by another announcement of another set of record fines levied against the same banks that attracted record fines for the previous rounds of malfeasance. Royal Bank of Scotland, JPMorgan, UBS, Bank of America and Citigroup were amongst the six banks fined $7.5 for rigging forex markets with PIRC Alerts perpetual favourite Barclays attracting an individual UK record fine.

 

 

The Telegraph has published some handy charts which break down the billions by bank and offence.

 

 

Thomson Reuters has gone one better with a very handy “all in one chart” that tracks the record of twenty of the worlds biggest banks from 2008 and tracks all fines “over” $100 million. According to  Reuters “ the world's biggest banks have paid more than $US 235 billion in fines and compensations in the last seven years for a litany of misdeeds, ranging from fines for manipulation of currency and interest rate markets to compensations to customers who were wrongly sold mortgages in the United States or insurance products in Britain.

 

 

The scale of the payouts is roughly equivalent to the annual economy of Greece or Portugal.”

 

 

That’s up till May 21st 2015. With investigations continuing in several areas the quarter trillion mark may not be that far way. Without the FCA practice of providing hefty fine discounts of up to 30% as an incentive for Bank boards to be transparent and tell the truth to government, regulators, their shareholders, customers and the wider community about wrongdoing, the $235 figure would probably be even higher.

 

 

The recent blanket coverage accorded to the first days proceedings against a former UBS and  Citbank trader over Libor rigging in part reflected a novelty factor. Court cases against bank employees are rare, against senior management non existant. With the exception of Iceland the nine years since the financial crisis is marked by the abject failure of regulators and governments to successfully prosecute any senior bank executive or director.

 

 

And just in case you’ve missed it, twenty six global banks including HSBC, Standard Chartered and yes, Barclays have been identified in the 164 page brief prepared by US authorities over corruption at FIFA. Money laundering of multi-million dollar bribes appears to be in investigators sights.

 

To one side we have repeated governance failures, hundreds of billions in fines and global regulators yet to red card a single senior banker. On the other, it’s those ‘continuing investigations’ and now FIFA added to the mix.

 

Not a scoreboard to inspire the shareholder community’s confidence in the global financial regulatory system.

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