Four Italian banks bail-in - moves to bail out savers

[Chad]

I imagine there's a better article on the matter but i didn't find it on Sott.net or here. And i think it's an important move - especially with the US Fed raising the interest rates (http://www.sott.net/article/308650-Federal-Reserve-raises-key-interest-rate-for-the-first-time-in-nearly-a-decade). I heard it on X22 report this morning (also posted below)

In short - the 'bail ins' (ie. the bank stealing your account money because they've ran out and without it they will collapse) which has been legally sanctioned, i think throughout the EU, began a month or so ago. It happened last year in Cyprus. Four Italian banks needed a bail in and were legally entitled to do so. But i imagine this is just the beginning.

After rescuing banks, Italy moves to bail out savers
December 11, 2015 6:37 PM



Italian Minister of Economy and Finance Pier Carlo Padoan speaks during a press conference at an Economic and Financial Affairs Council meeting on October 6, 2015 in Luxembourg
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Milan (AFP) - Italy was working Friday to set up a solidarity fund to help small investors who lost money in the rescue last month of four regional banks, following the suicide of a man whose life savings were wiped out.

Finance Minister Pier Carlo Padoan told parliament's budget committee that the government was "preparing a directive for the creation of a fund", as police seized documents from one of the banks as part of a probe into the pensioner's death.

Under the measure, which will be introduced in an amendment to the 2016 budget, appeals would be dealt with on a case-by-case basis by market watchdog Consob.

"It's not possible to rule out that the four banks sold subordinated bonds to people who presented a risk profile incompatible with the nature of these bonds, but this is what should be verified with the analysis of each individual case," Padoan said.

The finance minister said the government believed efforts to compensate those who had lost their savings would be "compatible with EU rules on state aid", but added that "assessments are ongoing with the European Commission".

A spokesman for the European Commission said it "supports the intentions of the Italian government to allow savers to ask for compensation from banks for potential irregular sales of bonds," according to Italian media reports.

Italy's financial daily, Il Sole 24 Ore, had said earlier that the government was thinking of creating a 100-million-euro ($109 million) solidarity fund, with contributions from both the state and the banking sector.

- Inquiry into banking system -

The four banks -- Banca delle Marche, Banca Popolare dell'Etruria e del Lazio, Cassa di Risparmio di Ferrara and Cassa di Risparmio della Provincia di Chieti -- had all been put under special administration over the past two years.

A 3.6-billion-euro ($3.83 billion) rescue plan was launched by the government last month using a newly-formed National Resolution Fund, which is fed by the country's healthy banks.

But there have still been heavy losses for some investors and the government has drawn fire for the suicide of a retired man who hung himself after he lost 110,000 euros which he had invested in bonds issued by Banca Etruria.

Police seized documents from the bank on Friday and prosecutors said they would be questioning bank officials about whether the man had known to what he was signing up.

Almost half of the 768 million in subordinated bonds swallowed up by the rescue was held by 10,500 retail savers, according to the finance ministry.

Under mounting pressure from consumer associations and political opponents, Prime Minister Matteo Renzi said he supported a parliamentary decision to hold an inquiry into "what has happened" in the banking system over the past decade.

But he defended the rescue, saying that it had protected the savings of hundreds of thousands of current-account holders and saved 7,000 jobs.

The Bank of Italy's director general Salvatore Rossi said in an interview that the bank had called in the past for the sale of subordinated bonds to ordinary savers to be banned.

The problem, he told Corriere della Sera, is that Bank of Italy does not have the "authority" to intervene in the matter.

As The FED Raises Interest Rates The Dam Is About To Burst And Economy Will Implode - Episode 844a

http://<iframe width="560" height="...5o" frameborder="0" allowfullscreen></iframe>

 

[Andrian]

Yes, the situation is worrying to say the least, a few weeks ago it was published an article on italian sott page, the author of the article discussed in detail the motive behind saving the banks from collapsing, on 28th of November when the 4 italian banks collapsed an italian pensionate gentleman lost more than € 100,000 and a gold lingot deposited in the bank Etruria(on of the banks that collapsed) because of that he took his own life, the major Italian medias shouted that it is outrageous and never again must happen something like this, in short they were asking(as told by they masters) the government to prevent the collapsing of the banks, now we know that the psychos when they see a tragedy or crisis they see it as an opportunity for them to push for regulations, draconian laws that in another circumstances these kind of laws couldn't be accepted by the people, so returning back to the tragic story, the Italian people off course were outraged, angry and scared, the government used that in his favor, promissing to the Italian people that such tragedy will not happen, but to reach this goal they will adopt new laws, new regulations to prevent the collapsing of the banks starting January 1st 2016, one of these laws is, in case of a high risk that a bank will collapse in order to prevent the collapse it will be used the savings of ordinary clients of said banks that have on their account at least € 100,000, off course not many people have such money on their bank accounts but the owners of medium and small businesses have and as the author mentioned in the article, if the banks will be allowed the take the money from the accounts of these small and medium business entrepreneurs eventually they will not be able to pay the salary of their workers and those would not be able to pay their bills etc. So It doesn't matter that in case of the risk that a bank will collapse will be frozen only the accounts of those who have at least € 100,000 on their bank account, most of them are entrepreneurs and if their accounts will be used to "prevent" the collapsing of the banks, their workers would not be paid so you see it's kind of a domino effect that will lead to more disaster, suffering, pain, frustration, anger. Indeed, it seems the worst has yet to come, but maybe then people will start to open their eyes finally and see who is the culprit of all this madness that happens right now all around the world?

 

[Palinurus]

But there have still been heavy losses for some investors and the government has drawn fire for the suicide of a retired man who hung himself after he lost 110,000 euros which he had invested in bonds issued by Banca Etruria.

Police seized documents from the bank on Friday and prosecutors said they would be questioning bank officials about whether the man had known to what he was signing up.

Almost half of the 768 million in subordinated bonds swallowed up by the rescue was held by 10,500 retail savers, according to the finance ministry.

In order not to panic too quickly over this affair, it seems healthy to clearly distinguish between several different bank accounts, e.g. current account, savings account, investment account, share-holding account, and so on.

What I understand from these reports is, that some investors who took heavy risk bonds for their precious money to acquire an additional 'decent' profit are now made to bleed heavily in order to rescue the money of other people not inclined to heavy risk investments, who accept the subsequent lower yields (if any) just to be more on the safe side -- if that's still possible anyway.

I'm not sure whether this would be a good thing or not but those are the current rules of this rigged game, apparently. FWIW.

 

[Chad]

Just on this theme.

The following article is basically a think-tank recommending the removal of insured UK bank deposits.

It's a think-tank so it's not policy yet but i thought to record here since this is often how it begins... as well as those in the think-tank, running the paper and working in government tend to know of each other.

Scrap £75k safety net on savers' deposits to stop them getting complacent and prevent bank bailouts, think-tank says

Centre for Policy Studies says FSCS should be axed
Argues it will help prevent 'probability and severity' of banking crises
Points to New Zealand which scrapped its temporary scheme in 2011

By Lee Boyce for Thisismoney.co.uk

Published: 09:13, 16 January 2016 | Updated: 14:48, 16 January 2016

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Britain should scrap the savings safety net of £75,000 to strengthen the British economy, a think-tank has argued in a report.

Andreas Wesemann – the author of the Centre for Policy Studies study - argues the Government must stop insuring bank deposits, a practice which he says has 'only resulted in an increase in the probability and severity of banking crises.'

The report says that without the availability of a Government guarantee for their savings, consumers would 'be required to become more risk-aware in their choice of bank.'

At present, if a bank or building society that is part of the Financial Services Compensation Scheme goes bust, savers are 'guaranteed' to obtain the first £75,000 back.


The scheme offers peace of mind to savers and limits the risk of a run on a bank in times of turbulence or uncertainty.

It proved particularly reassuring during the financial crisis when the long-term future of several major banks was called into question and is always there for any stormy seas ahead.

There are many quirks to the scheme. Some providers share licences such as First Direct and HSBC meaning £75,000 is only covered for one of these brands, while there has been a rise foreign banks offering deals covered by European safety nets rather than Britain's FSCS.

The Centre for Policy Studies says after four decades of 'increasingly frequent, increasingly severe' banking crises, it is time to consider scrapping deposit insurance.


Eight years after Icesave went bust, Britain finally...


The report argues that abolishing it would result in a far more secure environment for depositors, a less regulated, more innovative banking sector, a less debt-burdened economy, fewer recessions and a permanent end to the need for state bail-outs of British banks.

The report points out that deposit insurance has already been rejected in a number of sizable western economies.

It gives New Zealand as an example. A temporary scheme was ended in 2011 due to concerns it was creating damaging risk incentives and thereby increasing the chance of bank failure.

Deposit insurance there was replaced with a rapid resolution system to deal with bank failures, the 'Open Bank Resolution'.

The policy 'ensures' that customers would be able to gain access to their accounts and other bank services, while an appropriate long-term solution to a bank's failure is identified.

Grant Spencer, deputy governor of New Zealand's central bank, says the government had decided the widespread use of deposit insurance schemes in Europe had 'not prevented banking failures, as we saw during the global financial crisis'.


Andreas Wesemann, author of the report and partner at Ashcombe Advisers, said: 'The existence of almost complete loss protection on a significant part of banks' liabilities has distorted deposit pricing, retail investors' willingness to use banks, and banks' ability to grow and assume risk.

'The macro-economic cost of this subsidy has been very significant.

'The abolition of deposit insurance, supported by legislation outlawing such compensation payments, combined with the establishment of National Savings and Investments as a bank offering a full range of current account and savings products would trigger a significant strengthening and improvement of the UK banking sector.

'It could pave the way towards a world with less leverage, fewer recessions and a more functional involvement of the state making better use of its balance sheet.'

The abolition of deposit insurance would require either a British opt-out from European Union regulations – or for the policy to be adopted across the EU.

Andreas argues it would be a simple initiative to implement and would stabilise the banking sector by reducing its leverage substantially in a way that involves minimal regulatory intervention.

Andreas concludes the presence of deposit guarantees has allowed depositors to take a 'nonchalant attitude towards risk', which has in turn encouraged a greater degree of nonchalance by creditors and banks themselves. [LOL]

Deposit guarantees were first introduced in Britain 40 years ago. It came when a directive of the European Economic Community was implemented in the Banking Act 1979.

Since then, the amount covered by the Government has gently increased, reaching £85,000 from 2010 to 2015 - or £170,000 for couples.

This limit was cut to £75,000 at the start of 2016, with the Bank of England citing a strengthened pound against the euro.

You can read the full CPS 100-plus page study here: The abolition of deposit insurance

Read more: http://www.thisismoney.co.uk/money/saving/article-3401359/Scrap-75k-safety-net-savers-deposits-says-Centre-Policy-Studies.html#ixzz3xdE4IUZ9

Added: to be clear - this also ran on the DailyMail news website http://www.dailymail.co.uk/money/saving/article-3401359/Scrap-75k-safety-net-savers-deposits-says-Centre-Policy-Studies.html

 

[Palinurus]

Good catch, itellsya! Thanks for sharing.

If implemented, this doesn't bode well at all for small savers who will be forced to spread their risks over as many different and separate accounts as possible, in order to rescue at least something here or there when things go really awry or worse. OSIT.

 

[SeekinTruth]

Good catch, itellsya! Thanks for sharing.

If implemented, this doesn't bode well at all for small savers who will be forced to spread their risks over as many different and separate accounts as possible, in order to rescue at least something here or there when things go really awry or worse. OSIT.

Yup. If the general public was more informed, paying attention, and less apathetic generally, this could actually initiate a widespread bank run, though. What a twisted way of thinking and presenting the whole thing.... I'm not even sure they would be able to do it without an EU-wide adoption of no deposit insurance, otherwise, it seems no member state can go against EU regulations. Anyway, some kind of "bail-in" are definitely in the works. Plus, in the case of the FDIC in the U.S., it will also go bankrupt as they only have a fraction of the funds needed to cover a large scale, wide-spread banking failure.

 

[Chad]

Good catch, itellsya! Thanks for sharing.

If implemented, this doesn't bode well at all for small savers who will be forced to spread their risks over as many different and separate accounts as possible, in order to rescue at least something here or there when things go really awry or worse. OSIT.

Yup. If the general public was more informed, paying attention, and less apathetic generally, this could actually initiate a widespread bank run, though.

I was actually thinking the same last night because similar comments were going around after RBS sent that memo:

"Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small," said the bank's credit team in a note sent to clients

http://www.sott.net/article/310216-Sell-everything-Royal-Bank-of-Scotland-advising-clients-to-prepare-for-cataclysmic-year

The speculation was something like 'why would they release that if they didn't want a reaction'.

I had a further look at the comments from the DailyMail site to see what was being said and the majority were 'not surprised and the current Tory government would love that'. Which i think shows that whilst SOME people are paying attention it may be that they're not connecting the dots with the other issues like the crashing stock market/oil price/currency devaluations etc.. etc.. And i tend to think that they believe it won't happen. Surely it would receive media attention and people would act - only i think it's spun or as you say, apathy and lack of knowledge.

That said, the other week on like CNN or CNBC they had that investor ADMIT they 'front loaded the markets' that would destroy them but also earn them a hefty fee and that's passed by with not much furore or as i understand, response from the markets themselves.

What a twisted way of thinking and presenting the whole thing.... I'm not even sure they would be able to do it without an EU-wide adoption of no deposit insurance, otherwise, it seems no member state can go against EU regulations. Anyway, some kind of "bail-in" are definitely in the works. Plus, in the case of the FDIC in the U.S., it will also go bankrupt as they only have a fraction of the funds needed to cover a large scale, wide-spread banking failure.

It seems that they couldn't get away with it too easily - as you say about the EU regs - but that it could be suggested mid-crisis ("never let a good one go to waste") OR ala Obama during the Xmas/New Year holidays when they sneak in those 2000 page bills which have more nefarious legislation hidden, they could even slip it past the public during an 'attack'.

An example of these bills that slip by would be this article about the Tory government stopping ALL student grants which is beginning to generate some activity on social media:

The UK government has now abolished all student grants
The funding, which was designed to help the poorest students through university, has been scrapped by the Tories

http://www.dazeddigital.com/artsandculture/article/29239/1/the-uk-government-have-got-rid-of-all-student-grants

It could also be a distraction or a small 'win' on the part of pathological greed.

Overall though, like y'all, i agree that it probably won't be one particular thing, and it probably won't be something so brazen (at least initially) because something like stealing people's cash - western imperialist nations anyway, - i think would be too much and really galvanise opinion that something aint right. The article could be an instance of testing the waters though. And once things really kick off, a bit like in the comments, people will be too swamped with so many issues to know where to look, which ones to fight, and by that time it may be too late because the shops will be empty or some emergency law will be implemented even if they have access to cash.

 

[Chad]

Two articles which may be of interest:

The first article is from Sept 2015 and it doesn't seem to have featured on SOTT.net - in short it's Andy Haldane BoE Chief Economist as well as one of his banks main interest rate setters (according to the article). He's saying dump cash, bring in digital currencies, and that unless something is changed in the system, it will fail; changes to benefit bankers.

The second article seems to fall in line with the others - Deutsche bank suffered losses signalling problems in the German banking system.

Then third is just a selection of headlines found on the side of the mirror (tabloid) news site - it's not even close to all the things happening but as non targeted sample i think it's very interesting. They were stacked in that order and i only removed one headline because it was basically a duplicate. The shops mentioned have been high street giants for a long time.

Bank Of England Economist Calls For Cash Ban, Urges Negative Rates
Tyler Durden's picture
Submitted by Tyler Durden on 09/18/2015 11:55 -0400
http://www.zerohedge.com/news/2015-09-18/bank-england-economist-calls-cash-ban-urges-negative-rates

Just three short years ago, Bank of England chief economist Andy Haldane appeared a lone voice of sanity in a world fanatically-religious Keynesian-esque worshippers. Admissions in 2013 (on blowing bubbles) and 2014 (on Too Big To Fail "problems from hell") also gave us pause that maybe someone in charge of central planning might actually do something to return the world to some semblance of rational 'free' markets. We were wrong! Haldane appears to have fully transitioned to the dark side, as The Telegraph reports, he made the case for the "radical" option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.

Speaking at the Portadown Chamber of Commerce in Northern Ireland, as The Telegraph reports, Mr Haldane's support for a possible cut in rates came as the Bank as a whole has signalled that the next move in rates would be up.

Andy Haldane, one of the Bank’s nine interest rate setters, made the case for the "radical" option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.

He said that the "the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside".

As a result, "there could be a need to loosen rather than tighten the monetary reins as a next step to support UK growth and return inflation to target".

But recent volatility in financial markets, prompted by China, and a decision by the US Federal Reserve to delay rate hikes, have pushed back expectations of the Bank's first rate rise to November 2016.

Traditionally policymakers have resisted cutting rates below zero because when the returns on savings fall into negative territory, it encourages people to take their savings out of the bank and hoard them in cash.

This could slow, rather than boost, the economy. It would be possible to get around the problem of hoarding by abolishing cash, Mr Haldane said

Interestingly, one idea, Haldane told an audience of business owners in Northern Ireland, could be to scrap cash and adopt a state-issued digital currency like Bitcoin. Although widely reviled as the currency for drug dealers and criminals, Haldane said Bitcoin’s distributed payment technology had ‘real potential’. Which may explain the Fed's sudden fascination in the virtual currency.

NIRP - it would appear - is about to global.

So Haldane has gone from worrying that "financial markets were detaching themselves too materially from fundamentals" and fearing the "biggest risk to global financial stability right now it would be a disorderly reversion in the yields of government bonds globally," the BoE's chief economist has not only called for policies which will enable an even bigger bond bubble but will also remove freedom from the people to do what 'they' think is best with their capital. Indoctrination is complete (or more ominously, is there something Haldane sees that has driven him to this extremist perspective?)
inShare38

EU on brink: Germany's biggest bank records shock losses risking economic RUIN of Eurozone

GERMANY could force the European Union into ruin after Deutsche Bank's share price plunged following the country's biggest lender's first annual loss since the financial crisis.

By Alix Culbertson
PUBLISHED: 05:00, Fri, Jan 29, 2016 | UPDATED: 17:58, Fri, Jan 29, 2016

http://www.express.co.uk/news/world/639060/eurozone-Germany-Deutsche-Bank-first-annual-loss
EurozoneGetty
Deutsche Bank's share prices fell straight away

The German lender posted a full year loss of £5.1 billion (€6.8bn) on Thursday - higher than the expected €6.7bn million.

With losses of €2.1bn in the fourth quarter of 2015-16, fears of the entire eurozone toppling are becoming an increasing reality.

Germany, which has a GDP of $3.4bn is one of the six largest economies in the world and the fate of the eurozone relies heavily on its strong economy.

But it is facing the most difficult start to a year in recent memory. Its own industrial production growth has slipped to ZERO per cent and customer confidence has plummeted in a catalogue of disasters for Chancellor Angela Merkel.
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Much of Deutsche's losses have been down to litigation charges, racking up €1.2bn in the last quarter - which could still increase.

This year's litigation charges have reached €5.2bn, compared with €2bn the year before.

A reduction in the bank's corporate banking and securities division has been blamed on revenues in the fourth quarter falling 15 per cent year on year to €6.6bn.

Mark to market losses in Deutsche's non-core operating unit were also blamed.

The bank took a hit in early trading as its share price dropped 1.5 per cent, despite investors being pre-warned it would be bad news following share prices falling drastically over the last year.
Deutsche Bank shares have declined 24 percent since the beginning of the year. The stock has declined 36 percent in the last 12 months.

Deutsche's fall in grace adds to Germany's seemingly never-ending woes this year, with the country's industrial production growth slipping to zero per cent last week and customer confidence plummeting.

As the biggest economy in the eurozone, with a GDP of $3.4bn, experts have warned if its economy - along with second biggest eurozone economy France [currently under economic emergency rules?] - crashes it would trigger a domino effect which would bring the entire currency crashing down causing a detrimental ripple effect on the global economy.

Last week, under pressure German chancellor Angela Merkel admitted Germany may fail to balance its books this year as it contends with the costs of letting in more than a million refugees in a bid to relieve the current crisis across Europe. [blame it on the refugees?]

There is concern the eurozone is over-reliant on the economy of the relative powerhouse of Germany.

Andy Baldwin, EY’s Global Financial Services Leader, says: “The apparent reliance of the Eurozone on the German economy, bolstered by its strong banking system, is more pronounced than many would expect.

"The short term health of economies including France, Italy and Spain, is dependent on the continued growth of the German economy – a major component of which is the further strengthening of its banking sector."


Investors claims France's economy, which recently entered a 'state of emergency' could act as a drag on the overall health of Europe.

Only two per cent of investors claim that French banks have the best prospects for growth.

Mr Baldwin added: "It is clear that for a sustained return to economic health in Europe, growth needs to be more evenly spread across the continent."

In a bid to patch up some of Deutsche Bank's central issues, the lender is now restructuring.

At the beginning of the week it revealed bonuses could be slashed by as much as 30 per cent for staff, including investment bankers.

And it warned up to 1,000 jobs in London could be at risk if it scaled back its investment banking sector.

bankGetty
Deutsche Bank's London employees are set to be slashed by 1,000

Co-chief executive, John Cryan, said: "In 2015 we made considerable progress on the implementation of our strategy.

"The much-needed decisions we took in the second half of the year contributed to a net loss for the fourth quarter and full year."

Angela Merkel EU dream overGETTY
The European dream has turned sour for Angela Merkel

He added: "We are focused on 2016 and continue to work hard to clear up our legacy issues. Restructuring work and investment in our platform will continue throughout the year.

"We know that periods of restructuring can be challenging. However, I'm confident that by continuing to implement our strategy in a disciplined manner, we can and will transform Deutsche Bank into a stronger, more efficient and better run institution."

Mr Cryan is set to take over entirely in May, when investors are expecting significant changes to ensure the once almighty bank is back on course.

Findus
Iconic food firm Findus to be frozen out of supermarkets as owners drop the brand [this may be because their product is the most disgusting 'food' to be fed to unwitting children - me being one of them. No loss here.]

B&Q PLC
B&Q to shut 60 stores: Find out whether your local store is closing

Morrisons
Revealed: The 7 Morrisons supermarkets closing down - is your local store on the list?

Morrisons
Morrisons to close 11 supermarkets and put 900 jobs at risk following sales slump

Tesco
Tesco ripped off customers to make profits look good says watchdog

Argos
More than 400 Argos stores could be closed in Sainsbury's take-over plans

Asda
Asda to axe hundreds of jobs after profits plummet and sales slump

Mortgages
Time is running our for thousands of borrowers with interest-only mortgages - with half having no means to pay debt back

Poundland
Poundland buys 99p Stores but bosses warn prices will go up - by 1p

 

[Chad]

Barclays is a huge bank and i think this just goes to demonstrating that at the moment, things are quite precarious indeed.

Barclays shares fall 7% on results and restructuring

http://www.bbc.co.uk/news/business-35693952

Barclays shares closed down 7% after reporting a drop in full-year profits, a dividend cut and a restructuring including reducing its stake in Africa.

Underlying annual profits for 2015 fell 2% to £5.4bn. The bank said it would cut its dividend by more than half to 3p per share in 2016 and 2017.

Barclays also announced a further £1.45bn provision for PPI mis-selling.

It said it wanted to form two, main core divisions - Barclays UK and Barclays Corporate and International.

The bank said it would slim down its 62.3% stake in its Africa business in the next two to three years.

Barclays shares fell 11% in reaction to its latest results.

Barclays said it would split the company into Barclays UK and Barclays Corporate and International by 2019.

The UK's big four banks are having to make these changes to comply with tougher new banking regulations designed to prevent ordinary customers suffering from decisions made by investment bankers in the event of another credit crisis. [LOL]

Barclays, like most of the world's major banks, has been tainted by - and fined for - rigging prices in both foreign exchange and Libor interest rates.

It confirmed it was assisting both the US Department of Justice and the Securities and Exchange Commission (SEC) in their investigation about Barclays's hiring practices in Asia, which centre on allegations jobs were given to people with influence.

In the UK, the bank said it had put aside a further £1.45bn this quarter to meet compensation claims for mis-selling payment protection insurance (PPI).

That brings the total for this year to £2.77bn.

Barclays has so far set aside £7.42bn for wrongly selling this insurance for loans.


Mr Staley told the BBC his main aim was to restore the bank's reputation.

"We are working at Barclays to change conduct," he said.

"I am truly dedicated that Barclays rests itself on the foundations of integrity and engenders trust from our clients, so the conduct issues will be a thing of the past.

"I do believe that trust is returning to our institution.

"But we will never rest, we are never done.

"We have to focus on building that trust every day."

Mr Staley said the bank's decision on Africa, where it has had a presence for more than 100 years, had been "very difficult".

"The reality is, in this new regulatory environment, we carry 100% of the liabilities, but we only own 62% of Barclays Africa," he said.

"It truncated possible returns from investing in Africa."

Barclays has more than 12 million customers across 12 nations in Africa.

"You go to places like Uganda and Kenya and the brand of Barclays is as strong there as it is in the UK," Mr Staley said.

"But we have to make some very difficult decisions if we are going to get Barclays into focused, clear, compelling business model that generates returns for our shareholders."

Laith Khalaf, senior analyst at Hargreaves Lansdown, said the new boss was clearly taking a big broom to Barclays's operations in an attempt to dramatically simplify the group.

"When the dust has cleared, the bank should have two high-quality financial services divisions, and the potential to offer investors a decent dividend, but it is going to take some elbow grease to get there," he said.

Mr Khalaf said the move to reduce its interests in Africa made sense as it would "free up capital and get rid of an unwanted distraction as the bank continues its

The news that Barclays intends to retreat from Africa after 100 years of doing business there was one of the most eye-catching lines from the Barclays boss.

In recent years, former chief executive Antony Jenkins and before him Bob Diamond had described Africa as an important growth market for the bank.

Barclays Africa employs 45,000 people in Africa, so it is not an easy thing to sell, and the list of potential buyers is not a long one.

At the top of that list of potential buyers might be ex-Barclays chief executive Bob Diamond.

Barclays also said its bonus pool for staff in 2015 had shrunk 10% to £1.67bn.

Mr Staley, who took up his post in December, told the BBC the bank was competing on an international level.

"In the last four years, Barclays bonus pool has been cut in half," he said.

"This is a dramatic move - but we need to pay competitively.

"Whether it is a bank manager in Manchester or a banker in New York, we need to pay our people competitively for Barclays to be competitive."

The annual report shows former chief executive Antony Jenkins, who was sacked in July, was paid £3.4m last year, of which £500,000 was a bonus payment.

 

[Chad]

A list detailing recent job cuts across UK and Europe:

Job losses gather momentum across UK and Europe

Major companies in energy to banking and retail to manufacturing have announced tens of thousands of job cuts in coming months

Train manufacturer Bombardier has become the latest major company to unveil significant job cuts. Photograph: Bernd Settnik/EPA

http://www.theguardian.com/business/2016/feb/18/job-losses-gather-momentum-uk-europe?CMP=share_btn_fb


Thursday 18 February 2016 09.41 GMT
Last modified on Thursday 18 February 2016 14.36 GMT


Bombardier has become the latest major company to announce job cuts in the UK, with 1,350 posts set to be axed. Cutbacks are being announced in virtually every sector, in the UK and across Europe, with tens of thousands of jobs due to go in coming months.

Here’s a round-up of companies that are reducing their UK workforces.

Banking and insurance

Lloyds Banking Group is cutting a net 1,585 jobs and closing 29 branches across Britain.

Barclays to axe 1,200, in its investment bank worldwide.

Credit Suisse is cutting 4,000 jobs, including “rightsizing the bank’s London presence”.

Legal & General is pushing ahead with plans to close its Surrey offices by 2018, putting 1,500 jobs at risk, although some will transfer to Hove or Cardiff.


BP is laying off 7,000 more people.

Shell is also slashing jobs, with 7,500 gone and 2,800 losses still to come.

British Gas owner Centrica is cutting 1,000 jobs this year as part of a net 4,000 cutbacks by 2020 (it is slashing 6,000 jobs but also creating 2,000 new posts).

French utility company EDF is cutting up to 4,200 jobs in France and a further 6,000 worldwide by 2019, with the bulk expected to be at its UK division.
Media

Virgin Media plans to cut 900 jobs from its UK workforce by 2017.

Pearson, the world’s biggest educational publisher, is shedding 4,000 jobs around the world, including 500 in the UK.
Manufacturing

The Canadian aerospace giant Bombardier is cutting 7,000 jobs globally over the next two years, including 1,350 in the UK, with the rest in Germany and Canada.

US conglomerate General Electric intends to lay off 6,500 people across Europe over the next couple of years, including about 600 in Britain.

Tata Steel, Europe’s second-largest steel producer, announced a further 1,050 job cuts last month.

Carmaker Ford plans “hundreds” of job cuts across the UK and Europe through voluntary redundancy.
Retail

UK shoe chain Brantano went bust after a tough Christmas, although a rescue deal has saved nearly 1,400 jobs, which means redundancies have been reduced to 600.

British clothing brand Ben Sherman has been sold through a pre-pack administration deal, putting 100 jobs at risk.

Boots is cutting up to 350 jobs, its second round of layoffs in the last seven months.

Asda is cutting 200 jobs at its head office in Leeds.

 

[Chad]

My bank just sent me an alert to check my messages with them. I figured it was spam that made it through but needed to check anyway - there were two points: how they tax interest and this:

The Financial Services Compensation Scheme
Changes have been made to the Financial Services Compensation Scheme (FSCS). The FSCS protects your money
if a bank is unable to pay claims made against it. The amount of money that’s protected has changed from
£85,000 to £75,000

I hadn't seen anything about it recently and a search brought up articles from Mid 2015 stating:

http://www.telegraph.co.uk/finance/personalfinance/savings/11716470/FSCS-savings-compensation-rules-the-new-75000-limit.html 5:53PM BST 03 Jul 2015 The Financial Services Compensation Scheme (FSCS) will cut the compensation limit for savers from £85,000 to £75,000 from January 1, 2016. It is part of a recalibration of the threshold following falls in the euro against the pound.

Will they need to recalibrate again in a months time?

 

[Chad]

Not being that knowledgable about these matters, this piqued my interest - less reporting means a slower reaction from the market? Thus if firms are going under, the share holders and the people will find out much later?:

UK blue-chip firms told to stop reporting every quarter

Britain's biggest firms will no longer be under pressure to report every three months

James Quinn

20 March 2016 • 9:51pm

The UK’s biggest institutional investors are to demand FTSE 100 companies stop quarterly reporting as part of a radical shake-up of how shareholders interact with their investments.

In an attempt to rebalance the relationship between investors and company boards, aimed at nurturing long-term thinking, the Investment Association is expected to set out a series of demands designed to get more out of the UK’s largest companies.

The IA, whose members own approximately one third of the FTSE 100, will tell boards to move from spending time focused on three-monthly numbers to work on long-term strategy.

The new diktat, one of a string of new measures to be announced, will essentially force companies in the FTSE 350 to comply or explain how quarterly reporting fits into their strategy. The IA will monitor those who fail to do so.

The requirement will be one of 11 actions the group, whose members manage assets worth in excess of £5.5 trillion, is believed to be ready to set out as part of the launch of a landmark report later this week. The report is expected to be the most radical reshaping of big shareholders’ relations with the companies they invest in, and comes in the wake of the Kay Review and other studies designed to shift boards away from short-term targets.
Legal and General scraps quarterly reporting


Although several big companies – including Unilever and Legal & General – have signalled an end to quarterly reporting, the vast majority continue to publish at least some numbers on a three-monthly basis. The institutional lobby group will make the demands alongside publication of the document, which is the result of an eight-month project looking at how investors can play their part in boosting the UK’s ailing productivity levels.

The report is understood to look at five key areas: company reporting, investor stewardship, the relationship between owners and companies, capital markets, and the legal and regulatory framework.

One source said that the majority of conversations between institutional shareholders and company management are focused narrowly on financials, or on corporate governance.

The report, the source said, is aimed at “expanding the dialogue with companies” to look at a larger set of variables and how they link to long-term performance. But far more important will be the 11 action points to ensure the findings do not fall on deaf ears.

As well as the order on quarterly reporting, a second action point will focus on asking companies for capital expenditure plans over the long term, fuelled by a feeling that investment managers are not getting enough information about projects which could drive long-term performance.

The report is set to be published at an event in central London to be opened by the Treasury minister and former Goldman Sachs economist, Lord O’Neill.

Work on the report, which has been stewarded by the IA’s head of corporate governance, Andrew Ninian, followed a letter that several members wrote to the Chancellor, George Osborne, after last summer’s post-election Budget in which they said they had a role in solving the productivity problem.

The body will commit to reviewing take-up of its action points every six months, and writing to Mr Osborne on the first and third anniversary of the launch to update him on progress.

The following reads to me like more QE - though 'targeted', but my interpretation may be off. The language used in finance is amazingly childish: helicopter money, Coco 'financial instruments'.

Central banks are already doing the unthinkable - you just don't know it

Helicopter drops: instransigence of governments to support the recovery has already forced central bankers into uncharted territory
Helicopter drops may have already arrived in stealth form, as monetary policy is forced into truly uncharted territory

Mehreen Khan

19 March 2016 • 7:00pm

The lords of finance are losing their touch.

Institutions which dragged the world from its worst depression since the early 20th century are finally seeing their magic desert them, if conventional wisdom is to be believed.

Eight years on the from the Great Recession, voices as authoritative as the International Monetary Fund and the Bank of International Settlements - dubbed the 'central bank of central banks' - have called time on the era of extraordinary monetary policy.

Having hoovered up $12.3 trillion (£8.5 trillion) in financial assets and carried out 637 interest rate cuts since 2008, central banks have been stunned back into action in the last six weeks.

The Bank of Japan kicked off a new round of global easing with its decision to cross the rubicon into negative interest rate territory on January 29.

Eurozone policymakers followed suit earlier this month with a triple whammy of interest rate cuts, €20bn in additional asset purchases a month, and an unprecedented move to allow commercial banks to borrow money at negative rates.

The Federal Reserve has also taken its foot off the pedal by slashing its expected interest rate hikes from four a year to just two.

But the new wave of policy accommodation has ushered in fresh panic that monetary policy is suddenly subject to dwindling returns.

Instead, talk has turned to governments finally pulling their weight to support the shaky global recovery.

Fiscal policy has been largely dormant in the wake of the crisis as countries have concentrated on bringing down debt and deficits levels, binding themselves to stringent spending rules in the process.

But without tax breaks and greater state investment, the world is at risk of another "economic derailment", the IMF has warned.

In its latest communique the G20 paid lip service to the idea that global governments will adopt policies to "strengthen growth, job creation and confidence".

Realistically, there are little signs that politicians are ready to jettison their fixations on low debt and balanced budgets to support global growth.

Act now to stop global crisis, IMF warns governments

Central bankers have led the world out of recovery as politicians have stood on the sidelines [!!]


In Europe, it is an issue which is straining relations between central bankers and their respective governments.

Faced with accusations of impotence, Vitor Constancio, vice president of the ECB, launched a dogged defence of the central bank's actions, claiming they have been responsible for two-thirds of all eurozone growth since 2014.
Not only is it wrong to start talking down monetary policy – it’s actually dangerous
ECB vice president Constancio

Moreover, the very design of the euro actively prohibits governments from stepping in to stimulate weak economies, says Constancio.

"Stabilising fiscal policy is restricted by law in the EU. Countries that could use fiscal space, won’t; and many that would use it, shouldn’t."

Amid such constraints, Constancio warns "not only is it wrong to start talking down monetary policy – it’s actually dangerous".
%How the ECB went negativeDeposit rate 20082010201220142016-101234
Highcharts


Thinking the unthinkable

Faced with political intransigence, central bankers are openly talking about the previously unthinkable: "helicopter money".

A catch-all term, helicopter drops describe the process by which central banks can create money to transfer to the public or private sector to stimulate economic activity and spending.

Long considered one of the last policymaking taboos, debate around the merits of helicopter money has gained traction in recent weeks.

ECB chief Mario Draghi has refused to rule out the prospect, saying only that the bank had not yet “discussed” such matters due to their legal and accounting complexity. This week, his chief economist Peter Praet went further in hinting that helicopter drops were part of the ECB's toolbox.

"All central banks can do it", said Praet. "You can issue currency and you distribute it to people. The question is, if and when is it opportune to make recourse to that sort of instrument".
Embattled central bankers are beginning their fight back against accusations of impotence
Embattled central bankers are beginning their fight back against accusations of impotence

With 16 out of Europe's 28 economies still in deflation and annual eurozone growth set to hit just 1.4pc in the middle of a cyclical upturn, the opportune moment may soon be upon us.

“We have had forward guidance, QE and negative interest rates, says Gabriel Stein at Oxford Economics.

"But none of these has proven a panacea and their shelf-life is getting shorter."
Helicopter drops by stealth

For some observers, the next phase in extraordinary central bank action is already upon us, and it is Japan which is leading the way.

The Bank of Japan’s move to impose a three tiered deposit rate on banks is a covert attempt to inject funds directly to the private sector, argues Eric Lonergan, economist and hedge fund manager.

He notes that the BoJ's decision to exempt some reserves from the negative rate represents a transfer of cash to commercial lenders at rate of 0.1pc.

The system "separates out the interest rate on reserves from that which affects market rates”, says Lonergan.

"It is taking the first step along the journey towards helicopter money and opens up a whole new avenue of stimulus”.
RqcGUxMTE6FmYO43atbhTcg6BeHDyZqk

In the same vein, the ECB has also signaled its intention to move towards targeted attempts to boost private sector credit demand.

From June, eurozone banks will be paid as much as 0.4pc to borrow from the ECB for four years - a scheme dubbed 'Targeted Long-Term Refinancing Operations' (TLTRO's). Lenders who do the most to pass on cheap loans to customers will be rewarded with the most favourable rates. [so it's 'for the people' but actually benefits the banks, again?]

Erwan Mahe, chief macro strategist at HPC, calls the ECB's moves a "veritable revolution" in monetary policy which marks the end of an erstwhile central bank taboo.

"For the first time in the history of central banking, private-sector agents will be able to borrow money from the ECB and give back less than the capital borrowed," says Mahe.

"As long as fiscal authorities do not act to offset the counter-cyclical lag in aggregate demand, [TLTRO's)] will probably play an increasingly important role" in eurozone policy, he notes.

"I wish they'd done it an awful lot sooner", says Lonergan, who says that for all its institutional constraints, the ECB still boasts a number of tools to boost bank lending.

With government borrowing costs at rock bottom across the eurozone, even more QE would be unnecessary at this stage, he says.

TLTRO’s however, “open the possibility of two different rates where you can leave the policy rate unchanged but lend to banks at lower and lower rates contingent on them lending to the real economy” he adds.

“It is much cleverer way of doing things because savers do not suffer.”
Smashing the taboo

But central bank ingenuity - however welcome - raises separate concerns about the accountability of institutions whose independence is sacrosanct but where decision-making is often insulated from public view.

Lord Adair Turner, a former chairman of the Financial Services Authority, and one of the earliest advocates of helicopter money, calls for more transparency in a bid to finally smash the taboos around injecting money straight into the hands of consumers or governments.

"I think it is more dangerous for central banks to forever deny what they are doing," says Lord Turner.

He calls Japan's move to issue government debt at a rate of 40 trillion yen, while the central bank expands its balance sheet at a rate of 80 trillion yen a year, "a de facto debt monetisation".

"You are effectively replacing government debt with central bank money," says Lord Turner. "It would be better for authorities to publish a statement, laying out the rules and assuring the world it is not too much."
Lord Adair Turner has been a long standing supporter of a scheme of "money financing" between central banks and governments

But with much of the global economy witnessing steady if unremarkable expansion, any such admission is unlikely to come before another full-blown crash.

Mapped: Where in the world have rates turned negative?

Until then, debate will rage over the optimal way to engineer helicopter drops and the dividends they could bring to a subdued global economy.

For critics, the world's recent oil price crash is an ominous sign that consumers are still not ready to spend any free windfalls. The boost to global spending from this effective tax cut has not been as direct as economists would have expected, as people continue to pay down their debts or save for rainy day funds.

In the eurozone meanwhile, still stuck in a low-growth and high unemployment morass, the political barriers to extraordinary measures should not be underestimated.
Where is the government Draghi can turn to if he ever wanted to fire up his helicopter?
Ashoka Mody, former IMF bail-out chief

For all the exasperation aimed at the political class, the ECB still faces insurmountable barriers to action in an incomplete monetary union.

"Where is the government Draghi can turn to if he wanted to fire up his helicopter?" asks Ashoka Mody, a former assistant director at the IMF.

Seeking technocratic solutions to intractable economic problems also risks further damage to the fabric of the single currency, already facing huge challenges from migration flows and the rise of political extremism.

"By substituting so directly for fiscal policy, helicopter money becomes a profoundly political act", says Mody, who led the IMF's bail-out of Ireland from 2011.

"Europe has tried to govern itself through technocratic rules, especially the budget limits, and it has never worked."

The challenges of the eurozone - where 19 differing governments are under the aegis of one central bank - are a far cry from Japan, where both fiscal and monetary policy are working in tandem to revive the economy.

"I think we will be lucky if Europe does as well as Japan did during its lost decade", says Mody.

But the debate around helicopter drops has given way to a welcome fightback from central bankers who reassert that they are never powerless to generate inflation.

Citing Milton Friedman’s maxim that “inflation is always and everywhere a monetary phenomenon”, economist Tim Congdon is adamant that monetary policy is still the only game in town.

“Monetary policy can never – repeat, never – 'run out of ammunition'”, he says.