BofA’s role in Bramson’s Barclays push; CFPB sees rise in elder fraud

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Wall Street Journal

Elderly targeted
Financial institutions reported 63,500 suspected cases of financial elder abuse in 2017, “up 19% from a year earlier, and nearly three times the level reported in 2014,” according to the Consumer Financial Protection Bureau. Losses totaled $1.7 billion, or an average $34,200, topping $100,000 in 7% of the cases. “Most of the reports in 2017, 58%, were filed by businesses that provide money-transfer services, including Western Union and MoneyGram International. Banks and other depository institutions accounted for 35% of the filings.” For crimes reported by banks, the thefts were often committed by someone the depositor knew, according to the CFPB.

Financial Times

Hot under the collar
Edward Bramson, the activist investor who is trying to force his way onto Barclays board and change its business strategy, financed most of his 5.5% stake in the bank with a $1.4 billion loan from Bank of America “under a complex arrangement that has angered other large shareholders. Under an arrangement known as a ‘funded equity collar,’ Bank of America borrowed the Barclays shares and sold them to Mr. Bramson while also providing him with financing in the form of the loan. BofA’s role has raised eyebrows as it is funding an activist attack on a rival.”

The shoes keep dropping
Swedbank, the Swedish bank implicated in the Danske Bank money laundering scandal, found itself in more trouble on Wednesday. Sweden’s economic crime agency launched an investigation into whether Swedbank told its 15 largest shareholders about the initial television news report about the bank’s alleged involvement in the Danske scandal two days before it aired. At the same time, the same television station reported former Ukraine President Viktor Yanukovich, who was convicted in absentia of treason in January, moved €3.7 million through a company that had an account at Swedbank in Lithuania. “Both issues further raise the pressure on the Swedish lender and its chief executive, Birgitte Bonnesen, as well as its communications policy. Ms. Bonnesen was head of Baltic banking at Swedbank, which is the largest bank in the region, from 2011 to 2014.”

Another hit
Shares of Metro Bank plunged another 27% on Wednesday following Tuesday’s 15% drop on news that regulators in the U.K. are examining “how employees miscalculated assets and then potentially created a false market in its shares by providing inaccurate statements to investors.” The challenger bank said Tuesday that both the Financial Conduct Authority and the Prudential Regulation Authority plan to investigate the circumstances behind an accounting error that that led the bank to misclassify a large number of commercial loans, forcing it to raise £350 million in new equity capital and scale back its long-term growth plans.

Bankers blamed, again
Lawyers will likely be the main beneficiaries as market participants try to come up with an acceptable replacement for Libor, the scandal-tainted interest rate benchmark. “It is hard to imagine an overhaul of market infrastructure more suited to their needs as this process lumbers towards an inevitable flurry of disputes,” Katie Martin, the paper’s capital markets editor, writes. “Bankers will cop the blame, naturally. But for once, perhaps, the mess is not really their fault. But the order has come down from on high: Libor, in all its different currency forms, must die.”


Bigger hit
Wells Fargo said it has entered into preliminary discussions with the U.S. Department of Justice and the Securities and Exchange Commission to settle charges related to its retail banking sales practices dating back to 2015. In a regulatory filing on Wednesday, the bank increased the size of the expected cost of the settlement by $500 million, to $2.7 billion.

Mixed picture
Square beat analysts’ estimates for fourth quarter earnings but its guidance for the first quarter and revenue growth were weaker than expected, sending the company’s shares down as much as 7% after the market closed on Wednesday.

Making its play
JPMorgan Chase has added international and Asia-Pacific regional managers and several commercial bankers in Europe as it “closes in on business clients it hopes to poach from rivals abroad. For two years, JPMorgan’s commercial banking business has been building a list of around 1,500 middle-market European companies that it wants to attract through its global approach to investment banking, credit, hedging and treasury services.”

Change of mind
Cerberus, a major shareholder in both Deutsche Bank and Commerzbank, is reportedly open to a merger of the two German banks although it hasn’t decided if a merger is necessary. The investment firm owns 3% of Deutsche Bank, Germany’s biggest bank, and 5% of number two Commerzbank. The company was previously opposed to a combination, according to German newspaper Handelsblatt.


“Cerberus wouldn’t stand in the way of a merger.” — A person familiar with the U.S. investment firm’s attitude toward a Deutsche Bank-Commerzbank merger.

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