Credit Suisse, CFPB Transfers, China Audits: Compliance

Credit Suisse Group AG is paying part of its 2013 bonuses to top employees in bonds that can be wiped out if the company fails to maintain enough capital.

About 20 percent of 2013 deferred pay for directors and managing directors will be granted as contingent-capital securities, which lose value if the firm’s common equity ratio falls below 7 percent, according to a Jan. 21 staff memo obtained by Bloomberg News. A representative of Zurich-based Credit Suisse confirmed the memo’s contents.

Credit Suisse is joining UBS AG in paying staff partly in contingent capital, which the two lenders have to raise by 2019 to satisfy regulatory requirements. The awards seek to align the interests of employees and shareholders and give incentives to limit risk. Credit Suisse staff will also receive shares, some of which can be clawed back, as part of their deferred compensation.

Credit Suisse has previously given employees awards that link pay to reducing risk at the bank and boosting capital.

Compliance Policy

CFPB Proposes Rule to Oversee Large Nonbank Money Transfers

The Consumer Financial Protection Bureau said it has proposed a rule to oversee large nonbank money transfers.

The proposed rule would enable the CFPB, under the Dodd-Frank Act, to examine such transfers for compliance with the Remittance Rule, according to an agency statement. Regulators would be looking to make sure nonbanks offer better disclosures, options to cancel and correction of errors.

The agency said the rule would allow oversight of 25 of the largest providers on the market.

Compliance Action

Swiss Banks Seek Tax Amnesty as One-Third Accept U.S. Offer

One-third of Swiss banks offered amnesty by the U.S. for helping Americans evade taxes have applied for the program, a federal prosecutor stated at a Jan. 25 conference, according to three lawyers.

The U.S. government gave more than 300 Swiss banks until Dec. 31 to seek non-prosecution agreements if they have “reason to believe” they violated tax laws. Some 106 sought to join the initiative, requiring disclosure, handing over of data and payment of penalties.

The program is the largest assault in a five-year U.S. Department of Justice crackdown on offshore tax evasion. Kathryn Keneally, an assistant attorney general in the tax division, cautioned at the American Bar Association conference in Phoenix that the final figure may change, the lawyers said. She didn’t name any banks seeking to take part in the U.S. effort, which isn’t open to 14 institutions already under criminal scrutiny, including Credit Suisse Group AG and HSBC Holdings Plc.

Keneally declined to comment on the amnesty program.

The Swiss government encouraged banks to join the program, announced Aug. 29. The Swiss Bankers Association criticized the program’s cost, pointing to questions such as who qualifies as a U.S. client and what assets are considered untaxed.

For more, click here.

China Warns U.S. of Consequences After SEC Bans Accounting Firms

China warned the U.S. of “consequences” after the Securities and Exchange Commission barred the four largest accounting firms from conducting audits of U.S.-listed Chinese companies.

The decision to ban the Chinese affiliates of the accounting firms for six months “ignored” China’s efforts and progress made on cross-border regulatory cooperation, the China Securities Regulatory Commission said.

The ruling was made after the firms’ units in China failed to comply with SEC orders for documents needed for a series of accounting-fraud probes.

The firms receiving six-month bans are Deloitte Touche Tohmatsu CPA Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Ltd. If made final, the ruling could have an impact on the 425 Chinese companies with market capitalization of $185 billion that trade in New York.

The sanctioned firms said in an e-mailed statement that they will appeal the decision.

For more, click here.


Carrington’s Whalen Says Dodd-Frank Is ‘Killing’ Housing

Chis Whalen, managing director at Carrington Holding Co., told Bloomberg Radio that Dodd-Frank regulations are “killing the housing industry.”

Whalen spoke with Bloomberg’s Kathleen Hays and Vonnie Quinn on “The Hays Advantage.”

For the audio, click here.

China Bank Regulator Said to Issue Alert on Coal-Mine Loans

China’s banking regulator ordered its regional offices to increase scrutiny of credit risks in the coal-mining industry, said two people with knowledge of the matter, signaling government concern about possible defaults.

The China Banking Regulatory Commission also told its local branches to closely monitor risks from trust and wealth-management products, said the people, who asked not to be identified as the matter wasn’t public. The commission issues such alerts for matters that it judges may pose significant risks to banks, the people said.

The coal industry has come under scrutiny as investors seek repayment of a 3 billion-yuan ($496 million) trust product that’s facing default because the borrower collapsed.

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