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Another Big Bank Exits Commodities Business; Good News/Bad News for Bitcoin

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Waiting for Volcker: News on the contents of the Volcker Rule continues to trickle in ahead of next week's vote on the long-awaited Dodd-Frank provision. The Journal reports that the rule will require bank executives to guarantee their firms are in compliance with the regulation, which, incidentally, marks another requirement banks lobbied against that wound up in regulators' final proposal. Meanwhile, an unnamed senior Treasury official tells the FT the rule will "be quite short, leaving room for regulators' discretion."

Another Commodities Exit: Deutsche Bank plans to exit the bulk of it commodities business over the next one to two years in an attempt to meet challenges posed by increased capital and regulatory (read: Volcker compliance) costs. Many other banks have made similar moves over the last year, with UBS slashing its commodities business and JPMorgan Chase, Goldman Sachs, Barclays and Morgan Stanley pursuing sales of parts of theirs. However, the Journal notes Deutsche Bank "is the largest to announce a near-total shutdown," electing to keep only its trading arms in financial derivatives and precious metals.

OCC Under Fire: An external report from international regulators has found the Office of the Comptroller of the Currency has some work to do. More specifically, the report, requested by Comptroller Thomas Curry, found the agency has lagged in issuing guidance addressing risks posed by large banks. It suggests the OCC revise its mission statement so that the "safety and soundness" of financial institutions is its main goal. It also suggests revamping the Camels rating system and moving examiners-in-residence out of the megabanks and into a central office. Per the Journal, Curry "vowed to develop plans within four months for addressing issues raised in the report, which focused on oversight of large and mid-sized banks."

Breached: JPMorgan Chase is set to warn 465,000 prepaid UCard holders that their personal information may have been comprised after hackers viewed a "small file of data" on its servers back in mid-July. The bank discovered the breach in September. Meanwhile, Standard Chartered disclosed on Thursday that 647 private banking clients in Asia had their monthly statements stolen from a server at Fuji Xerox.

Good News/Bad News for Bitcoin: The virtual currency took a bit of a hit yesterday when the Chinese government moved to restrict its banks from using Bitcoin as currency. "The regulatory assault undermines the narrative that Bitcoin is in the vanguard of a global shift toward new, computer-generated forms of money," suggests Reuters columnist Peter Thal Larsen (via Dealbook). "With that new monetary age paradigm looking shaky, the virtual asset has lost a good portion of its speculative appeal." But some folks on Wall Street might beg to differ with that assessment. While China is cracking down, Bank of America Merrill Lynch "has begun to cover Bitcoin, saying in a research report on Thursday that it could be useful in e-commerce and money transfers," reports Dealbook. Of course, Dealbook is also reporting that Bitcoin's rapid ascent "has obscured the fraud, hacking and outright theft that have become an increasingly regular part of the virtual currency world," but, hey, at least for Bitcoin enthusiasts, it's not all bad news.

Wall Street Journal

Be careful what you say on trading floors. Banks are investing in software that uses "complex algorithms to monitor traders' calls and emails—looking for catchphrases as well as changes in tone—to try to detect signs that traders may be colluding or placing unauthorized bets."

Royal Bank of Canada CEO Gordon Nixon is set to retire in August. He will be succeeded by Dave McKay, group head of RBC's Personal and Commercial Banking operation.

New York Times

Securities and Exchange Commission chairman Mary Jo White during a roundtable discussion of corporate shareholders' use of proxy advisers on Thursday: "I am particularly interested in the discussion of conflicts of interest that may or may not arise in connection with the participation of proxy advisers in our system—what they are and views on how they should be addressed."

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The Seven Largest Sanctions-Related Fines Against Banks

The Justice Department announced a criminal plea and settlement with BNP Paribas on Monday, in which the French bank will pay nearly $8.9 billion to settle charges it willfully continued to do business with countries and entities on the U.S. sanctions list. It was the largest sanctions fine in the Justice Department's history — more than four times larger than #2 on the list. The following are the largest penalties paid by banks for sanctions violations.

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