International Banking Fraud: Six top banks fined for forex, Libor abuses

US and British regulators have slapped massive fines on six major global banks for rigging the foreign exchange market and Libor interest rates. They called the banks' frauds 'brazen schemes' to harm clients.

In a settlement announced by the US Justice Department on Wednesday, the banks agreed to pay close to $6 billion (5.3 billion euros) in fines for their manipulations.

The deal included guilty pleas from UK-based Barclays Bank and Royal Bank of Scotland, as well as US banks JPMorgan Chase and Citigroup. They admitted to conspiring to manipulate the massive currency market.

Switzerland's UBS also pleaded guilty - in its case for one count of wire fraud in connection with Libor interest rate manipulations. However, the Justice Department granted the Swiss bank conditional immunity for cooperating with the investigation.

Together, the five banks agreed to a record $2.5 billion in criminal penalties, the largest set of antitrust fines ever obtained by the Department of Justice.

In addition, these five banks, plus the Bank of America, will pay more than $1.8 billion in fines to the US Federal Reserve over "unsafe and unsound practices" in forex markets.

Note EU-Digest: If someone steals a bar of chocolate in a grocery store, he or she can go to prison for a week including paying a fine. These banker crooks just pay a fine out of the billions they already stole from you and me and continue their life.
 
Read more: Six top banks fined for forex, Libor abuses | Business | DW.DE | 20.05.2015

European Insurance Industry: Low Interest Rates Pressuring European Insurers - by Juliet Samuel

Low interest rates are taking their toll on some European insurers as they prepare to implement more stringent capital regulations being introduced by the European Union.

Results from three of the continent’s largest insurance companies Wednesday showed how low or negative yields are having an uneven effect, forcing some companies to change their strategies.

Tidjane Thiam, the outgoing chief executive of Prudential PLC, who is leaving to run Credit Suisse Group AG, warned about the “headwinds” of low long-term rates and said that his priority since 2008 has been to reduce the company’s reliance on rates for its earnings.

“It was my deeply held belief that if we wanted to control our destiny we needed to reduce the [interest rate] income in our earnings,” the chief executive said. “We’ve done that successfully.”

Prudential on Wednesday said total new business profits fell 6% from a year earlier in the first quarter, to £496 million. Total annual premium equivalent, a common measure of sales for U.K. insurers—reached £1.25 billion, up 7% compared with the first quarter of last year.

Prudential’s shares fell 1% on Wednesday in London.

Insurers are particularly sensitive to low rates. One of the main ways they make money is by collecting payments made by policyholders and investing them in the market for higher returns, mostly in bonds because they are seen as lower risk than equities. When interest rates fall, insurers’ margins get squeezed.

Low market yields also force insurers to put aside more cash because they can’t rely on high market returns to generate enough cash to fulfill their obligations to policyholders.

“There is a lot of jiggery-pokery they can do to manage these numbers to at least show a good number,” said James Shuck, an analyst at UBS AG.

Read more: Low Interest Rates Pressuring European Insurers - WSJ