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Banking & Finance Litigation Update BANKING & FINANCE LITIGATION UPDATE Issue 60 We wish to establish a dialogue with our readers. Contents Please contact us at B&FL Update and let us know which particular areas you are interested in and what Domestic Banking ······································ 2 you would find helpful. Domestic General ······································· 4 The Banking & Finance Litigation Update is published monthly and covers current developments European Banking ······································ 5 affecting the Group's area of practice and its clients during the preceding month. European General ······································· 5 This publication is a general overview and discussion International Banking ·································· 5 of the subjects dealt with. It should not be used as a International General ··································· 6 substitute for taking legal advice in any specific situation. DLA Piper UK LLP accepts no Legislation ··············································· 6 responsibility for any actions taken or not taken in reliance on it. Press Releases ··········································· 6 Where references or links (which may not be active Case Law ················································ 8 links) are made to external publications or websites, the views expressed are those of the authors of those publications or websites which are not necessarily those of DLA Piper UK LLP, and DLA Piper UK LLP accepts no responsibility for the contents or accuracy of those publications or websites. If you would like further advice, please contact Paula Johnson on 08700 111 111. DOMESTIC BANKING 7. Support staff working in investment divisions of banks including Barclays and RBS could have BANK OF ENGLAND their 2013 bonuses cut in a move to reduce costs. Executives believe that pay for backroom staff at 1. Mark Carney, the governor of the Bank of Canada, investment banks should be aligned with the pay will become the highest earning banker in the of their retail counterparts who are doing the same world when he becomes the Governor of the Bank job. of England ("BofE"). His total package will be worth £874,000, more than double the salary of Times, 19 November 2012 his nearest rival, Mario Draghi, the Governor of the European Central Bank. HSBC Guardian, 21 December 2012 8. The first sale of sub-prime loans since the height of the financial crash is being prepared by HSBC, 2. Martin Weale of the BofE Monetary Policy as the bank starts to off-load over $40 billion (£25 Committee has warned that further quantitative billion) of toxic US debt that it still has on its easing by the Bank would result in increased books. Four sub-prime loan portfolios worth a inflation and have no beneficial effect on growth. total of $2.7 billion will be sold in the next year, with interest already being expressed by hedge Daily Telegraph, 22 November 2012 funds. The sale will be the first time HSBC has BARCLAYS sold any of its holding of sub-prime debt since Lehman Brothers collapsed back in September 3. Barclays and Deutsche Bank have joined with 12 2008. other banks to become stakeholders in a "bad bank", called Sareb, created to absorb 60 billion The Daily Telegraph, 3 December 2012 Euros of Spain's bad debts. 9. HSBC is to launch a global 'know your customer' programme costing $700 million as part of a plan Times, 19 December 2012 agreed with US regulators to settle breaches of 4. An American plan that would force Barclays and Iran sanctions and money laundering issues. Deutsche Bank to put more cash into their Wall Financial Times, 14 December 2012 Street operations is threatening to bring about an international trade war. Daniel Tarullo, a governor 10. HSBC has agreed a record fine of $1.9 billion with of the Federal Reserve and the man overseeing the international regulators to settle charges of money implementation of the Dodd-Frank banking laundering between 2002 and 2009. The bank was regulation reforms, wants tougher capital and found guilty of wholesale failings in its control liquidity rules for all foreign banks operating in and systems processes but was not found to have the US. According to senior financiers and facilitated money laundering. Senior staff at the analysts, foreign banks would be put at a bank will defer part of their bonus entitlement competitive disadvantage by the rules. A number until 2017 to safeguard against any future of foreign banks and financial institutions are wrongdoing. furious about the plans. Times, 12 December 2012 Sunday Times, 9 December 2012 11. HSBC chairman Douglas Flint wants bankers to 5. Barclays' CEO, Anthony Jenkins, has been in talks swear an oath similar to that sworn by doctors in with shareholders about axing its investment bank an attempt to rebuild confidence in the profession. as part of a radical restructuring. Financial Times, 26 November 2012 Daily Telegraph, 26 November 2012 12. HSBC has confirmed that it is in talks on the 6. Former Barclays chairman Martin Agius could be possible sale of its 15.57 per cent holdings in retained by the bank as a consultant. Agius Chinese insurance group Ping An. The deal could resigned in July but is still working on "legacy be worth $9 billion. issues" at the bank until 1 January 2013 when his Independent, 19 November 2012 notice period expires. Daily Telegraph, 19 November 2012 02 | Banking & Finance Litigation Update - Issue 60 LLOYDS BANKING GROUP successive governments. The bank's first aim is to be ready to begin paying dividends again in late 13. In a deal worth £60 million, restaurants including 2014. Eighteen months of further repairs to the Le Pont de la Tour and Quaglino's are set to bank's balance sheet should, senior figures at the change hands. The private equity arm of Lloyds bank believe, leave it ready to be returned to the Bank, LDC, is frontrunner to purchase D&D private sector in four offerings spread over ten London, owner of 30 leading restaurants. It would years. get the 51 per cent stake of founder Sir Terence Conran, and also the 18 per cent owned by Caird Times, 3 December 2012 Capital. The remaining 31 per cent would be 19. Despite having effectively agreed to pay its larger retained by management. A number of rivals are rival to take the unit off its hands, RBS has been still in the talks so LDC could be outbid, even forced to call off the sale of its Indian commercial though it is the current frontrunner. and retail operations to HSBC. RBS said that the Sunday Times, 9 December 2012 sale had 'lapsed' and it would now begin to 'wind- down' the 31-branch business. The collapse of the 14. An estimated 4.8 million Lloyds Banking Group deal is understood to have come after protracted account holders will begin receiving letters talks over the transfer of the ownership of the informing them that their branch has been business with the Indian regulator. transferred to new ownership as part of the Project Verde sale to Co-operative Bank in July. The Daily Telegraph, 3 December 2012 Times, 28 November 2012 20. After refusing to cave in to pressure to sell its American business, RBS is expected to further SANTANDER shrink its investment bank. RBS has been pressed 15. A deal is expected to be announced soon between by City regulators to consider a sale of its Santander UK and SAV Credit in relation to American retail banking business, Citizens, which Santander's store card portfolio. SAV currently could be worth as much as £10 billion. However serves retailers such as Debenhams and Arcadia. the bank has said it cannot find a buyer quick Santander is worried that its reputation will be enough to meet the timetable of new capital damaged by criticism of the high interest rates demands. RBS is believed to be looking at ways to charged on store cards. trim capital-intensive areas of its investment bank as an alternative. Times, 21 December 2012 Sunday Times, 2 December 2012 THE ROYAL BANK OF SCOTLAND PLC 21. Private equity firm Corsair Capital has become a 16. The Royal Bank of Scotland ("RBS") is expected potential bidder for the 316 RBS branches to be to be the next bank to agree a settlement with sold. regulators over attempts to manipulate the LIBOR rate, following the settlement agreed between UK Evening Standard, 26 November 2012 and US authorities in December with UBS, and 22. Whitehall is proposing that the 316 RBS branches the one made with Barclays in June 2012. which are for sale could be nationalised and set up Daily Telegraph, 20 December, 2012 as a standalone bank if a buyer is not found. The tax payer, as the majority shareholder in RBS, 17. RBS is to launch a £200 million Carbon would automatically acquire an 83 per cent share Reduction Fund aimed at helping businesses of the new bank. reduce energy costs. The fund will be run by the bank's corporate and institutional banking Sunday Times, 18 November 2012 division. RBS will finance a range of sustainable UK GREEN INVESTMENT BANK PLC energy projects and will be able to lend at lower rates as the fund is backed by Funding for 23. The UK Green Investment Bank Plc ("UK GIB") Lending, with funding available for businesses has officially opened for business and has invested with a turnover of over £25 million. £8 million in a project to construct an anaerobic digestion plant in Teesside, and £5 million to Independent, 10 December 2012 retrofit Kingspan's UK industrial facilities. UK 18. RBS has predicted that it will take it ten years to GIB has been funded with £3 billion of fully return to the private sector, underlining the Government money and will aim to mobilise scale of the challenge facing executives and www.dlapiper.com | 03 additional private capital to develop a green scandal which has involved at least 20 of the economy.
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