You are here: Home - Investing -

Banks face $22bn in LIBOR penalties – Morgan Stanley

0
Written by:
13/07/2012
LIBOR rate-rigging penalties and damages to investors could reach $22bn for the 12 global banks involved, according to Morgan Stanley estimates.

Its analysts assume 11 more banks will be fined like Barclays, which had to pay a record £290m fine to UK and US regulators for breaching rules regarding LIBOR.

Morgan Stanley warns taxpayer-owned bank RBS could face a legal bill of up to $1bn and fines of £150m, which if accurate could indicate a lower level of wrongdoing than Barclays, said Morgan Stanley, who expect RBS as a state controlled bank to settle early.

The report said: “We see the LIBOR issue as particularly contentious for the UK banks as LIBOR rate is overseen by the British Bankers’ Association (whose chairman has stepped down).

“The political climate in the UK appears more hostile to perceived bank wrongdoing than in a number of other jurisdictions.

“Though we note in the case of Barclays the regulator (FSA) had already expressed concerns about a “cumulative impression created by a pattern of behaviours” on regulatory matters according to the April 10 letter released to the Treasury Select Committee,” said Morgan Stanley.

The calculation is a combined figure of regulatory penalties and damages to both investors and counterparties and assumes most of the 11 other banks will admit to similar Barclays-type behaviour.

The estimates would cut between 4%-13% off banks’ earnings per share for 2012 or 0.5% off book value, according to the note.

The analysis also predicted each of the banks may have to pay an average $400m in class action lawsuit fees, with individual charges of $60 – $1.1bn, depending on the size of their derivatives books.

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2191494-stress-debt
Brits think bankruptcy should last longer to cull reckless spending culture

Brits are hardening their views on debtors as over a half think that bankruptcy should last longer than a mere...

Close