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U.K. Regulators Vow to Break up Big Banks that Break Their Rules; 2 Barclays' Execs Step Down; New Citi Exec Steps In

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The Electric Ring Fence: Would the threat of a break up keep big banks from violating the law? U.K. regulators appear to believe so as they are set to announce new powers today that will give them the authority to break up banks that flout ring-fencing rules in their Banking Reform Bill. "In America and elsewhere, banks found ways to undermine and get around the rules," U.K. Treasury chief George Osborne is expected to say in a speech later today. "We could see that again — so we are going to arm ourselves in advance. In the jargon, we will 'electrify the ring fence'." News of the regulators' plans has already received pushback from bankers, with one unnamed senior banker telling the FT Osborne was "playing politics with the economy."

Personnel Changes: The door keeps revolving over at beleaguered Barclays with finance chief Christopher G. Lucas and general counsel Mark Harding announcing their resignations/retirement plans over the weekend. The resignations weren't attributed to any particular scandal, though many news outlets point out that Lucas is currently involved in the Financial Services Authority's investigation into whether Barclays made an undisclosed loan to Qatar back in 2008 so it wouldn't need a bailout. Instead, CEO Antony P. Jenkins — who announced plans to forego his 2012 bonus on Friday — said in a statement that both men wanted "to do what is best for the bank" and that "their decision to retire was theirs alone." Lucas and Harding are expected to stay in their positions until replacements are found. Meanwhile, "amid cuts," Citigroup has starting hiring at the senior level, adding Luigi de Vecchi, a well-known dealmaker who previously worked for Credit Suisse and Goldman Sachs, as its chairman of corporate and investment banking for continental Europe. The FT says the bank intends to bring in up to ten senior bankers in an attempt to "intensify its European franchise."

Wall Street Journal

As a side effect of the Federal Reserve's prolonged low-interest rate policy, U.S. companies, including Ford and Verizon Wireless, are pouring cash that could otherwise be used to expand into pension plans. As a quick explanation: "Companies are required to calculate the present value of the future pension liabilities by using a so-called discount rate, based on corporate bond yields. As those rates fall, the liabilities rise." But the article goes on to — rather quickly — point out that these companies also benefit from rates being so low since borrowing money remains cheap. "Ford borrowed $1.2 billion to contribute to its pension," the next paragraph notes.

Financial Times

Greek banks are lobbying to ease bailout terms that could lead them to become fully nationalized.

Chinese banks are expanding … into e-commerce. The article focuses on China Construction Bank's launch of its own online mall, following a partnership with an e-commerce company that expired, though other Chinese banks have either initiated or considered similar ventures. The move is less about boosting profits and more about commandeering big data in order to make more loans. "Competition is very severe now for Chinese banks, and information about clients is the key for their competitiveness," one analyst tells the paper.

New York Times

Bank of America may not be able to blame Countrywide for all of its mortgage problems. New documents have surfaced that indicate the "questionable practices by the bank's loan servicing unit have continued well after the Countrywide acquisition." The documents were submitted in state Supreme Court in Manhattan late last week by three federal home loan banks and investment vehicle Triax in an attempt to show that an $8.5 billion settlement B of A struck over Countrywide mortgage dealings was too low. According to the article, the documents indicate B of A "failed to buy back troubled mortgages in full once it had lowered the payments and principal on the loans — an apparent violation of its agreements with investors who bought the securities that held the mortgages."

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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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