U.A.E. Banks, RBI Fines, Danes’ Free-for-All: Compliance

Banks in the United Arab Emirates are seeking five years to comply with a central bank regulation to limit their exposure to government entities in the second-biggest Arab economy.

The banks are also seeking to exclude marketable bonds and sukuks from the proposal, according to an e-mailed statement yesterday from the U.A.E. Banks Federation.

The central bank said in April 2012 that banks must not lend more than 100 percent of their capital to local governments and the same amount to government-related entities to help reduce risk, and must comply with the new regulations by Sept. 30, 2012. There was no limit under previous rules. The central bank in December delayed implementing the regulations.

Many U.A.E. banks experienced an increase in bad loans linked to debt restructuring by state-owned businesses including Dubai World, which roiled global markets in 2009 with its request to delay payments on $25 billion of loans.

Emirates NBD PJSC’s investments in sovereign and quasi-sovereign clients is 192 percent of regulatory capital, while that of National Bank of Abu Dhabi PJSC is 199 percent, according to estimates from Deutsche Bank AG last April.

The banks federation said yesterday that the central bank postponed the September deadline to allow lenders to “study, evaluate” the new rules and to revert back to the regulator with a final proposal.

Compliance Policy

Denmark Invites Bank Free-for-All in Rules Fight Over Easing

Denmark’s central bank is inviting financial instability by urging the nation’s lenders to ignore a European rule easing how risks for small- and medium-sized business loans are calculated, an industry group said.

Encouraging the banks to be tougher than the directive on SME loans would open the door to them underestimating risks elsewhere, Michael Friis, head of prudential regulation at the Danish Bankers Association, said in an interview.

The central bank in June told lenders to disregard a section of the capital requirements directive -- approved by European lawmakers last month -- that reduces risk weights by 24 percent because implementing it would weaken Denmark’s financial system. Access to credit remains high in a historical perspective, Deputy Governor Hugo Frey Jensen said last month.

Denmark’s financial industry has yet to recover from a lending glut in the last decade that has sunk more than a dozen banks and forced at least another 12 to merge.

Europe’s economic slump has led lawmakers to embrace measures once considered taboo in the wake of the financial crisis. Denmark in March proposed bundling and selling small business loans as the stigma of securitization fades.

For more, click here.

China Regulator Said to Start Electronic Wealth Product Registry

China’s banking regulator told lenders to register all wealth management products they sell and distribute on a centralized electronic system to improve tracking, said two people with direct knowledge of the matter.

Banks were told late last month to register products sold since 2011 on the database run by China Securities Depository and Clearing Co., said the people, who asked not to be identified because they aren’t authorized to speak publicly about the matter.

The China Banking Regulatory Commission has tightened rules on the high-yielding savings vehicles on concerns they’ve lent client money to borrowers that won’t be able to repay debt as the nation’s economy slows.

Chinese banks had previously been required to report sales of wealth management products to local branches of the banking regulator, the people said. The Wall Street Journal reported the use of the electronic platform yesterday.

Compliance Action

India Central Bank Imposes $8.3 Million in Fines for 22 Lenders

India’s central bank ordered 22 financial firms including State Bank of India and Deutsche Bank AG’s local unit to pay a combined $8.3 million in penalties for flouting rules including anti-money laundering regulations.

State Bank, the nation’s largest lender by assets, will be fined 30 million rupees ($501,000), while Deutsche Bank will need to pay 10 million rupees, the Reserve Bank of India said in a statement on its website yesterday. Another seven banks were sent notices to ensure compliance with the norms.

The Reserve Bank in June had separately penalized HDFC Bank Ltd., the country’s biggest by market value, Axis Bank Ltd. and ICICI Bank Ltd. for flouting the rules. Axis was ordered to pay 50 million rupees at that time, and HDFC Bank 45 million rupees, with ICICI at 10 million rupees. Yesterday, the largest fine was levied against the government-controlled Indian Overseas Bank, at 30.02 million rupees.

Banks in India are running a nationwide “money laundering racket,” violating multiple rules including tax and banking regulations, website Cobrapost reported on March 14. The banking regulator is investigating the allegations and appropriate action will be taken against those lenders that breached rules, central bank Governor Duvvuri Subbarao had said at a press conference on May 3.

Cautionary letters were issued to seven banks - State Bank of Patiala and the local units of Barclays Plc, BNP Paribas SA, Citigroup Inc., Royal Bank of Scotland Group Plc, Standard Chartered Plc and Bank of Tokyo Mitsubishi UFJ Ltd. - after the central bank’s scrutiny didn’t expose any “serious” violations or the firms’ explanations were found to be “satisfactory,” the RBI said yesterday. The regulator didn’t impose monetary penalties on the seven lenders.

Swinton Fined $11.2 Million for Mis-Selling Insurance in U.K.

The U.K. markets regulator fined Swinton Group Ltd. 7.4 million pounds ($11.2 million) for mis-selling personal accident, home emergency and car breakdown insurance policies.

The Financial Conduct Authority found that Swinton didn’t give customers enough information about the terms of the policies and didn’t sufficiently monitor its sales calls. Swinton set aside 11.2 million pounds to repay customers who were mis-sold insurance, the regulator said in a statement today.

“Swinton acknowledges the shortcomings in its sales practices during this period, and the company unreservedly apologizes to customers,” the insurer said in a statement. It has contacted more than 650,000 customers who may be entitled to redress and paid out 1.9 million pounds so far, it said.

China Widens Drugmaker Probe as Glaxo Bribery Charges Outlined

China is investigating at least four multinational drugmakers as it widens its probe of GlaxoSmithKline Plc, according to a lawyer in Hong Kong whose firm advises companies on cross-border anti-corruption.

The investigations point to an increased targeting of the pharmaceutical industry in corruption probes as the world’s most populous country faces rising health-care costs and seeks to lower drug prices. While the drugmakers are being examined by local regulators, the results may draw added questions from officials in Beijing and scrutiny by the U.S. government under the Foreign Corrupt Practices Act.

Wendy Wysong, the head of anti-corruption practice in Asia-Pacific at law firm Clifford Chance, said the firm is aware of four companies facing investigation. She declined to identify the companies.

Yesterday, Chinese officials said Glaxo used travel agencies as a conduit for bribes, that company executives received “sexual bribes,” and that other drugmakers have transferred money to the agencies.

Gao Feng, head of the economic crimes investigations unit at China’s Public Security Ministry would not identify the other companies linked financially to the travel agencies at a news conference, saying only that people should ask the companies whether they “sleep well” at night. His comments were unusual, given that Chinese police rarely speak publicly to foreign media about ongoing investigations. The Glaxo case, Gao said, included bribes that went to “government officials, medical associations, hospitals and doctors.”

China, the world’s fastest-growing market for medicines, has become an important target for the pharmaceutical industry as more and more best-selling therapies have gone off patent.

The Glaxo probe is a result of police investigations, not a whistle-blower’s complaint, Gao said at the press conference.

For more, click here.


First Brokers Charged in Global Criminal Libor-Rigging Probe

Two former RP Martin Holdings Ltd. employees in London became the first brokers to face criminal prosecution in the global probe of manipulation of the London interbank offered rate.

Terry Farr, 41, and James Gilmour, 48, were charged with conspiracy to defraud at a London police station yesterday, the U.K. Serious Fraud Office said in an e-mailed statement. Farr and Gilmour, both from Essex, are the second and third suspects to be charged in the U.K. investigation.

The brokers were arrested in December along with Tom Hayes, the former UBS AG and Citigroup Inc. trader. Hayes was charged with eight counts of conspiracy to defraud by the SFO last month. Hayes, who remains free on bail, is charged with working with employees at JPMorgan Chase & Co., Royal Bank of Scotland Group Plc, HSBC Holdings Plc, Rabobank Groep and Deutsche Bank AG, as well as Tullett Prebon Plc, ICAP Plc and RP Martin over a four-year period to manipulate yen Libor rates.

Hayes has also been charged by the U.S. Justice Department, which is running a parallel criminal investigation.

Farr and Gilmour are scheduled to appear at a London criminal court at a later date, the SFO said.

Andrew Honnor, a spokesman for RP Martin, declined to comment.

Court Rejects Nomura Asset Seizure Amid Doubt on Paschi Fraud

An Italian appeals court rejected a request to seize assets from Nomura Holdings Inc., accused by prosecutors of colluding with some executives of Banca Monte dei Paschi di Siena SpA to hide losses.

Two former bank executives, who prosecutors claim were tricked by Nomura, and other former Paschi managers, knew of a connection between its 2009 restructuring of an investment that was losing money and the purchase of Italian bonds through Nomura, judges at the court in Siena wrote in their ruling.

Losses from derivatives prompted Monte Paschi to seek state aid of 4.1 billion euros ($5.4 billion) in February. Prosecutors had sought authorization to seize as much as 1.95 billion euros of Nomura assets, consisting mostly of funds pledged by Monte Paschi to Nomura as security for the derivatives contracts and deposited in Germany.

A spokesman for Nomura declined to comment. Siena prosecutors declined to comment. An official for the Bank of Italy declined to comment.


Tarullo Says QE Tapering Would Depend on Economic Gains

Federal Reserve Governor Daniel Tarullo talked about central bank monetary policy, the U.S. economy and financial regulation.

Tarullo spoke with Politico Chief Economic Correspondent Ben White in Washington.

For the video, click here.

Loss In Tourre Case May Hurt SEC’s Image, Barofsky Says

Neil Barofsky, former special inspector for the U.S. Treasury’s Troubled Asset Relief Program and a Bloomberg contributing editor, talked about the start yesterday of the fraud trial for Fabrice Tourre, the ex-Goldman Sachs Group Inc. vice president, on allegations he misled investors.

For the video, click here.

iCrowd’s McGee says Crowdfunding an ‘Emotional Return’

Brad McGee iCrowd’s McGee says Crowdfunding an ‘Emotional Return’ iCrowd’s McGee says Crowdfunding an ‘Emotional Return’

Brad McGee, founding partner at iCrowd and former chief strategy officer at Tyco International Ltd., discussed crowdfunding, in which individuals instead of banks or institutional investors raise funds for a business venture.

McGee talked with Bloomberg’s Pimm Fox and Carol Massar on Bloomberg Radio’s “Taking Stock.”

For the audio, click here.

Brad McGee, founding partner at iCrowd and former chief strategy officer at Tyco International Ltd., discussed crowdfunding, in which individuals instead of banks or institutional investors raise funds for a business venture.

McGee talked with Bloomberg’s Pimm Fox and Carol Massar on Bloomberg Radio’s “Taking Stock.”

For the audio, click here. , founding partner at iCrowd and former chief strategy officer at Tyco International Ltd., discussed crowdfunding, in which individuals instead of banks or institutional investors raise funds for a business venture.

McGee talked with Bloomberg’s Pimm Fox and Carol Massar on Bloomberg Radio’s “Taking Stock.”

For the audio, click here.

Comings and Goings

Nominees Deal Eludes Senators as Reid Warns of Rule Change

The Senate is nearing showdown votes over seven presidential nominees even as leaders seek a last-minute deal to avoid a change to the chamber’s filibuster rules threatened by Democrats.

Senators reported no agreement after Democrats and Republicans met privately for three and a half-hours tonight on the nominations of Richard Cordray to run the Consumer Financial Protection Bureau and nominees for the National Labor Relations Board. Republicans have pledged to block them.

Senate Majority Leader Harry Reid, a Nevada Democrat, said that without a deal, votes will begin this morning on the nominees, starting with Cordray. Reid is threatening to employ the so-called “nuclear option,” a unilateral rule change to prevent the minority from blocking the president’s executive appointments. He said at least 51 Democrats back such a move.

The partisan rancor over seven of President Barack Obama’s nominees could prompt gridlock in the Senate and at regulatory agencies. A rule change by Democrats may make it difficult in coming months for lawmakers to agree on raising the U.S. debt ceiling and enacting a new immigration law.

Minority Leader Mitch McConnell’s spokesman, Don Stewart, said in an e-mailed statement that a “clear bipartisan majority in the meeting believed the leaders ought to find a solution. And discussions will continue.”

Several Republicans said they made suggestions for resolving the dispute. Senator Rob Portman of Ohio said he spoke with Democratic leaders and proposed strengthening oversight of the consumer bureau in exchange for allowing a vote on Cordray, something Durbin said he would oppose.

Senator John McCain, an Arizona Republican, said that also under discussion was substituting two new NLRB nominees to replace the two who were installed by the president as recess appointees.

Ex-FTC Commissioner Appointed to New U.K. Antitrust Committee

Bill Kovacic, a former commissioner at the U.S. Federal Trade Commission, was appointed as a non-executive director at the soon-to-be-created antitrust regulator, the U.K. Competition and Markets Authority.

Kovacic and four other non-executive directors were appointed to the watchdog’s board, the U.K.’s Business Secretary, Vince Cable, said yesterday in a statement. The CMA, which is scheduled to begin operating on April 1, 2014, will combine the Competition Commission and some of the antitrust functions of the Office of Fair Trading.

Philip Lowe, the director general for energy at the European Commission, Carolyn Fairbairn, a non-executive director for Lloyds Banking Group Plc, Alan Giles, a non-executive director for the Office of Fair Trading, and Annetje Ottow, head of the Authority for Consumers and Markets Academy in the Netherlands, were also named non-executive directors at the CMA.

Before it's here, it's on the Bloomberg Terminal.