Russian Bank Sanctions, Credit Suisse, GAO Report: Compliance

The European Union said Sberbank, VTB Bank OJSC, Gazprombank OJSC, Vnesheconombank and Rosselkhozbank OJSC, are Russian state-owned banks that are prohibited from selling bonds or shares in the EU beginning today.

The notice was published yesterday in the EU’s Official Journal. The five banks will still be permitted to carry out other operations in the EU, according to the notice.

The restrictions are among economic sanctions against Russia that the EU endorsed July 29 and are separate from a blacklist of entities and people barred from doing any business in the 28-nation bloc.

EU governments also restricted the export of equipment to modernize the oil industry, a key prop for Russia’s economy, the EU said in a July 29 statement.

For more, see Interviews, below.

Compliance Action

Credit Suisse Is Responding to Regulatory Inquiries on Dark Pool

Credit Suisse Group AG, Switzerland’s second-biggest bank, is responding to government and regulatory inquiries on the running of its dark pool.

The bank is cooperating with the requests, the Zurich-based bank said in its financial report for the second quarter yesterday. It said it’s among more than 30 defendants named in lawsuits seeking to represent a group of investors alleging violations of U.S. securities laws related to high-frequency trading.

Deutsche Bank AG, too, has been answering regulators’ queries on high-frequency trading, while the U.S. Securities and Exchange Commission has been investigating UBS AG’s private-trading venue since early 2012, the banks said in quarterly reports earlier this week.

“We obviously see a lot of benefits from that business, but we also know that there are potential abuses there as well,” Chief Executive Officer Brady Dougan said in a telephone conference after the bank published second-quarter earnings last week. Credit Suisse works with regulators to avoid as many abuses as possible, he said.

Danske Bank Is Reprimanded by FSA for Misstating Risky Loans

Denmark’s financial regulator reprimanded Danske Bank A/S for underestimating the risk of losses in a part of its retail lending business.

Denmark’s biggest lender couldn’t prove a group of consumer debt assets deserved a lower risk weighting than other loans, the Copenhagen-based Financial Supervisory Authority said yesterday. It ordered Danske to raise its risk-weighted retail assets by 2.7 billion kroner ($485 million).

The reprimand marks the second time Danske has been ordered to correct its stock of risky assets in 13 months, adding to the bank’s capital requirement. The two FSA orders aren’t related, according to Danske.

“We have taken note of the order and have made the necessary adjustments,” Peter Rostrup-Nielsen, Danske’s chief risk officer, said in an e-mailed response to questions.

Danske was one of four banks the FSA said failed to assign the correct risk weights to consumer loans. The others are Jyske Bank A/S, Nykredit A/S and Laan & Spar Bank A/S.


European Court Orders Russia to Pay $2.5 Billion for Yukos

A European court ordered Russia to pay 1.87 billion euros ($2.5 billion) for the seizure of Yukos Oil Co., once the country’s largest oil producer, adding to a $50 billion arbitration ruling announced this week.

The European Court of Human Rights in Strasbourg, France, partially satisfied a 38 billion-euro demand for compensation by ex-managers of Yukos over what they termed a “politically motivated” attack on the company a decade ago, according to a ruling on its website yesterday.

The decision, which can be appealed within the Strasbourg court within three months, isn’t “fair or impartial,” the Russian Justice Ministry said on its website, adding that it casts doubt on the right of national legislatures to determine penalties for violations of law.

If Russia refuses to pay, Yukos’s former majority owners may seek arbitration in about 150 countries that are party to the 1958 United Nations convention on foreign arbitration awards.


Hecker Expects Russia Sanctions to Bite in Three to Six Months

Charles Hecker, global research director at Control Risks Ltd., talked about the ability of Russian banks to refinance as they face stiffer sanctions, and the possible role of Asian banks in responding to the crisis.

He spoke with Ryan Chilcote, Caroline Hyde and Mark Barton on Bloomberg Television’s “Countdown.”

For the video, click here.

GAO Report Shows Too-Big-to-Fail Not Gone, Vitter Says

U.S. Senators Sherrod Brown, an Ohio Democrat, and David Vitter, a Louisiana Republican, talked about a Government Accountability Office report on bank subsidies, financial regulation and proposed legislation to impose a 15 percent capital requirement on the largest banks.

They spoke with Peter Cook on Bloomberg Television’s “In the Loop.”

For the video, click here, and click here.

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