Receiving Wide Coverage ...
Low-Rate Bonanza: Breaking with tradition, both the European Central Bank and the Bank of England (separately) pledged to keep interest rates low indefinitely. The forward guidance "underscored the stakes as officials around the world try to safeguard fragile economies as financial markets swing wildly," reports the Journal. Per the FT, ECB President Mario Draghi said the timing of the two announcements, tied to meetings held by both central banks, was coincidental. He also "denied his institution had been forced into a more dovish communication policy by the Federal Reserve's recent hints that it would slow the pace of its" bond-buying program. Meanwhile, the Times notes "that the Bank of England even issued a statement after its monetary policy meeting was a departure from previous practice and showed that [Mark] Carney, the former governor of the Canadian central bank, is making his mark just days after taking office."
Libor Trial Update: Former UBS trader Tom Hayes, charged with fraud related to the Libor rate-rigging scandal by the U.K.'s Serious Fraud Office, will not enter a plea until late October. He is set to remain on bail until then. "To describe [the case's documentation] as voluminous would be an understatement," Mukul Chawla, the lawyer for the prosecution, said during a court hearing on Thursday. Scan readers will recall Hayes was also charged with fraud related to the Libor rate-rigging scandal by the Justice Department last December. Financial Times, New York Times
Wall Street Journal
SAC Capital Advisors CEO Steven Cohen is expected to avoid criminal charges related to the government's investigation into insider trading at the hedge fund. Sources familiar with the matter tell the paper prosecutors "don't have enough evidence" to file criminal insider-trading charges against Cohen before the July deadline tied to a five-year statute of limitations.
Financial Times
HSBC's streamlining efforts continue. Pending regulatory approval, the bank will close its retail banking and wealth management operations in South Korea, "admitting defeat in its 14-year struggle to break into consumer finance in the country."
Lenders are feeling bruised after U.S. and U.K. regulators pushed for higher capital requirements at big banks. "It is clear that regulators have found a second wind in their push to bolster bank safety," writes banking editor Patrick Jenkins. "Good news as that might be for governments in risk terms, it will dash politicians' hopes that lenders can become powerful drivers of economic growth any time soon."
Royal Bank of Scotland has started interviewing a shortlist of candidates to replace ousted CEO Stephen Hester. Those believed (though not necessarily confirmed) to be under consideration include Richard Meddings, group finance director of Standard Chartered and Nathan Bostock, who is due to become RBS finance director this Fall.
New York Times
Leaked audiotapes of phone conversations between officials at Ireland's Anglo Irish Bank, originally published by an Irish newspaper, appear to indicate the bank misled the Irish government about how much trouble it was in before its 2008 bailout. A choice snippet from the tape, attributed to the bank's director of the treasury John Bowe: "If they saw the enormity of it up front, they might decide, they might decide they have a choice
They might say the cost to the taxpayer is too high." Times columnist Floyd Norris writes that the tapes teach a few lessons on how to conduct bank bailouts, including to only save those whose failure would be disastrous for the country. "In 2008, many regulators were afraid to force bank investors to take losses, worrying that such an example might prompt them to abandon other banks and create unnecessary failures," he concludes. "That decision may have been justified then, but by now every investor should understand that nothing except insured deposits is sure to be protected."
