Libor investigation roll on ( driven by State AG in Connecticut and New york ) as the toll for Standard Chartered money laundering tab could rise to a cool billion.....

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9478891/US-steps-up-Libor-inquiry-as-seven-banks-issued-subpoenas.html

By Angela Monaghan

11:13PM BST 15 Aug 2012

36 Comments

The threat of prosecutions loomed closer as authorities in New York and Connecticut became the latest to widen the investigation into the alleged manipulation of the interbank lending rate.

The attorneys general from the two states are jointly investigating and have requested information from JP Morgan Chase, Barclays, Royal Bank of Scotland and HSBC according to reports. UBS, Deutsche Bank and Citigroup were also named in the Bloomberg report.

Barclays has already been fined £290m for its role in Libor rigging and the scandal prompted the resignation of its chief executive Bob Diamond. It is expected that investigations into other banks will result in further fines.

In the UK the Serious Fraud Office has said it will investigate “a number of financial institutions” over the alleged manipulation of Libor and related interest rate benchmarks.

The Government has also commissioned a review of the Libor-setting system after it was widely accepted that the current system based on subjective submissions from banks is no longer viable. Sir Mervyn King, governor of the Bank of England, has been among those to say that Libor is not working and must be replaced,

Martin Wheatley, who heads conduct regulation at the Financial Services Authority and is leading the review of Libor for the Government, said last week that his proposals would be published by the end of September.

He said recommendations would include action for banks that could be “implemented very quickly”.

and....


http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9478181/Standard-Chartered-faces-total-fines-of-up-to-1bn-before-it-settles-US-charges.html

By Louise Armitstead, Chief Business Correspondent

5:56PM BST 15 Aug 2012

27 Comments

The British bank confirmed it is braced to pay more fines to a raft of other state and federal authorities in America despite agreeing to pay $340m to the New York State Department of Financial Services (DFS).

The total charges are expected to top $700m while some analysts said it could be as high as $1bn. Sources at the bank said talks were progressing with the US Treasury, the Federal Reserve, the Justice Department and New York, but that an agreement was “not expected imminently.”

The bank said the deal with the DFS, which averted a public hearing on the charges, was “pragmatic” and “in the best interests of shareholders and customers.”

The DFS said that the bank had “schemed” for 10 years to by-pass US sanctions to process $250bn of transactions on behalf of Iranian clients.

The “flagrantly deception actions” had left the US “vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes,” according to the DFS order which wiped 20pc of the bank’s shareprice when it was published.

However, shares in Standard Chartered climbed yesterday as analysts argued that the settlement with the DFS had at least quashed the “main risk”, that the bank would be stripped of its New York licence. Peter Sands, chief executive, was praised for reaching a deal quickly. The stock closed up 4.3pc at £14.29.Analysts at Nomura said: “There is still uncertainty around the ultimate size of the penalty, but the key threat to Standard Chartered was the loss of its banking licence, and we see this risk to be materially lower now.” The note added: “The two most important pillars of Standard Chartered’s investment case are its balance sheet strength and its geographically advantaged balance sheet. Buy.”

Others were angered by the rollercoaster ride the stock had given over the past week. Analysts at Investec said: “It is not our policy to comment on the motivation of the DFS. However, it is highly unsatisfactory that the DFS’ allegations have effectively allowed a false market to develop in Standard Chartered’s shares over the past week. In our view, Standard Chartered has acted with pragmatism and integrity in the face of extreme provocation.”