Blankfein was at meeting with accused 1MBD fraudster; UBS hit on two fronts
Editor's note: Morning Scan will not publish on Monday, Nov. 12, in observance of Veterans Day. We'll be back on Tuesday, Nov. 13.
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The European Commission has ordered the European Banking Authority to investigate suspected regulatory breaches in Denmark, Latvia and Estonia as part of the probe into the $200 billion Danske Bank money-laundering scandal. The bank is also under investigation by American authorities.
Separately, the head of the EBA, Andrea Enria, has been nominated to chair the European Central Bank’s supervisory board, which oversees the euro zone’s 118 biggest lenders. According to the New York Times, Enria “is unlikely to take a softer line on tackling lenders’ bad debts. The industry’s chronic low profitability and poor money-laundering controls present bigger challenges.” Specifically, he is not likely go easy on banks in his native Italy, “many of which are still grappling with bad debts.”
Wall Street Journal
Good news, for once
Wells Fargo said it found “unequivocally no gender bias” in its wealth management division following a months-long internal investigation. On Tuesday, the bank announced the head of the division, Jay Welker, who had been accused of calling women “girls” or telling women "to put their 'big-girl panties on,'” will retire in March.
Statistics Canada, the country’s national statistics agency, is “under attack from lawmakers, privacy advocates and the public” over its proposal to collect detailed consumer banking information. The agency wants access to banking records for 500,000 random Canadian households, which it says it needs to improve the accuracy and timeliness of data on consumer spending. But “lawmakers have expressed concern the data could be accessed by hackers or handed over to other government agencies.”
The Securities and Exchange Commission has reached a settlement with the founder of a digital-token trading platform for operating an unregistered exchange. The platform enabled users to trade directly with each other rather than through a centralized marketplace. “This is the first time the SEC has targeted a cryptocurrency exchange, and what is known in the crypto sector as a ‘decentralized’ exchange. The enforcement action is another indication that the commission is focused more on the impact a business has, not how it is organized or how its operators describe it," the paper says. "It also shows that the commission will target individuals.”
Former Goldman Sachs CEO Lloyd Blankfein has been identified as the unnamed “high-ranking executive” listed in Department of Justice court documents who met with Jho Low, the Asian financier “at the heart” of the 1MDB scandal in Malaysia, the paper reports. "[T]he very fact that they met could complicate the bank’s attempts to prove that it did not know he was involved as a middleman in the 1MDB deals," the paper says. Two former Goldman bankers have been indicted by the DOJ for their role in the $2.7 billion money laundering and bribery scandal.
Coming from all sides
As expected, the U.S. Justice Department filed a lawsuit against UBS on Thursday alleging that the bank caused investors to lose “many billions of dollars” on toxic mortgage-backed securities sold prior to the financial crisis. The Swiss bank has vowed to fight the charges after it and the DOJ could not agree on the size of a settlement.
At the same time, UBS is fighting a court action in France, where prosecutors are demanding a €3.7 billion fine for allegedly helping its wealthy clients evade tax. The bank called the demands “irrational.”
Ready for prime time
A trade finance platform based on blockchain technology that bankers hope will “speed up, simplify and reduce risk in the $16 trillion global trade” business is now being used to close deals. “After several years of development work and testing, the first real-life transactions passing over these systems indicate that banks are getting closer to their goal of starting to make money from the investments they have patiently bankrolled.”
"China's central bank has approved an affiliate of payment card group American Express to issue bank cards in China, making Amex the first foreign-invested group to win such a license."
“It was Lloyd.” — A Financial Times source, who said former Goldman Sachs CEO Lloyd Blankfein met with the Asian financier behind the $2.7 billion 1MDB scandal in Malaysia.