BANKING & FINANCE LITIGATION UPDATE Issue 54 We wish to establish a dialogue with our readers. Please CONTENTS contact us at B&FL Update and let us know which particular areas you are interested in and what you would Domestic Banking .......................................................... 2 find helpful. Domestic General .......................................................... 3 The Banking & Finance Litigation Update is published monthly and covers current developments affecting the European Banking .......................................................... 4 Group's area of practice and its clients during the European General .......................................................... 5 preceding month. This publication is a general overview and discussion of International Banking..................................................... 5 the subjects dealt with. It should not be used as a International General ..................................................... 5 substitute for taking legal advice in any specific situation. DLA Piper UK LLP accepts no responsibility for any Press Releases ................................................................ 5 actions taken or not taken in reliance on it. Case Law ....................................................................... 7 Where references or links (which may not be active links) are made to external publications or websites, the Articles ......................................................................... 14 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. Barclays has been forced to accept tougher bonus conditions by its shareholders including a cut of 50 per cent in the 2011 £2.7m bonus of CEO Bob BARCLAYS Diamond. 1. Barclays is reported to be considering the sale of its French retail banking business - a network of Financial Times, 20 April 2012 more than 100 branches. HSBC and La Banque Postale are said to be interested. 8. Barclaycard has launched a credit card, PayTag, which will allow its 12 million customers to make Times, 15 May 2012 "wave and pay" purchases from their mobile phones. PayTag will sit on any mobile handset and 2. Barclays has launched an assault on the US is linked to a customer's credit card account, savings market, returning to deposit-taking in the allowing them to make purchases in any States for the first time in years. The bank is "contactless" store, restaurant, and eventually on offering an online savings account to Americans, public transport. The card will be launched to a in a bid to finance its credit card business there select group of Barclays' credit card customers in without relying on capricious wholesale funding May. markets. Guardian, 19 April 2012 Daily Telegraph, 8 May 2012 3. Barclays Natural Resources Investments has HSBC signed a deal with the Qatar Asset Management 9. HSBC has said it might sell its UK retail banking Company to develop natural resource investments. division if new regulations are too arduous Barclays is to locate the company's Middle according to chief executive Stuart Gulliver. Eastern office within the Qatar Financial Centre. Times, 18 May 2012 Daily Telegraph, 1 May 2012 10. HSBC's underlying profit in Q1 was almost $7 4. Over a third of Barclays' investors voted against a billion because of an increase in investment controversial remuneration package for executives banking income and a fall in US bad debts. The which awards chief executive, Bob Diamond, profit was up 25 per cent on the year. £17.7 million. Chairman, Marcus Agius said the bank should have done a better job of Evening Standard, 8 May 2012 communicating its case earlier and more clearly. 11. HSBC is to cut 2000 jobs, mainly in-branch Independent, 30 April 2012 investment advisers and back office administrators. The cuts to investment advisers are 5. Bob Diamond, chief executive of Barclays, and its part of HSBC's reaction to the retail distribution finance director Chris Lucas, have agreed to put review, which puts in place much stricter rules on 50 per cent of their bonuses up against a new the sale of financial products to consumers, return on equity target. The bank's Q1 results diminishing the role of branch advisory staff. suggest that the 50 per cent will be retained by the bank. Daily Telegraph, 26 April 2012 Daily Telegraph, 27 April 2012 12. HSBC is launching a new initiative in partnership with the Telegraph to help UK companies expand 6. Barclays has added £300m to its £1bn provision their business overseas. The Global Connections for payment protection insurance compensation as competition will offer a share of £60m in lending a result of a high-than-expected number of claims. to UK medium-sized businesses, plus the global The move pushed the bank to a £475m statutory expertise of HSBC and the Telegraph Media loss before tax once a reversal in the value of Group's communications know-how. paying back its own debt is included. Telegraph, 23 April 2012 Guardian, 26 April 2012 02 | LLOYDS BANKING GROUP growth. RBS currently has a market capitalisation 13. Chief executive of Lloyds, António Horta-Osório, of £25.6bn. has criticised the claims management firms that Daily Telegraph, 26 April 2012 submit compensation forms for customers, saying that a quarter of the claims submitted by these 20. RBS is proposing a ten-for-one share swap to firms were from customers who did not have reduce the number of its shares and boost their products with the banks against which claims were price according to documents distributed in being made. advance of the bank's annual meeting in May. Guardian, 1 May 2012 Financial Times, 25 April 2012 14. NBNK will attempt to coax Middle East sovereign 21. Direct Line Group has completed its first bond wealth funds to help them secure the purchase of issue as RBS prepares to float a portion of the 632 Lloyds Banking Group branches. Concerns business later this year. The debt issue raised over the NBNK bid has prompted Lloyds to ask £500 million for the group which owns both for detailed information on the capital strength of Direct Line and Churchill insurance brands. the group and proof of the introduction of tough corporate guidance rules. Times, 23 April 2012 Telegraph, 30 April 2012 STANDARD CHARTERED 15. Lloyds Banking Group has ended its exclusive talks with the Co-operative Group over the sale of 22. Standard Chartered plans to open 50 new branches 632 branches. The Co-op remains their preferred in sub-Saharan Africa in 2012 and increase its bidder but the government-owned bank will also branch staff by about 10 per cent, while also consider alternative bids. investing in credit cards and increasing corporate business headcount. Times, 30 April 2012 Financial Times, 3 May 2012 16. Lloyds took first round bids for its €360m Irish property portfolio on 30 March. The portfolio is a combination of loans that Lloyds took on it when DOMESTIC GENERAL it acquired HBOS and some made through its own 23. The UK is considering a £1 billion capital lending business. The move is in line with the investment into the European Investment Bank as bank's stated intention of withdrawing from the part of an EU-wide growth drive. Irish market. Financial Times, 14 May 2012 Financial Times, 25 April 2012 24. The Chancellor of the Exchequer is to drop some UK objections to the Basel III international accord THE ROYAL BANK OF SCOTLAND on bank capital, allowing a common position to be 17. The Royal Bank of Scotland ("RBS") is to make agreed. extra provision for PPI mis-selling compensation claims by setting aside a further £125m in addition Financial Times, 14 May 2012 to the £1bn already set aside. 25. Sir John Gieve, former head of financial stability Times, 3 May 2012 at the Bank of England, has called on regulators to slow down the introduction of new financial rules, 18. According to outgoing chief executive of RBS clarify the future structure of the banking industry Retail and Wealth, Brian Hartzer, the and tone down attacks on banks to stimulate government's stake in the bank could be sold growth and lending. within the next two years. Daily Telegraph, 10 May 2012 Telegraph, 30 April 2012 19. RBS chief executive, Stephen Hester, has said that the reforms proposed by the Independent Commission on Banking could see £20bn wiped off the bank's market value by restricting its EVERYTHING MATTERS | 03 26. The Chancellor is expected to concentrate on EUROPEAN BANKING banking reform in his Mansion house speech on 14 June. There will also be a white paper the same day on the International Commission on CREDIT SUISSE Banking's proposals, probably containing details 33. Credit Suisse is planning a flotation of its of proposals to ring-fence retail banking and specialist catastrophe insurance team's closed- setting up a 'depositor preference' scheme. ended funds on the London Stock Exchange. Guardian, 7 May 2012 Financial Times, 30 April 2012 27. Senior bankers are blaming a slow-down in the 34. Investors' revolts over bonus packages have project finance market on shrinking bank funding spread to Switzerland with 31.6 per cent of and regulatory pressures, jeopardizing the shareholders voting against Credit Suisse's Government's plans to invigorate the economy by remuneration report. injecting private capital. Times, 30 April 2012 Financial Times, 3 May 2012 28. Mervyn King, Governor of the Bank of England, DEUTSCHE BANK has admitted that the Bank failed in its handling of 35. Concerns have been raised over the planned sale the financial crisis and that the Labour by Deutsche Bank of part of its asset management government's actions worsened the situation. He business to Guggenheim Partners. Negotiations has called on the Government to implement the are on-going two weeks after the German bank proposals of the independent Commission on announced a board meeting would be held to Banking.