Barclays business feels pain of rate fixing scandal - Reuters India Barclays business feels pain of rate fixing scandal - Reuters India

Friday, July 13, 2012

Barclays business feels pain of rate fixing scandal - Reuters India

Barclays business feels pain of rate fixing scandal - Reuters India

LONDON | Fri Jul 13, 2012 8:57pm IST

LONDON (Reuters) - Barclays Plc (BARC.L) is already counting the cost of lost business over its part in rigging a global interest rate and may be spared a worse exodus of customers only because the cloud of scandal hangs over other banks too.

So far, Barclays is the only bank to admit a role in manipulating the London interbank offered rate, Libor, which sets a benchmark for interest rates on everything from mortgages to credit cards and over $550 trillion in financial derivatives.

Britain's third biggest bank was dropped from a Japanese bond deal this week. Meanwhile, the council in the central English city of Leicester said it was pulling out 6 million pounds in deposits.

"We share in the anger expressed by many customers by the recent scandal," said Rory Palmer, deputy mayor of Leicester, in a statement provided to Reuters. "We will not be investing in Barclays in the foreseeable future."

The Japan Bank for International Cooperation left Barclays out of a deal which could have reached $1 billion in bond sales, having named the bank in May as one of three assisting. It would have earned hefty fees.

A banker with knowledge of the process said Barclays was dropped due to reputational and counterparty risk issues. "Clients are more sensitive to this stuff now," he told IFR, a Reuters publication.

Mark Bamford, Barclays head of global fixed income syndicate, said it was business as usual for the firm.

"We remain focused on executing for clients and competing for their business every day, and our pipeline of deals continues to be very strong," he said.

The bank declined further comment.

The scandal has forced out the bank's chairman and chief executive and sparked a political row in Britain. It has also prompted talk of Barclays scaling back its investment bank, which had grown into the world's seventh biggest.

There was no clear estimate of the total impact on business at Barclays since the scandal broke.

OTHER BANKS

The loss of the deposits from Leicester, a city of around 300,000 people, was a pinprick compared to the cost even of the $450 million Barclays has been fined in Britain and the United States for helping rig Libor.

But the account would not be the last that Barclays lost over the scandal, said analysts from Italian investment bank Mediobanca in their daily research note on developments in the financial industry.

"The question is the scale of the outflows and the concern that corporate clients will start to follow," said the note, which goes to the bank's investment customers.

"The only good news is that many of Barclays' competitors are also being investigated. The winners may be Goldman Sachs (GS.N) and Morgan Stanley (MS.N) who are not involved in the scandal."

U.S. investment banks Goldman Sachs and Morgan Stanley are not among the mainly commercial banks which provide Libor levels, but compete with many of them for investment banking business.

Both Goldman Sachs and Morgan Stanley declined to comment on any possible impact.

More than a dozen other banks are already being probed as part of the worldwide scrutiny, including UBS (UBSN.VX), Deutsche Bank (DBKGn.DE) and Royal Bank of Scotland (RBS.L), all of which have said they are cooperating with investigators.

The backlash faced by Barclays could deter others from co-operating. A complex legal process means it could take many more months for other settlements or fines to land, bankers and analysts said.

Rivals were on the lookout to snap up business, but a corporate broker at one rival firm said he expected Barclays' clients to wait to see how things develop given the likelihood more banks will be drawn in.

The broker said that although few banks could be totally free of regulatory issues, the current environment could make it harder for Barclays to pitch for business.

"If someone were thinking of appointing Barclays as a broker, that would be a brave announcement at the moment," he said.

Libor is compiled from estimates by large international banks of how much they believe they have to pay to borrow from each other.

The rates submitted by banks are compiled by Thomson Reuters (TRI.TO), parent company of Reuters, on behalf of the British Bankers' Association.

(Additional reporting by Matthew Davies and Kylie MacLellan; Editing by Matthew Tostevin)



British avalanche victim was raising money for hospice - Daily Telegraph

"We are devastated to hear of Steve's death and the deaths of John Barber and Roger Payne, as well as of the other victims. Our thoughts and prayers are with their families and friends today."

Steve Barber in training for the ascent

Mr Barber had a 10-year-old daughter, Francesca, while Mr Taylor, 48, had an eight-year-old daughter Louise and a 10-year-old daughter Emma.

Their children went to the village school, Poppleton Ousebank, and Mr Barber's parents are understood to have run the Post Office before moving to York.

Estelle O'Hara, head teacher, wrote to parents yesterday informing them of the accident. She offered her sympathies to Mr Barber's partner Donna Rodgers and Mr Taylor's wife Karine.

She said: "It is with great sadness that I write to inform you that two of the climbers killed in yesterday's avalanche in the French Alps were parents from Poppleton Ousebank – Steve Barber, father of Frankie in Year 5 and John Taylor, father of Emma in Year 5 and Louise in Year 3.

"Our thoughts and prayers go out to both Donna Rogers and Karine Taylor who have both lost their lifelong partners.

"Children have been informed and school staff have been supporting them throughout the day, providing a caring shoulder and answering any questions that children may have.

"We would ask that people respect the families' privacy at this sad time. We understand that the climb was to raise money for St Leonard's Hospice and so we will be collecting on their behalf."

An emergency services rescue helicopter lands in Chamonix with the body of a victim killed after the avalanche on Mont Maudix (AFP/Getty Images)

Before he left for France, Mr Barber, 47, had raised £340 for the charity through his JustGiving website. The page was set up by his partner, who posted a photograph of him practising for the climb.

In messages left by donors, friends Mike and Helen Vest wrote: "Good Luck Steve, the Lake District will seem a bit tame after this! See you for a beer or three on your return."

Carole Harland wrote: "Take great care getting up there and getting back down – there must be a much easier way – good luck Steve."

Members of York Council paid tribute to the men. Leader of the council's Conservative group, councillor Ian Gillies, who represents Upper Poppleton, said: "Devastated doesn't cover it, really.

"I'm sure the people in the village and the wider community will provide the support the families need, not only now but for weeks to come."

Councillor James Alexander, Labour leader of City of York Council, added: "I am deeply saddened by the news that two Poppleton residents lost their lives in Thursday's avalanche in Chamonix, France.

"I would like to offer their families and friends my condolences and offer any support and assistance we can provide at this difficult time."

The men were believed to have been climbing with Roger Payne, former president of the Association of British Mountain Guides, who was also killed.

Mr Payne’s family paid tribute to a man who they said “died doing what he loved”.

His brother Keith, 66, told The Daily Telegraph that his brother would never have taken any risks on the mountain.

Speaking from the home of their 92 year-old mother, Nellie, in Hammersmith, west London, he said: “Roger … would never take any chances, he was true professional.

"All I know is there was an avalanche and it was not expected, a freak of nature. Our mother ... lives on her own.

"Every time there is an accident on a mountain she thinks of Roger – she is devastated.”

He added: “We will miss him greatly. He died doing what he loved doing. He will never be forgotten.”

Ed Douglas, a friend and fellow member of the British Mountaineering Council, wrote a moving tribute about Roger Payne, posted on the BMC's website.



Business profile: M’s Building Supplies - Reading Evening Post

The business: M’s Building Supplies, A33 Swallowfield Bypass, South Reading, RG7 1LZ. (0118) 988 4000. www.msbsltd.co.uk, sales@msbsltd.co.uk

The boss: Dave Meakin. “The firm originally started off as Meakins Transport, a haulage contractor which ran successfully for 40-plus years before semi-retirement.

“The opportunity came to open a builders merchants within the area and it is now an ongoing project.”

What is your business about? “Supplying quality building materials at sensible prices to anyone requiring building materials. We are able to offer advice and fast free delivery.”

What product/services do you offer? “Sand, ballast, cement, bricks, thermal blocks, drainage, roofing materials, timber, natural sandstone, patio slabs, decking, sleepers, topsoil, tools. By the end of July we will also be able to offer a ‘grab loading service’.”

How and when did you start your business? “After a recent closure of a local builders merchants, we saw an opportunity to open south of the M4 and started trading in June 2012. Loyal staff, who were made redundant from their previous job, have joined us and have continued to support us.”

How many staff do you employ? “Currently we have a small group of eight employees.”

Who are your customers? “Anyone needing to purchase building materials.”

What sets you apart from the competition? “We offer, within Reading and surrounding areas, free, fast, flexible same/next day delivery.”

How do you feel about the future? “We look forward to moving forward with our new project and hope to achieve a successful business.”



Is marriage the worst financial mistake most men ever make? No, but divorce might be - Daily Telegraph Blogs

Dividing assets on divorce can be an expensive and bitter business

Cynics say marriage is the worst financial mistake most men ever make. Even if they are wrong, divorce might prove them right.

This week Lord Justice Thorpe compared a divorcing couple to squabbling children, saying their case was “almost puerile” and that someone was needed to “come into the nursery” to sort out their “nonsense”.

He criticised the “completely disproportionate” legal bills spent on the case by Mark Evans, a successful businessman, and his estranged wife Jenifer.

While the multi-million pound assets involved in this case are exceptional, the sad fact is that it’s not unusual for unhappy husbands and wives to reach for their lawyers. With one in three marriages now ending in divorce and the Office for National Statistics attributing a 5pc increase last year to “financial strain caused by the recessionwhat can divorcees do to limit the financial damage?

Alison Hawes, a partner in the family law team at nationwide lawyers Irwin Mitchell, said: “Too many people think that spending money telling lawyers to be nasty to their exes will make them feel better.

“I have been instructed to write angry letters – in one case criticising the husband for emptying the garage of all his tools and the lawn mower when he left to set up home with his girlfriend. My client wanted to point out that she could scarcely be expected to cut the grass with scissors which was all he had left behind.

“The response was that the husband would be amazed if she could find the lawn, let alone the scissors. The ping pong of correspondence degenerated very quickly into each party slinging mud not only about their roles in the house, but also their respective shortcomings in the bedroom.

“The best advice we can give clients to help them not spend hundreds of thousands of pounds is to stay as businesslike as possible and make sure they line up good emotional support as they go through the process, from family, friends and from counsellors.”

Ruth Bross of family law solicitors Bross Bennett agreed: “Perhaps there is another drama being played out here – revenge, jealousy, bitterness, greed, the desire to punish a former partner, an unwillingness to move on with their lives.

“Clients often come to me with a very rigid view of what they want to achieve, and they can become obsessed by the concept of ‘winning’ no matter what the cost – but this is a luxury that most people cannot afford.

“Of course, there some points which are worth arguing about, for example obtaining enough from a financial settlement to re-house or to meet basic outgoings. However, I have had clients who have spent thousand of pounds arguing over who keeps the furniture, crockery or pets. My advice to clients is that in the end it is always about the cost, not the principle.”

Perhaps the best way to reach a satisfactory end is to start from the right place. Simon Bruce, a partner at Farrer solicitors of Lincoln’s Inn Fields, told me: “Prevention is better than a cure. Make your best offer to settle as soon as you can. It brings difficult clients to the table and puts them under serious costs pressure if they refuse it.

“Remember, it’s a free world. You don’t have to get married. But if you do, you can choose to have a pre-marital contract to protect your assets. Only people from outer space don’t know they can protect you.

“Life is not a fairy tale. If I had £1 for everyone who had told me that pre-marital contracts were unromantic, I would be a rich man. People should wake up and smell the coffee – with divorce rates increasing, you have to be realistic and think of having a pre-nup if you get married.”

He should know. Mr Bruce represented German heiress Katrin Radmacher whose pre-nuptial agreement helped persuade the Supreme Court in London to cut her French former husband’s divorce settlement from £5m to £1m two years ago.

That set a new precedent in English law but emotional and practical problems remain. As Sandra Davis, head of family group at lawyers Mishcon de Reya, pointed out at the time: “Imposing contractual terms on personal relationships is now fine from a legal perspective; but it is still less likely to be so from an emotional perspective.

“As a nation we’re culturally uncomfortable talking about money. But negotiating the terms of a pre-nup necessitates frank and difficult financial discussions in advance of a marriage about what should happen in the event of a divorce.

“The Supreme Court has proposed that the courts should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications – unless it would not be fair to hold them to their agreement.”

For example, that could exclude pre-nups which infringe children’s rights or where one partner took legal advice before signing the contract but the other did not. As a general rule, courts will seek fairness and reasonable behaviour in pre-nuptial contracts and divorce.

You don’t need to be a lawyer to recognise that, as Elizabeth Wyse, author of Debrett’s Guide to Civilised Separation, explained: “It may be tempting to throw your husband’s vintage wine down the loo or shred his best suit, but judges will take a dim view of this behaviour. Hold your head high and retain the civilised high ground.”

Finally, remember that nine in 10 divorcees manage to separate without litigation. Alimony costs mean only the very rich or very poor can afford divorce, which can prove ruinous for those in the squeezed middle.



MONEY MARKETS-Fed unlikely to follow ECB rate cut - UBS - Reuters

Fri Jul 13, 2012 12:41pm EDT

* US excess reserve rate cut might disrupt money market funds

* European money markets tackle uncharted waters

* Search for yield as more rates turn negative

By Chris Reese and Kirsten Donovan

NEW YORK/LONDON, July 13 (Reuters) - The U.S. Federal Reserve is unlikely to follow the European Central Bank's move to a zero percent deposit rate due in part to fears of disruptions to money market funds, according to UBS strategist Chris Ahrens.

The ECB last week cut its main refinancing rate to 0.75 percent and its overnight deposit rate - which is paid to banks that park cash in the central bank's deposit account - to zero.

U.S. money market fund managers breathed a sigh of relief earlier this week after minutes from the Fed's June policy meeting showed no indications the central bank was considering cutting the interest rate it pays on excess reserves to banks.

Many fund managers believe any cut in the rate, which currently stands at 0.25 percent, would cause disruptions in funding markets, especially money market funds.

"We agree with our economists that the Fed is unlikely to reduce interest on excess reserves (IOR)," Ahrens said. "The Fed discussed this alternative in detail at the September 2011 meeting but was reluctant to exercise this option. Moreover, June 2012 Federal Open Market Committee (FOMC) meetings did not mention IOR, and recent speeches have not included it."

"The Fed's reluctance to cut the rate stems primarily from 'concerns that reducing the IOR rate risked costly disruptions to money markets and to the intermediation of credit'," Ahrens said, quoting from FOMC minutes from Sept. 20-21, 2011.

"Our read is that the central bank worries that reducing IOR would elicit meager gains at the potential cost of eroding the architecture of the financing markets and fracturing the link between the policy rate and various funding rates," Ahrens said.

Meanwhile, implementation of the ECB's zero percent deposit rate this week has pushed money markets into uncharted territory, forcing many to accept negative returns while Seemingly doing little to spur bank lending.

T-bill yields and repo rates are below zero for the euro zone's more-trusted "core" countries and they are falling even for Spain and Italy - despite the euro zone debt crisis appearing no closer to being resolved. Bank-to-bank Euribor lending rates are in free fall.

The changes came into force with the start of the new maintenance period on Wednesday but JPMorgan Chase & Co, BlackRock Inc, which is the world's largest money manager, and Goldman Sachs Group Inc had already restricted investor access to European money market funds .

Commerzbank strategist Christoph Rieger described the move to zero or negative rates as "a small step for the ECB but a giant leap for money markets".

"While some investors will likely still be willing to pay a price for safe investments, others will either be keen to exit the euro or should grudgingly revise their credit and duration limits... in an attempt to preserve the nominal value of their investments," he said in a note.

While banks are now not making any cash from the ECB, analysts are skeptical that they will increase lending to the wider economy in response. But there is some suggestion that banks may be seeking even modest returns by buying more sovereign debt - which could potentially ease euro zone policymakers' headaches somewhat on that front.

Tradeweb quotes one-month T-bill yields for Germany, France, Holland and Belgium at close to zero or below, while Spanish yields have fallen to 0.90 percent from around 1.5 percent ahead of the ECB meeting.

Similarly, secured lending rates in the repo market - where banks commonly use government bonds as collateral to raise funding - have collapsed.

General collateral repo rates, which are paid to borrow funds against a basket of government bonds, are negative for the core countries and falling in Spain and particularly Italy. An Italian bond auction on Friday saw good demand despite a ratings cut earlier in the day.

"Italy appears to have been a major beneficiary of the search for yield," said ICAP economist Don Smith, referring to the repo market.

"Bid interest in this market has surged in the last two days and repo rates have correspondingly dropped...(jibing) with the previous rising trend set against a backdrop of elevated lending concerns."

With no incentive for banks to deposit money at the ECB overnight, cash is being hoarded in institutions' current accounts, central bank data showed this week.

While it is impossible to tell how much money may be being used to buy shorter-dated government bonds from the figures, there is only anecdotal evidence from market players.

However, Smith says reports from Brokertec's euro government bond platform suggest a "scramble" for short-dated Austrian, Belgian, French and Dutch debt.



MONEY MARKETS-Euro money markets test uncharted waters - Reuters

Fri Jul 13, 2012 9:53am EDT

* Money markets tackle unchartered waters

* Search for yield as more rates turn negative

* Spain, Italy benefit

By Kirsten Donovan

LONDON, July 13 (Reuters) - The implementation of the European Central Bank's zero percent deposit rate this week has pushed money markets into uncharted territory, forcing many to accept negative returns while seemingly doing little to spur bank lending.

T-bill yields and repo rates are below zero for the euro zone's more-trusted "core" countries and they are falling even for Spain and Italy - despite the euro zone debt crisis appearing no closer to being resolved. Bank-to-bank Euribor lending rates are in freefall.

The ECB last week cut its main refinancing rate to 0.75 percent and its overnight deposit rate - which is paid to banks that park cash in the central bank's deposit account - to zero.

The changes came into force with the start of the new maintenance period on Wednesday but JPMorgan Chase & Co, BlackRock Inc, which is the world's largest money manager, and Goldman Sachs Group Inc had already restricted investor access to European money market funds .

Commerzbank strategist Christoph Rieger described the move to zero or negative rates as "a small step for the ECB but a giant leap for money markets".

"While some investors will likely still be willing to pay a price for safe investments, others will either be keen to exit the euro or should grudgingly revise their credit and duration limits... in an attempt to preserve the nominal value of their investments," he said in a note.

While banks are now not making any cash from the ECB, analysts are sceptical that they will increase lending to the wider economy in response. But there is some suggestion that banks may be seeking even modest returns by buying more sovereign debt - which could potentially ease euro zone policymakers' headaches somewhat on that front.

Tradeweb quotes one-month T-bill yields for Germany, France, Holland and Belgium at close to zero or below, while Spanish yields have fallen to 0.90 percent from around 1.5 percent ahead of the ECB meeting.

Similarly, secured lending rates in the repo market - where banks commonly use government bonds as collateral to raise funding - have collapsed.

General collateral repo rates, which are paid to borrow funds against a basket of government bonds, are negative for the core countries and falling in Spain and particularly Italy. An Italian bond auction on Friday saw good demand despite a ratings cut earlier in the day.

"Italy appears to have been a major beneficiary of the search for yield," said ICAP economist Don Smith, referring to the repo market.

"Bid interest in this market has surged in the last two days and repo rates have correspondingly dropped...(jibing) with the previous rising trend set against a backdrop of elevated lending concerns."

NO INCENTIVE

With no incentive for banks to deposit money at the ECB overnight, cash is being hoarded in institutions' current accounts, central bank data showed this week.

While it is impossible to tell how much money may be being used to buy shorter-dated government bonds from the figures, there is only anecdotal evidence from market players.

However, Smith says reports from Brokertec's euro government bond platform suggest a "scramble" for short-dated Austrian, Belgian, French and Dutch debt.

But without cash filtering through to the broader economy, the ECB may be pressed into cutting interest rates further, adding to the pressure on yields.

Klaas Knot, one of the central bank's Governing Council members on Thursday signalled ECB policymakers could act again, holding out the possibility that the deposit rate could be cut below zero - something the Danish central bank did last week .

"Because the amount of cash at the ECB hasn't really reduced, the market is left to speculate that sentiment hasn't changed and maybe the ECB should do something about it. That's what the market is weighing up for the moment," said Credit Agricole rate strategist Peter Chatwell.



Peregrine Financial trustee seeks approval on liquidation plan - msnbc.com

(Reuters) - The trustee of Peregrine Financial Group Inc, the regulated unit of the collapsed Iowa-based brokerage PFGBest, has sought bankruptcy court permission to operate the business with the aim of liquidating its assets, according to a court filing.

Trustee Ira Bodenstein has also asked the court's permission to retain 57 employees to assist him in the liquidation process.

"The Trustee believes that the continued operation of the debtor's business is both necessary to maintain the value of the assets and to allow him to maximize the recovery from the liquidation," according to the filing.

The trustee does not intend to solicit new customers or market Peregrine services to the public, according to the filing. The trustee's motion will be heard on Friday.

On July 10, Peregrine Financial Group filed to liquidate under Chapter 7 of the U.S. bankruptcy code, with between $500 million and $1 billion of assets, between $100 million and $500 million of liabilities, and between 10,000 and 25,000 creditors.

The Commodity Futures Trading Commission (CFTC) earlier alleged Peregrine Financial Group and its owner defrauded customers and lied to regulators in order to hide a shortfall that now exceeds $200 million.

Peregrine Chairman Russell Wasendorf Sr apparently attempted suicide on July 9 and was hospitalized.

The case is: Peregrine Financial Group Inc, Case No. 12-27488 U.S. Bankruptcy Court, Northern District Of Illinois (Eastern Division)

(Reporting by Sakthi Prasad; editing by Jeffrey Benkoe)

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