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Sentenced: Rohit Bansal, an ex-Goldman Sachs banker, has been sentenced to probation for taking confidential documents from a source inside the New York Fed. Bansal has dodged the year in prison he faced and will instead serve two years’ probation, do 300 community service hours and pay a $5,000 fine. Under a settlement with the New York State Department of Financial Services, Goldman reached a settlement in the case. It paid $50 million, accepted restrictions on how it handles sensitive regulatory information and has acknowledged its failure as a company to “effectively supervise its employee.” The case draws attention to the so-called revolving door between public and private financial authorities. Bansal joined Goldman in 2014 after several years at the New York Fed and was assigned to advise a bank he previously regulated.
Wall Street Journal
IEX Group, the New York upstart trading venue striving to become a registered stock exchange, has received the endorsement of executives at JPMorgan Chase. The organization’s model is designed to foil high frequency traders’ predatory strategies to exploit slower moving investors, like mutual-and pension-fund managers. It's now famed founders are the heroes of Michael Lewis’ latest novel, Flash Boys, who discover the market is rigged for the benefit of such insiders and that after the financial crisis Wall Street banks have only gained more control of it. JPM is the second large bank to publicly back the competitor’s exchange application. Goldman Sachs endorsed it in January.
Litigation costs are hurting U.K. banks’ profits and will continue to for at least two more years, according to Moody’s. Misconduct fines, compensation and related legal costs soared 40% to about $21 billion in 2015 from a year earlier. Last year the five biggest banks recorded an increase of 51% in payment protection provisions, compared with 2014. Moody’s expects a surge in customer misselling claims in a race to 2018, the Financial Conduct Authority’s expected deadline to cap fees charged by claims management companies for winning payment protection insurance cases, which can get as high as 40%.
Credit Suisse announced it will cut 2,000 jobs in global markets in addition to the previously announced 4,000 group-wide cuts (of which 2,800 have already been implemented). It plans to increase annual cost-cutting by about $820 million and reduce assets in its global markets division by 30% this year. The announcements are part of a plan to accelerate its restructuring after its global markets business reported taking $346 million in writedowns in the first quarter.
The Royal Bank of Scotland just posted its eighth straight annual net loss and has since stepped up efforts to turn things around, with hundreds of job cuts, at least 50 branch closures in the coming weeks and offloading millions in pension expenses to employees. The bank says it plans to take these restructuring measures through the end of the year, but analysts believe they’ll have to continue beyond the next 12 months in order to hit their end target of £800 million pounds, or $1.1 billion, annually.
HSBC has named David Nish, former chief executive of U.K. insurer and investment group Standard Life, as a nonexecutive director of the bank. He will join the board in May and serve on the bank’s audit committee.
New York Times
The chip card payments overhaul hasn’t been smooth. Merchants that have implemented the appropriate systems to accept chip cards are now saying those systems must first be certified. Waiting for that certification has taken several months – and in the meantime the merchants have to shoulder the costs of fraudulent purchases. U.S. merchants were pressured to employ terminals that accept chips cards by October. The newly issued bank cards came about as a security measure to lower the number of fraudulent purchases – the cost of which was previously covered by the banks. Merchants unequipped to accept chip cards would be responsible for fraudulent purchases, but now, even the ones that are equipped are left holding the bag for customer fraud. The number of retailers affected by the delays is unavailable, but payment processing giant First Data said about 20% of its 4 million merchant clients are in the process of being certified.
The Royal Bank of Scotland has reimbursed the U.K. government about $1.7 billion under the bailout package it received, which prioritizes government dividend payments over shareholders’. The government, which injected about $63.8 billion in the bank during the financial crisis, now has a 73% stake in it. RBS has not paid shareholder dividends since 2008, but is now one step closer to resuming them. Its first-quarter earnings will reflect the reimbursement; it has not posted a full-year profit since 2007.