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The Banking & Finance Litigation Update is
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affecting the Group's area of practice and its clients
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CONTENTS
Domestic Banking 2
Domestic General 3
European Banking 5
European General 6
International Banking 7
International General 8
Press Releases 9
BANKING & FINANCE LITIGATION UPDATE
ISSUE 75
2 | Issue 72 - Banking & Finance Litigation Update
DOMESTIC BANKING
BANK OF ENGLAND
1. The Monetary Policy Committee of the Bank of
England has agreed to keep interest rates at 0.5
per cent with no indication that it is in any rush to
increase them in the near future, despite inflation
being well below the target of 2 per cent set by the
Bank.
Financial Times, 11 April 2014
2. The Bank of England's hopes that it would be able
to provide secret assistance to banks in financial
difficulty have been dashed as three EU members
states rejected the UK's request to "clarify" details
in the draft bank recovery and resolution directive.
The Bank had wanted to be able to step in as a
lender of last resort when a bank faced short term
financial problems.
Financial Times, 11 April 2014
3. The Bank of England and European Central Bank
are intending to work together to spark a revival in
the asset-backed securities market. The two
central banks want to see the rules on bundled
debt relaxed to enable credit in the EU to flow
more freely.
Financial Times, 8 April 2014
4. The Bank of England has announced that it will
introduce stress tests for banks and building
societies to determine whether they could cope if
house prices were to suddenly fall or the cost of
borrowing were to increase significantly. The
tests, to be introduced later in 2014, will check
how resilient the banks would be if the property
bubble was to burst.
Guardian, 28 March 2014
BARCLAYS
5. Barclays has agreed to settle the £70 million
interest rates swap case linked to Libor being
brought against it by the owner of Guardian Care
Homes, Graiseley. Graiseley has dropped the case
after it reached a settlement with the bank
whereby the bank agreed to restructure a £40
million loan. The case was due to start at the end
of April.
Guardian, 8 April 2014
6. Abu Dhabi Islamic Bank, a sharia-compliant bank,
is to buy Barclays' retail bank business in the
United Arab Emirates for £106 million. Barclays
will ask its existing customers to switch their
credit card accounts to Islamic instruments which
do not allow interest payments. A spokesman for
the bank said the move would enable Barclays to
"focus on [its] business in corporate and
investment banking and wealth and investment
management".
Telegraph, 7 April 2014
7. Barclays has introduced a £15 buffer on overdraft
charges which means customers will not be
charged until their account is over £15 overdrawn.
The managing director of Barclays Retail,
Catherine McGrath, said the bank wanted to
"improve transparency and customer control".
Telegraph, 26 March 2014
8. Barclays is hoping investors will support a plan
which will enable the bank to pay 1,400 of its
employees double their salaries as a bonus.
Shareholders must approve bonuses over 100 per
cent of basic salary under new EU legislation.
Independent, 22 March 2014
CO-OPERATIVE BANK
9. The Co-operative Bank issued its annual reports
and accounts showing a loss of £1.3 billion for the
troubled bank. The new chief executive Niall
Booker was positive about the bank's attempts to
find £400 million extra credit to boost its financial
standing, saying ""we remain enthusiastic about
the long-term potential for the bank".
Guardian, 12 April 2014
HSBC
10. Richard Durkin has won a 16-year legal battle
against HSBC after the Supreme Court ruled in his
favour. Although he won his case, Mr Durkin was
awarded only £8,000 not the six-figure sum he
was seeking. Mr Durkin had claimed that his
credit rating had been damaged by a division of
HSBC. The judgment means that where a
consumer disputes that he or she has defaulted on
a loan or credit agreement, the bank cannot put a
default notice on their credit file until the matter
has been resolved.
Guardian, 27 March 2014
www.dlapiper.com | 03
LLOYDS BANKING GROUP
11. Lloyds Banking Group expects that the TSB will
be listed on the London Stock Exchange by the
end of May following an initial public offering
(IPO) which will be launched on May 19th. TJP
Morgan and Citigroup are advising Lloyds on the
IPO.
Sunday Telegraph, 13 April 2014
12. Lloyds Banking Group is getting ready to sell its
remaining taxpayer shares to the public after it
asked shareholders to support a resolution on a
"related party transaction" in the notice of its
annual shareholder meeting. The government still
holds 25 per cent of shares in Lloyds Bank
following a second share sale in March of 7.5 per
cent, although the next sale is not expected to go
ahead until autumn at the earliest.
Guardian, 4 April 2014
THE ROYAL BANK OF SCOTLAND
13. City analysts have said that the government could
begin to sell down its stake in The Royal Bank of
Scotland (RBS) this year following the lender's
agreement with the Treasury which could result in
dividend payments being resumed. According to
analysts at Jefferies, the deal to get rid of the
Dividend Access Share, which blocked payouts to
shareholders, could speed up the Government's
exit.
Telegraph, 11 April 2014
14. RBS has appointed a new chief financial officer
following the departure of Nathan Bostock. Ewen
Stevenson will join RBS on 19 May from Credit
Suisse where he is joint head of the investment
banking division in Europe, the Middle East and
Africa.
Telegraph.co.uk, 4 April 2014
15. More than 40 branches of RBS are to be closed in
a move which will lead to branches across the UK
shutting down. The lender said this comes as a
growing number of customers switch to mobile
banking. In the last four years there has been a
30pc decrease in transactions in branches.
Telegraph, 3 April 2014
16. NatWest, part of the RBS Group, has confirmed
that a technical glitch which stopped interest being
paid to thousands of ISAs and savings accounts
has been repaired. Whilst working to remedy the
error the bank had said the accounts affected
would have the missing interest applied as quickly
as possible and apologised "for the inconvenience
caused".
Telegraph.co.uk, 3 April 2014
17. A court has ruled that Michael Hockin can take
RBS to court over the alleged mis-selling of an
interest rate swap despite the fact that his
company has been placed into administration. In
2008 RBS sold the swap to the former owner of
London & Westcountry Estates, which runs over
20 business parks in the south of England, against
a £57 million three-year loan taken out with the
lender. Mr Hockin claims that this cost the
business at least £5 million in additional payments
leaving his family with an £11 million break fee
they say they received no warning about.
Telegraph, 21 March 2014
DOMESTIC GENERAL
18. As the larger banks have to focus on dealing with
the changes brought about by the government's
structural reforms, smaller "challenger" banks are
seeing a chance to increase their toehold in the
market. According to James Cobb, chief finance
officer of Arbuthnot Banking Group, with the big
banks focused on the major institutional overhaul
needed to comply with new ring-fencing rules
over the coming five years, smaller banks that are
not covered by the ring-fencing, will have the
chance to win over customers and disaffected staff
from their larger rivals.
Financial Times, 16 April 2014
19. The £8 billion overdraft market is facing an
investigation by the Financial Conduct Authority
(FCA), which has published research showing that
neither clear information, nor good value was
being received by customers, who the FCA
believe are paying too much for their overdrafts
with their easy availability leaving some in
perpetual debt. The investigation is the third into
the credit industry that the FCA has announced
since it took over responsibility for regulating
consumer credit on 1 April.
Times, 11 April 2014
4 | Issue 72 - Banking & Finance Litigation Update
20. Over 600,000 people have moved their bank
accounts since new rules were introduced in
September 2013 making the process easier. The
six months to the end of March saw a 14 per cent
increase in the number of switches compared to
the same period a year earlier, with a total of
609,300 switches according to figures from The
Payments Council.
Telegraph, 11 April 2014
21. The payment protection insurance mis-selling
scandal, which has cost banks £14 billion, may
have peaked, with new figures from the FCA
showing the first fall in customer complaints on
the issue since 2009. According to the figures, the
second half of 2013 saw a 22 per cent drop in PPI
complaints, though at 1.4 million between July
and December, it remained the financial product
with the most complaints. Banking-related
complaints also fell to a seven-year low during the
same period.
Times.co.uk, 10 April 2014
22. New figures from the FCA have shown that
Britain's high-street banks are running behind
schedule, and so are set to miss a May deadline
for the completion of all customer redress reviews
for victims of interest-rate hedging products mis-
selling. The regulator told lenders in 2013 that the
process for paying compensation was moving too
slowly, warning that banks could be fined if the
FCA felt that payments to victims were being held
up.
Telegraph, 9 April 2014
23. A new report from KPMG has said that the British
banking industry faces more pain in the future, as
it tries to manage the demands of regulators,
investors and the government, whilst relying on a
technology infrastructure from the "dinosaur age".
The "Reinvention of UK Banking" report revealed
that the five largest banks in the UK experienced a
25 per cent drop in total assets in the past five
years, down to £5.2 trillion, whilst they had to pay
out £28.5 billion in costs for fines, litigation and
customer redress.
Telegraph, 7 April 2014
24. Millions of machines including government
computers, ATM cash machines and other
systems will face an increased risk of attack from
computer viruses and hackers, when Microsoft
stops supporting its Windows XP operating
system in mid-April. According to software
company AppSense, XP is still used by 77 per
cent of companies in the UK, and experts have
warned of potential problems. Barclays, HSBC,
Lloyds Banking Group, RBS and Santander are in
talks, or have already arranged, to get extended
support from Microsoft as a temporary solution.
Times.co.uk, 5 April 2014
25. The Prudential Regulation Authority (PRA) and
the FCA's combined annual funding requirements
will reach £673 million in 2014, nearly £100
million more than when the banking industry was
regulated by the Financial Services Authority
(FSA). Whilst the figure is only a small increase
on 2013's £668 million, it is significantly higher
than the £578 million the financial sector was
charged by the FSA in 2012. Concerns have been
raised by industry sources over the increasing
costs.
Times, 3 April 2014
26. The PRA has decided to cut its budget for the
coming year after ending its first 12 months with a
surplus of almost £20 million. The regulator said it
would reduce the fees charged to lenders for their
supervision, having reduced its 2014-2015 funding
cost by 4 per cent, to £227 million. The larger
parts of the PRA budget are paid by the bigger
banks, which have to pay higher fees, but all
regulated firms will benefit from a fee reduction.
Telegraph, 3 April 2014
27. An FCA business plan for the coming financial
year has revealed that concerns over a possible
repeat of the Libor scandal mean that banks are to
face an inquiry into possible manipulation of key
benchmarks for commodity prices and interest
rates, as well as foreign exchange. The review will
determine whether lessons from the Libor scandal
have been learned by the banks. The FCA said that
evidence would have to be shown by firms that
they had "adequate controls on traders' behaviour
and activity" through all types of benchmarks
which could be open to manipulation.
Telegraph, 1 April 2014
28. With a number of recent incidents having left
millions of customers temporarily without access
to their money, regulators are to review the quality
of the IT systems that support Britain's banks. The
investigation will be led by the PRA and the FCA,
who will then report to the Bank of England,
which will issue its conclusions in early 2015.
Times, 29 March 2014
www.dlapiper.com | 05
29. A clampdown on banks that try to avoid paying
compensation for card fraud, could see thousands
of victims who were previously denied a refund
finally receive their money. The FCA is to
announce a review that will examine whether
customers have been fobbed off with excuses by
card providers. According to the FCA, one in ten
of the over 1.5 million people who have cash
stolen from credit card or debit accounts each year
are unfairly denied a refund. It believes that its
clampdown could benefit as many as 170,000
people annually.
Times, 29 March 2014
30. A warning has been issued by Scottish Financial
Enterprise (SFE), the sector's Scottish trade body,
that a yes vote for independence would leave the
banking industry and financial services in
Scotland facing a long and costly period of
disruption. Representing 110 banks, finance firms,
insurers and pension companies, the SFE said
there were a number of factors causing
uncertainty, including which central bank and
currency an independent Scotland would use, and
the potential impact of talks on EU membership. It
said doubt would be cast on the achievability of
the target set by the Scottish government of
declaring independence in March 2016, due to the
complexity and scale of the task the country would
face following a yes vote.
Guardian, 28 March 2014
31. In the midst of allegations that it will raise £400
million less than expected in the current year, a
consultation on changes to the bank levy has been
started by the Treasury. Despite the effective tax
rate on British banks surpassing 70 per cent,
KPMG has warned that the £2.5 billion revenue
target will be undershot by the Government due to
the continued shrinkage of the balance sheets of
the country's five biggest banks.
Telegraph, 27 March 2014
32. With some claiming that British lenders are
amongst the world's most heavily taxed, experts
are saying that the burden of the bank tax may be
transferred away from UK retail banks and on to
foreign institutions by the government. With
consultations beginning on possible changes to the
tax, banks are preparing for a big lobbying effort
to reduce their levy contribution. In a submission
to the Treasury, the British Bankers' Association
(BBA) complained about the eight consecutive
levy increases, a move they said was "inconsistent
with the government's desire for the UK to have a
competitive, stable and predictable tax regime."
Financial Times, 26 March 2014
33. A scheme aimed at encouraging banks to lend
more to small businesses, is to be used by the
British Business Bank to offer to share the burden
of losses on some loans made to such borrowers.
The offer is the latest attempt to improve lending
to small and medium-sized businesses, which have
experienced difficulties in getting credit since the
financial crisis. The "wholesale guarantee" pilot
scheme offers lenders a government-backed
guarantee covering a share of net credit losses
incurred on their SME-lending portfolios.
Financial Times, 24 March 2014
EUROPEAN BANKING
BANK OF IRELAND
34. Richie Boucher, the chief executive of the Bank of
Ireland, has told the Oireachtas Finance
Committee that the bank will block any insolvency
deals involving mortgage debt write-offs. In
response, a spokesman for the Irish justice
minister Alan Shatter said the government would
be prepared to amend the new personal insolvency
legislation it introduced in September 2013 if it
felt it was not working as was intended.
Sunday Times, 13 April 2014
CREDIT SUISSE
35. Credit Suisse will take a charge of £189 million in
its quarterly results after agreeing a settlement
with the US Federal Housing Finance Agency.
The $885 million settlement concerns almost $17
billion worth of residential-backed mortgages sold
in the two years prior to the financial crisis.
Times, 22 March 2014
DEUTSCHE BANK
36 In a move aimed at combatting European
guidelines that look to place a cap on bankers'
bonuses, Deutsche Bank is intending to spend
hundreds of millions of euros to increase the fixed
salaries of up to 3,700 members of staff. The
German bank is to ask shareholders to give
approval to a 1:2 ratio of fixed to variable pay
under the new EU rules. If approved, the bank
estimates that the fixed pay review could cost
€291 million for 2014.
Financial Times, 11 April 2014
6 | Issue 72 - Banking & Finance Litigation Update
37. Deutsche Bank has restated its 2013 results to
include roughly €50 million for covering impaired
assets and about €350 million of settlement costs.
Deutsche was pushed into the red in the final
quarter of the year as a result of legal settlements.
Expenses incurred in the settlement of a long-
running lawsuit with the heirs of the Kirch estate
saw the bank's litigation reserves fall to €1.8
billion at the end of 2013.
Telegraph, 21 March 2014
EUROPEAN CENTRAL BANK
38. Mario Draghi, president of the European Central
Bank (ECB), has said that the Central Bank could
be prompted to launch a new wave of stimulus if
the euro strengthens further, in order to fight low
inflation and maintain its loose policy stance. He
said that non-standard measures such as
quantitative easing could be used.
Telegraph, 14 April 2014
39. After years of resistance, the ECB has finally
opened the door on quantitative easing, though
calls for immediate action to help southern Europe
and head off a deflation trap were dismissed.
Mario Draghi has announced that if inflation falls
too low, the Bank's governing council has
unanimously agreed to take emergency measures.
The bank also chose to leave interest rates at 0.25
per cent and delayed reducing the deposit rate
below zero.
Telegraph, 4 April 2014
SANTANDER
40. Santander has introduced a new five-year fixed-
rate mortgage for landlords, which has a rate of
4.34 per cent. A booking fee of £1,495 applies and
a minimum deposit of 25 per cent is required. Self
-employed borrowers can apply for the deal,
which is available through brokers. Also, some of
the lender's tracker and fixed rates for buy-to-let
mortgages have been lowered by up to 0.3
percentage points.
Sunday Times, 13 April 2014
UBS
41. Swiss bank UBS will this year begin paying out
half its profits to shareholders, making it one of
the sector's highest dividend payers. The bank's
chief executive Sergio Ermotti, told the Financial
Times that UBS will increase the payment from 30
per cent to at least 50 per cent, reaching one of the
prime goals of its radical restructuring. The level
of payment is contingent on achieving a core Tier
One capital ratio of 13 per cent.
Telegraph, 14 April 2014
42. The global investigation into manipulation and
collusion in the foreign exchange market has seen
UBS suspend six more traders. One of the
suspended traders was based in Singapore, two in
Zurich and the other three in New York.
Telegraph, 28 March 2014
EUROPEAN GENERAL
43. New laws which will make it easier for problem
banks to be shut down have been signed off by the
European Parliament. The new rules will enable
an agency to shut down weak Eurozone lenders
and is the last in a line of significant reforms to
create a Eurozone banking union. The banking
'union' and accompanying clean-up of banks'
books, are intended to create a united front that
will enable bank problems to be dealt with more
promptly, starting with the policing of the sector
by the ECB this year.
Telegraph, 16 April 2014
44. As the EU looks to give teeth to the strongest
clampdown on the sector seen anywhere in the
world, attempts to rein in high-frequency traders
are moving to the world of rule writing. The
Markets in Financial Instruments Directive (Mifid)
is set to be adopted by MEPs in the European
Parliament, though this formal step is only the
beginning of a complex process to put into
practice rules which are peppered with political
compromises. The new rules are an attempt by the
EU to catch up with technology that enables
traders to look for nanoseconds of advantage when
buying and selling.
Financial Times, 15 April 2014
45. Banking rules being brought in to regulate asset-
backed securities have been criticised by British
lenders Barclays and Nationwide, and six
European rivals. The British lenders claim that
"excessive" regulations could see millions of
businesses and consumers unnecessarily denied
loans. In response to a consultation by the Basel
Committee, the international body which drew up
the new capital rules, Nationwide said that the
www.dlapiper.com | 07
flow of credit into Europe's economies was being
damaged by the rules, which compel building
societies and banks to hold the same amount of
capital to buffer prime-asset backed securities as
would be held against a product that was more
risky.
Times, 10 April 2014
46. The International Monetary Fund has said that a
serious threat is posed to global financial stability
by the creaking banking system in the Eurozone,
warning leaders in Europe that plans to support
weak banks and create a banking union need to be
speeded up. The global financial stability report
also detailed a number of issues that could hamper
expectations of a smooth recovery for the global
economy.
Guardian, 10 April 2014
47. Pope Francis has ended speculation that he might
shut down the IOR (Istituto per le Opere di
Religione), the scandal-plagued Vatican bank. The
decision follows an intense period of reform at the
bank, which has seen dozens of accounts closed.
Officials now believe that they will have
completed checks on all of the bank's 18,900
accounts by the summer. The Vatican said that
"IOR will continue to serve with prudence and
provide specialised financial services to the
Catholic Church worldwide."
Telegraph, 8 April 2014
48. Concerns over the potentially destabilising
interdependency between national governments
and financial institutions have been fuelled by
news that more sovereign debt is currently held by
Europe's banks than at any time since the euro
crisis. According to the ECB , since the beginning
of 2012 banks in the Eurozone have increased
their holdings of government debt as a percentage
of assets almost every month. Despite warnings by
regulators in Europe of a growing "sovereign
debt" nexus, by February government debt
accounted for 5.8 per cent of combined assets, up
from a January 2012 figure of 4.3 per cent.
Financial Times, 2 April 2014
49. Europe has finally agreed on a banking union. As
a result of the agreement between member states
and the European Parliament, governments in the
Eurozone will no longer be the sole overseer of
their big national banks. Instead, the banks will be
regulated by the EU's top bank supervisor, the
ECB, and could be wound down by a central
authority, even if that action has to take place
against the wishes of the bank's home state, using
a €55 billion rescue fund.
Financial Times, 21 March 2014
INTERNATIONAL BANKING
BANK OF AMERICA
50. The US Consumer Financial Protection Bureau
has ordered Bank of America to pay a settlement
of $800 million in relation to allegations that it mis
-sold credit card products to its customers. This is
the largest settlement imposed by the Bureau to
date.
Times, 10 April 2014
51. Bank of America has settled an investigation by
the Federal Housing Finance Agency into
allegations that it misrepresented mortgage-backed
securities it sold to Fannie Mae and Freddie Mac
ahead of the financial crisis. The Bank agreed to
pay $9.3 billion.
Times, 27 March 2014
CITIGROUP
52. Citigroup has reached a settlement with investors
who were sold sub-prime mortgage packages in
the run-up to the financial crisis. The £670 million
deal involves 18 big institutional investors but
does not include fees for the plaintiffs' lawyers
which will be paid in addition to, rather than out
of, the settlement.
Independent, 8 April 2014
JPMORGAN CHASE
53. JP Morgan was the first Wall Street bank to issue
its quarterly results, with profits much lower than
expected, indicating how difficult banks have
found the first quarter of 2014. Revenue from
bond trading dropped by over 20 per cent at the
bank, and revenue from mortgage lending was
down by almost 85 per cent. Total net income was
down from $6.53 billion at the same point in 2013
to $5.27 billion.
Guardian.co.uk, 11 April 2014
8 | Issue 72 - Banking & Finance Litigation Update
LEHMAN
54. Over five years after Lehman Brothers collapsed
into bankruptcy and triggered the global financial
crisis, creditors are to get an extra $17.9 billion
pay out, bringing the current total for pay outs to
$56 billion. The distribution in the United States
includes third parties such as hedge funds that
bought Lehman's debt at a discount following its
bankruptcy. More payments are expected to see
the total reach a final figure of $80 billion.
Times, 28 March 2014
NATIONAL AUSTRALIA BANK 55. National Australia Bank's UK subsidiaries
Clydesdale and Yorkshire bank will close 28 of
their 320 branches during 2014 in a move
expected to save £5 million. The banks will also
spend £25 million improving the remaining
branches and £20 million expanding mobile
banking.
Telegraph, 26 March 2014
56. National Australia Bank's new group chief
executive Andrew Thorburn has fuelled
speculation that the group is looking to dispose of
UK subsidiaries Clydesdale and Yorkshire Bank,
saying he wants to concentrate on the core
businesses in Australia and New Zealand and
"shrink UK commercial property loans". The
group has previously expressed interest in selling
the banks. Santander, NBNK and private equity
groups are seen as potential buyers.
Times, 4 April 2014
INTERNATIONAL GENERAL
57. Just as China's debt-laden financial system is
beginning to exhibit signs of real strain, policy co-
ordination is being hindered by a turf war between
the two most important financial regulators in the
country. Rising tensions between the China
Banking Regulatory Commission and the People's
Bank of China, which have always been rivals, are
obstructing reforms and attempts to tackle risks in
the financial sector.
Financial Times, 10 April 2014
58. In an attempt to fight off tighter regulation of the
sector, senior executives from the foreign
exchange market are set to look at ways to drive
cultural change on trading desks and alternatives
to industry benchmarks.
Financial Times, 10 April 2014
59. The US Federal Reserve, the Federal Deposit
Insurance Corporation and Comptroller of
Currency have approved rigorous new rules that
are designed to stop a repeat of the 2008 financial
crisis. The rules will mean that America's eight
biggest banks will be required to hold an
additional $68 billion of cash on their balance
sheets in order to shore up capital reserves. The
requirement to hold at least five per cent of their
total assets in cash, is an increase from the
previous obligation to hold three per cent. The
new rule will come into force in 2018.
Telegraph, 9 April 2014
60. A grand jury investigation has been opened by the
US Attorney for the Southern District of New
York into Deutsche Börse's Clearstream Banking
unit, the Frankfurt-based group has confirmed.
The investigation will look into the unit's
settlement and custody business, over allegations
of violations of both sanctions against Iran, and
money-laundering laws. In January 2014
Clearstream agreed to pay the Office of Foreign
Assets Control $152 million to settle allegations
that it might have violated sanctions against Iran.
Financial Times, 3 April 2014
61. In the latest escalation of the global investigation
into possible foreign exchange market
manipulation, regulators in Hong Kong and New
Zealand have announced that they are to
investigate banks in their markets for possible
wrongdoing. The news came a day after the
competition watchdog in Switzerland became the
first regulator to publicly confirm that it had found
signs of illegal activity, as it announced
investigations into eight banks for possible forex
manipulation.
Financial Times, 2 April 2014
www.dlapiper.com | 09
62. Local officials in eastern China have had to take
emergency measures to calm panic, after there
was a run at a small rural bank, which saw
hundreds of depositors remove their cash. The run
on Jiangsu Sheyang Rural Commercial Bank is
the most recent sign of the growing stresses in
China's financial system, though the incident did
remain localised in the one county.
Financial Times, 27 March 2014
63. The US Federal Reserve has thwarted plans by the
US units of HSBC and RBS to launch share
buybacks or pay higher dividends for the coming
year, due to what it called "significant
deficiencies" in their capital planning processes.
Citigroup was also affected by the ruling, with
capital plans being rejected at five of the 30 US
banks with total assets of over $50 billion.
Times, 27 March 2014
64. Bank of America, Goldman Sachs and Morgan
Stanley would suffer massive losses in a financial
crisis, according to stress tests conducted by the
US Federal Reserve, curbing the ability of the
banks to return capital to shareholders. The tests,
which modelled a hypothetical recession and
market meltdown to measure the financial
system's resilience, were passed by US banks.
Only one of the 30 banks tested, a lender in Utah,
fell below a minimum 5 per cent equity to risk-
weighted assets capital ratio.
Financial Times, 21 March 2014
PRESS RELEASES
65. Countdown to new mortgage lending rules –
FCA publishes simple guide to explain the
changes to consumer
New rules from the FCA, which come into force
on 26 April 2014, will make sure a common sense
approach is taken for every lending decision. To
ensure that people only get a mortgage they can
afford, and to prevent a recurrence of the
irresponsible lending practices of the past, every
borrower will now have to prove that they can
afford the repayments both now and in the future.
The FCA has produced a short guide that explains
the changes.
Financial Conduct Authority, 14 April 2014 http://www.fca.org.uk/news/countdown-to-new-mortgage-
lending-rules
66. FCA research shows many consumers paying
too much for overdrafts
The FCA has published research into the £8
billion overdraft market. The findings show
overdrafts are still not providing good value, with
many consumers confused about the costs.
Financial Conduct Authority, 10 April 2014 http://www.fca.org.uk/news/research-shows-many-
consumers-paying-too-much-for-overdrafts
67. Bank of England maintains Bank Rate at 0.5%
and the size of the Asset Purchase Programme
at £375 billion
The Bank of England’s Monetary Policy
Committee voted to maintain the Bank Rate at
0.5%. The Committee also voted to maintain the
stock of purchased assets financed by the issuance
of central bank reserves at £375 billion.
Bank of England, 10 April 2014 http://www.bankofengland.co.uk//publications/Pages/
news/2014/004.aspx
68. Bank of England sets out the PRA's Annual
Funding Requirement
The Bank of England is consulting on the
regulatory fees and levies required to support the
PRA’s strategic priorities and business aims for
the fee year 2014/15. Fees from individual firms
are based on the size of their business.
Consequently, those firms that could potentially
cause the greatest harm to the stability of the UK
financial system will be the main contributors.
Prudential Regulation Authority, 2 April 2014 http://www.bankofengland.co.uk/publications/Pages/
news/2014/067.aspx
69. BBA launches major new work on digital
banking
Mobile phone banking transactions made by
British customers have nearly doubled in a single
year, new industry figures compiled by the BBA
show. Customers are now making more than 5.7
million transactions a day using smart phones and
other internet-enabled technology.
British Bankers Association, 31 March 2014 https://www.bba.org.uk/news/press-releases/bba-launches-
major-new-work-on-digital-banking/
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70. Chancellor welcomes landmark agreement on
London renminbi clearing and settlement
arrangements
The Bank of England and the People’s Bank of
China (PBoC) have agreed to sign a Memorandum
of Understanding (MoU) on renminbi (RMB)
clearing and settlement in London. The MoU will
be signed in London on 31 March 2014 and will
set out the cooperation between the Bank and
PBoC relating to the operations of the RMB
clearing and settlement service in London.
HM Treasury, 26 March 2014 https://www.gov.uk/government/news/chancellor-welcomes-
landmark-agreement-on-london-renminbi-clearing-and-
settlement-arrangements
71. Government reduces its stake in Lloyds
Banking Group to below 25%
The government has sold 24 per cent of its
remaining shares in Lloyds Banking Group at a
price of 75.5p per share. This takes the
government’s holding in the bank to less than a
quarter.
HM Treasury, 26 March 2014 https://www.gov.uk/government/news/government-reduces-its-
stake-in-lloyds-banking-group-to-below-25
72. European Parliament and Council back
Commission's proposal for a Single Resolution
Mechanism: a major step towards completing
the banking union
The European Parliament and the Council have
reached a provisional agreement on the proposed
Single Resolution Mechanism (SRM) for the
Banking Union. The SRM will see the ECB
directly supervise banks in the euro area and in
other Member States which decide to join the
Banking Union.
European Commission, March 20, 2014 http://europa.eu/rapid/press-release_STATEMENT-14-
77_en.htm?locale=en
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taken on the basis of this publication. If you would like
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