Category: Uncategorized

Corporate Advisory

US sues Barclays over mortgage-backed loans

Federal prosecutors have sued Barclays and two of its executives over allegedly fraudulent mortgage-backed securities the bank issued as the US housing bubble was at its peak.

 The suit claims the bank “securitised billions of dollars of loans it knew had material defects” and financed lenders that it knew were issuing mortgages to customers who would be unable to repay them, prosecutors charged. The loans in question defaulted “at exceptionally high rates early in the life of the deals”.

It comes after the breakdown of talks aimed at reaching a negotiated settlement with the US Department of Justice and seeks unspecified civil penalties from the bank and the two men.

See full article here

Corporate Advisory

Deutsche Bank agrees settlement with the DoJ

Deutsche Bank has agreed to pay $7.2bn to resolve the Department of Justice’s probe into the alleged mis-selling of mortgage securities – about half the sum authorities had originally claimed.

After months of talks with the US authorities, the German bank said early on Friday it agreed “in principle” to pay a $3.1bn civil penalty and also provide $4.1bn in relief to consumers.

The figure compares with the Justice Department’s opening request of $14bn. Deutsche had insisted it was not expecting to settle the claims for anything like that sum.

See full article here

Corporate Advisory

Italian government approves bailout of Monte dei Paschi

The Italian government has approved a bailout of Monte dei Paschi di Siena at a late night cabinet meeting in Rome, led by prime minister Paolo Gentiloni.

The state rescue of the country’s third largest bank, saddled by non-performing loans, became necessary after it failed to raise enough capital in the wake of European-wide stress tests published in July.

A last-ditch effort to gather funds in the last few days only yielded about €2.5bn, well short of the €5bn target required.

In the decree approved early on Friday, the Italian government also announced a compensation scheme for retail investors in junior debt who would be hit under EU rules on burden sharing, saying that they would be able to receive senior debt of the equivalent value in exchange for the subordinated bonds.

See full article here

Corporate Advisory

MiFID II – ESMA sets timetable for Waiver Applications

he European Securities and Markets Authority (ESMA) has updated two Questions and Answers (Q&A) documents regarding implementation issues relating to transparency topics and market structures topics under the Market in Financial Instruments Directive and Regulation (MiFID II/ MiFIR).

Transparency

The new MiFID II transparency regime, which requires trading venues to make public bid and offer prices and depth of trading interest unless granted a waiver, applies from 3 January 2018. To obtain a waiver, trading venues must submit the application to the relevant national competent authority (NCA) and the NCA, where it considers the application is MiFIR compliant, will submit it to ESMA for an Opinion.

The updated Q&A document sets out the waiver application schedule for 2017 in order for competent authorities and ESMA to handle applications in time for 3 January 2018. The waivers will be processed in two tranches:

Equity and Equity-like instruments:

  • Trading venues submit waivers to NCAs by 1 February 2017
  • NCAs submit waivers to ESMA by 28 February 2017
  • ESMA review completed by 31 May 2017

Bonds and Derivatives:

  • Trading venues submit waivers to NCAs by 1 June 2017
  • NCAs submit waivers to ESMA by 31 July 2017
  • ESMA review completed by 30 November 2017

Waivers submitted by trading venues after the above dates will be processed on a best effort basis. The updated Q&A document also clarifies the conditions when existing waivers for shares require a new waiver application.

Market Structures

ESMA has also updated its Q&A document on market structures with new questions on the topics of algorithmic trading and the mandatory tick size regime.

Future work

The purpose of these Q&A documents is to promote common supervisory approaches and practices in the application of MiFID II/MiFIR and its implementing measures. ESMA will continue to develop these Q&As in the coming months, both adding questions and answers to the topics already covered and introducing new sections not yet addressed.

See link to ESMA update

Corporate Advisory

CFTC – Challenging times as new Margin rules approach

As the new non-cleared margin rules approach in March , derivatives users must now be working to modify their existing collateral agreements or draft new ones

“Unfortunately, regulators imposed an unrealistic deadline on the marketplace and seem intent on sticking to that deadline regardless of the effect on the health of the market and market participants,” said Giancarlo, who is in line to head the agency once Donald Trump is inaugurated as U.S. president on Jan. 20.

“As the variation margin deadline approaches, I call on my fellow regulators to determine the market’s readiness and help ease the transition as much as possible to ensure the orderly functioning of the marketplace.”

Australia, Hong Kong and Singapore have already said they would allow a six-month phase-in approach from March, but the EU is heading for a hard deadline.

Giancarlo, who was meeting British regulators during his visit to London, said it was too early to know what needs to be done about a deadline that will affect many trades in a cross-border market.

“The concern I have with the March deadline is some of the smaller firms, asset managers and pension funds, may not be able to get their documentation done in time with some of the sell-side firms,” Giancarlo told reporters.

See article here and here

 

Corporate Advisory

A period of Deregulation through Reforming the Reforms ?

As Europe battles on with perhaps the most transformational period of regulation ever in the form of MiFID II, the US see signs of reforming the reforms. Will Brexit provide an opportunity for the UK to follow and leave Europe behind? In truth, no body knows, but one thing is for certain. Change, change and opportunity continue across the industry.

So long Dodd-Frank as big sections will be repealed in the next year

Trump will be the next US President. The Republicans will continue to control the Senate and the House of Representatives. Parts of Dodd-Frank and other financial regulation are certain to be repealed. Hold on to your seats.

Just when US financial markets were getting used to Dodd-Frank, the Supplementary Leverage Ratio and money market reform, the election has turned all that on its head. The next year will be marked by more upheaval as Republicans undo major portions of financial regulation enacted in the last eight years.

See full article here

Corporate Advisory

Challenging Times & Painful Measures

Deutsche axes bonuses to pay toxic loans fine

Top bankers to miss out on payouts as lender braces for giant US settlement.

Deutsche Bank is to axe bonuses for senior staff as part of its desperate efforts to pay for a potential $14bn (£11.2bn) legal settlement with American regulators.

John Cryan, the German bank’s Yorkshire-born boss, warned top bankers this month that their bonuses would be seized to help foot the bill for the mis-selling of sub-prime mortgages.

A handful of top-performing executives will receive “retention cheques” — much smaller sums that will be paid out over several years. Junior staff will still receive a bonus, but on a far smaller scale.

“The fine could be partly paid for by bonuses,” said one senior insider.

See full article here