U.S. may probe Swedbank; Bramson’s tougher road to board

Receiving Wide Coverage ...

Sued
Mozambique sued Credit Suisse in the U.K.’s Commercial Court over the bank’s alleged involvement in $2 billion of debt deals linked to an international corruption scandal. “It is the first public lawsuit naming Credit Suisse as a defendant to arise from the scandal and raises the risk that the Swiss bank might face financial penalties for arranging bonds and loans to Mozambique in 2013. The debt deals were arranged by bankers in London.” Three former Credit Suisse bankers, Mozambique’s former finance minister and an executive at Privinvest Group, an Abu Dhabi naval contractor, were indicted by the U.S. Justice Department in January in the scheme.

The U.S. indictment accused the three bankers of working with Mozambique’s former finance minister “to siphon at least $200 million in kickbacks from loans that were marketed to international investors in 2013 as backing for a state tuna fishery and maritime security projects. While the debt to finance tuna boats was raised publicly, other loans arranged by Credit Suisse and Russia’s VTB were concealed from the IMF and international donors. The debts sent one of Africa’s poorest nations into a financial tailspin when they were fully uncovered in 2016.”

Wall Street Journal

Uphill battle gets steeper
The disclosure that Sherborne Investors is financing about half of its stake in Barclays with a loan from Bank of America, first reported by the Financial Times, may actually make it more difficult for the activist firm to achieve its goal of winning a seat on the board in order to change its business strategy. “The fact that Sherborne has financed some of its stake, and limited both its upside and downside on the bet, could color attempts to get other investors to support the campaign. Analysts say [Sherborne chief Edward] Bramson faces a huge challenge to get on the board because his message hasn’t gained traction, and some Barclays shareholders have already said they would vote against him.”

Financial Times

Breathing room
The U.K.’s Financial Conduct Authority said it will give financial firms a 15-month grace period to comply with rule changes “in the event of a cliff-edge Brexit in 29 days’ time.” The FCA is working on regulations as a result of the U.K. leaving the European Union, but will give banks time to conform. The rules still need approval from the Treasury Department.

Growing pains
Peter O’Higgins, the former JPMorgan Chase investment banker who joined the U.K.’s Revolut in 2016 as CFO, left the company last month “in favor of a replacement with more retail banking experience as the British fintech faces growing questions over its ability to effectively manage its rapid growth. Revolut has expanded exponentially during Mr. O’Higgins tenure from a start-up … to a licensed bank with more than three million customers. However, a series of recent setbacks have prompted concern about the company’s internal culture and the quality of compliance controls.”

Special ops
The French government employed a “relatively junior marketing manager who organized client events during her more than 10 years at the bank” to gather evidence against UBS bankers that led to last week’s €4.5 billion penalty against the Swiss bank for “recruiting clients in France and helping them evade taxes.”

Washington Post

Left behind
“Despite a strengthening economy, including record low unemployment and higher wages for black workers, homeownership levels for [African Americans] have dropped incrementally almost every year since 2004,” the paper reports. The homeownership rate for African Americans fell to 43% in 2017, compared to 63.9% for all Americans, “virtually erasing all of the gains made since the passage of the Fair Housing Act in 1968, landmark legislation outlawing housing discrimination. The decline comes even as whites, Asian Americans and Latinos slowly see gains in home-buying.”

"The reasons for the downturn in the black homeownership rate are varied and complex, experts say. They include a lack of affordable housing in some areas and chronically low inventory in others," the paper reports." Rising student debt is increasingly an issue, too, as more financially strapped buyers struggle to save for a down payment." Racism, also plays a role, according to the paper.

Looking back
Sen. Elizabeth Warren, D-Mass., is on the forefront of the war against big banks and the fight to protect consumers. 14 years ago, she and her daughter wrote a personal finance advice book. To mark the anniversary of its publication, the paper sees if the advice holds up and what it might reveal about the prospective presidential candidate.

Elsewhere

Sniffing around
The U.S. embassy in Sweden wants to meet with the country’s financial supervisor to discuss Swedbank’s possible involvement in the Danske Bank money-laundering scandal. “The move raises questions whether the U.S. authorities will seek to investigate Swedbank. Analysts have said an investigation by the U.S. authorities could put Swedbank shares under more pressure. The bank’s shares have lost a fifth of their value since the report first surfaced.” Danske Bank is under investigation in five countries, including the U.S.

Freya Ingrid Morales/Bloomberg

Quotable

“We’ve made progress in leveling the playing field for minority homeownership, but the landscape is still more challenging for African Americans.” — Chris Herbert, managing director at Harvard University’s Joint Center for Housing Studies.