Receiving Wide Coverage ...
Banished: The U.K.'s Financial Services Authority has banned former head of corporate lending at HBOS Peter Cummings from working in the country's financial services industry for his role in the bank's collapse during the 2008 financial crisis. Cummings was also fined £500,000 ($805,000), which the Journal notes is "the highest fine imposed by the FSA on a senior executive for management failings." The FSA imposed the penalties because it believes Cummings "pursued an aggressive expansion of HBOS's lending practices, which led to major losses," the Times reports. HBOS was ultimately purchased by Lloyds TBS as a part of a rescue takeover in 2008 and the merged banks received a big bailout from the British government shortly thereafter.
The FT reports Cummings is likely to be the only British banking executive to face fines related to the 2008 financial crisis as the FSA has concluded other investigations without filing charges. Cummings himself was surprised to be singled out, telling the paper, "The fact that I am the only individual from HBOS to face investigation defies comprehension." While he rejects the decision completely, Cummings says he has no plans to appeal in order to spare his family additional costs and strain.
The JPMorgan Shuffle: Just a little over a month after an executive shake-up that saw now co-chief operating officer Matt Zames rise in power, JPMorgan Chase is overhauling its corporate and investment banking division. Equity division head Carlos Hernandez will oversee a new unit called investor services, which includes prime brokerage services for the bank's hedge fund clients. Tim Throsby will now oversee all of the investment bank's equities division. Another "winner" in this shake-up, according to the Times, is Blythe Masters, the long-time head of JPMorgan's commodities division, who will take on regulatory affairs for the corporate and investment bank. A source close to the bank told the Journal that unlike previous shake-ups, its latest reshuffle is not a result of mounting wrong-way derivatives trading losses.
Wall Street Journal
European banks are maintaining business ties with Iran, according to regulatory filings obtained by the paper. While these ties don't appear to be violating any sanctions, some banking experts suggest "the banks are risking embarrassment or regulatory problems in the U.S. as it scrutinizes financial transactions with sanctioned countries."
It looks like the Securities and Exchange Commission's case against the Reserve Primary money-market mutual fund — which "broke the buck" in 2008 when it fell below the $1-a-share price money-market funds look to maintain — may actually go to trial. The case is slated to start on Oct. 1 and, though attempts have been made by both sides, a settlement does not appear imminent.
The head of HSBC's U.K. bank, Joe Garner, has quit, telling the paper he was supposed to move abroad, but, instead, prefers to say in the U.K. with his family. Garner will be replaced by Antonio Simoes, the Portuguese head of its European retail business, in November.
Incoming Barclays chairman David Walker's predictions about bank sector pay appear to be quickly coming true. Swiss bank UBS is considering capping banker bonus pay under increased investor and regulatory pressures. The bank may use a formula similar to the one utilized by HBSC and the aforementioned Barclays where "executive directors' annual variable pay is limited to 250% and 300% of base salary respectively." Alternately, it may restrict its top managers' bonus pool to a specified amount of net profit.
Barclays is selling its stake in a U.K. student housing program in a deal expected to net the bank around £1 billion.
New York Times
U.S. Treasury lawyers have recommended a preliminary settlement with Standard Chartered over the British bank's dealings with Iran. The article doesn't specify how much the settlement requires StanChart to pay, but does note "it will be much smaller than the $340 million the bank had to pay to New York State's top banking regulator in a related case."
What do you do after resigning from a company via a scathing Op-Ed in the Times? You write a "tell-all" book about said company. According to this Dealbook article, former banker Greg Smith received close to a $1.5 million advance to write his memoir "Why I Left Goldman Sachs: A Wall Street Story" due out this October.
Remember that bill we mentioned in an earlier Scan that would allow the White House to second-guess all the actions independent agencies such as the SEC and the Commodity Futures Trading Commission were taking? It has stalled in the Senate, following opposition from "some federal officials."