On November 28, Russian President Vladimir Putin enforced economic sanctions on Turkey for shooting down one of its Su-24 bomber jets last week. The plane had flown into Turkish airspace along the Syrian border in the fight against the highly aggressive terrorist organisation, Islamic State (IS). Disputes over whether Turkey had sent warnings have ensued – with the one surviving pilot denying that they had been received.
The incident was the first time that a member of NATO has shot down a Russian jet in over six decades. “The circumstances are unprecedented. The gauntlet thrown down to Russia is unprecedented. So naturally the reaction is in line with this threat,” said Putin’s spokesman, Dmitry Peskov, according to Al Jazeera.
[C]hartered flights to Turkey have been terminated, together with the sale of tourist packages to Turkey
The series of sanctions includes a ban of trade for various goods, which have not yet been specified. Additionally, “certain types of work” carried out by Turkish companies in Russia have been prohibited, while the work permits for Turkish nationals in Russia will be barred from extension as of January 1. It is likely that these two caveats of the sanctions will impact Turkey’s construction industry considerably as the two countries have been working together increasingly on various projects. Increased scrutiny of Turkish shipping companies has also been suggested, with greater security at Russian ports.
Furthermore, chartered flights to Turkey have been terminated, together with the sale of tourist packages to Turkey. As around 4.5 million Russians visit Turkey each year, which accounts for 12 percent of all tourists to the country, the decision indicates a large blow to Turkey’s growing tourism sector.
Although not included in the Kremlin’s announcement on Saturday, other sanctions may soon be ordered, including the end to the construction of a gas pipeline between the two states and a nuclear plant in Turkey.
On the same weekend, EU officials announced that they have reached a deal with Turkey to stem the flow of refugees fleeing from IS. For increasing security along its borders, the Turkish state will receive around €3bn in government concessions from the EU. The deal also includes a pledge to revive negotiations for Turkey’s EU membership and allows Turkish nationals to travel within the Schengen zone without a visa.
With Russia now turning its back on Turkey, and colder relations from Russia’s regional allies also expected, it would seem that Turkey is once again moving closer to the West as it re-launches its campaign for a long-desired seat at the EU table. This is an issue that many have criticised in the past due to Turkey’s failures in terms of human rights, the persistent attack on the freedom of speech for Turkish citizens and the fact that its military still illegally occupies an expansive territory of EU Member State Cyprus.
In the lead-up to Paris, the World Bank Group has called for $16.1bn in funding to boost Africa’s resilience to climate shocks. The so-called Africa Climate Business Plan, which consists of protective measures against natural disasters and plans to up renewables share of the energy mix, will be presented in full at COP21, as the organisation looks to make the conversion about much more than emissions.
[T]he World Bank estimates that approximately 43 million people, mostly in Ethiopia, Nigeria, Tanzania, Angola and Uganda, could slip into extreme poverty before 2030 hits
The strategy, according to the World Bank, has been designed to prevent millions from sliding into climate change-induced poverty, and, if successful, should accelerate climate resilience and low carbon development on the continent. The World Bank and the United Nations Environment Programme estimates that the global cost of managing climate resilience will reach $20-50bn per year by the midpoint of the century, with a considerable part set for Africa. However, the level of investment rests on a willingness to act and keep to the 2°C warming target.
“The plan is a ‘win-win’ for all especially the people in Africa who have to adapt to climate change and work to mitigate its impacts,” said the World Bank’s Senior Regional Advisor for Africa, Jamal Saghir. “We look forward to working with African governments and development partners, including the private sector, to move this plan forward and deliver climate smart development.”
Without the measures, the World Bank estimates that approximately 43 million people, mostly in Ethiopia, Nigeria, Tanzania, Angola and Uganda, could slip into extreme poverty before 2030 hits. And though the continent is responsible for only three percent of global emissions, the consequences are disproportionately large.
“The Africa Climate Business Plan spells out a clear path to invest in the continent’s urgent climate needs and to fast-track the required climate finance to ensure millions of people are protected from sliding into extreme poverty,” said the World Bank Group’s Vice President for Africa Makhtar Diop. “While adapting to climate change and mobilizing the necessary resources remain an enormous challenge, the plan represents a critical opportunity to support a priority set of climate-resilient initiatives in Africa.”
Islamic finance is a burgeoning industry. And with more people looking towards more ethical financial solutions, it’s becoming a part of the mainstream market and offering. Nasr Albikawi, CEO of International Turnkey Systems, discusses the international growth of Islamic finance, and how ITS ETHIX can reduce the costs of Sharia compliance.
World Finance: Islamic finance is a burgeoning industry. And with more people looking towards more ethical financial solutions, it’s becoming a part of the mainstream market and offering. With me now to discuss is Nasr Albikawi, CEO of International Turnkey Systems.
Well Nasr, in what way has Islamic finance evolved over the last 30 years?
Nasr Albikawi: It has evolved in a very noticeable way. Islamic banking started around 30-40 years ago, and all the financial institutions in the region are adopting this model and are enhancing their services as they go.
So as we go, we see more institutes are offering their services, because the demand in the market is increasing. And we expect also to increase as we go for the coming few decades, also.
World Finance: And what role would you say technology has played in the development of Islamic finance?
Nasr Albikawi: As in all other businesses, technology is kind of a platform and enabler. Exactly as technology played a role in conventional, classical banking, it’ll do the same thing in Islamic banking and all other businesses.
World Finance: Looking at ETHIX Finance now – how does it differ from other software packages on the market?
Nasr Albikawi: In terms of addressing the business needs from an Islamic perspective, ETHIX is ahead of all other competitors in all respects. Because we started earlier in this market, we’ve been able to work with our clients, our partners, the banks, to identify those needs and to write the application to meet the Islamic needs that are compliant with Islamic Sharia.
So we ahead of all competitors in addressing Islamic financing business needs.
World Finance: How big a challenge is compliance for your clients, and how has ETHIX been able to overcome this hurdle?
Nasr Albikawi: It is challenging, because the Islamic way of doing finance is a bit different. It’s not straight-forward, there are a lot of calculations to be done. So it is challenging, yes. And because we’re doing it for the first time, it requires a lot of effort, it requires a lot of information from the client side, from the Sharia… the counsellor part, because we have to consult at our side. At ITS, the bank side, we have to go back to the Sharia Islamic Committee or counsellors.
But as I said, for quite some time we’ve been able to add results and enhance it as we go, being ahead of everybody else.
It is a challenging task, and it’s not straight-forward. But we’re up to it, and we’re trying to keep our edge moving forward: meeting the customers’ and the market’s demands and expectations.
World Finance: Likewise how can ETHIX reduce costs and strengthen customer services?
Nasr Albikawi: By being able to complete and accomplish the tasks and the requirements of Islamic banking using our system’s applications and infrastructure. This is definitely will play a major role in enhancing and reducing the total cost of ownership. And the output of the whole process by increasing the productivity of the setup in general, the department, and individuals.
World Finance: Now Nasr, there has been a lot of unrest in the Middle East following the Arab Spring. What sort of impact has this had on the industry?
Nasr Albikawi: From the economic side, it has been impacted negatively, by slowing down projects. But at the same time, people are depending on banks to deposit their money and to keep their money. So from one side, they’re not moving their money, they’re not investing much of their money, and they trust the banks most now.
So that kind of encouraged the banks to expand more on their services, expand their capacity, add more services to encourage people to keep their money with them. So we’ve seen some kind of new services that have been introduced by those banks, and the base of these services have been introduced to the market has increased a bit due to the circumstances in the region.
That’s pushed us of course to start meeting the demand by working with these new requests, new services, as per the compliance with Sharia law.
World Finance: Finally, how do you see the industry developing?
Nasr Albikawi: It’s promising, because we would still like to make the costs of complying with Sharia law and financing low, and methods of complying with conventional banking and market requirements. So that gives us more opportunities to work on more services and introduce more business functions as we go.
In terms of market size it’s also very promising. Because today we receive demand and calls from the west part of the world. So Islamic banking is not limited only to our region and to the Asia-Pacific. We receive requests today from North America, from South America, from China, from Japan. And we know there are some governments that are working on introducing Islamic financial regulations, and regard it as part of their central banks’ rules and regulations.
So I think the future is promising. We plan to go global in 2017 to meet the demand that we see growing all over the world.
As emerging market economies experience strong middle class growth, the insurance realm is blossoming alongside these demographic changes. Farzana Chowdhury and Nasir Choudhury from Green Delta Insurance discuss the Bangladesh insurance market and the potential for greater penetration in insurance in Bangladesh.
World Finance: As emerging market economies experience strong middle class growth, the insurance realm is blossoming alongside these demographic changes.
Here to share insight about how the industry is evolving: Farzana Chowdhury and Nasir Choudhury.
First let’s talk about how the middle class growth has evolved?
Farzana Chowdhury: I think the middle class growth has been enormous, for the last 11 years we have been enjoying this over six percent of GDP growth. I mean, a few years ago, I mean the per-capital income was less than $500 but now it’s over $1,200 and because of the economy growth we are having a lot of opportunities for young people to join in various industries like insurance, banking, non-financial institutions.
Bangladesh is the second largest exporter country in the world, so with this expansion of the economy’s growth, we have seen in the insurance industry a lot of insurance needs are coming up at the moment; in addition, you know, to the traditional insurance covers that we have been giving them.
World Finance: So what I they calling for in terms of their insurance needs?
Nasir Choudhury: Without the insurance, no added economic growth, now we have achieved lower middle class, middle-income group now, we are giving proper protection, insurance protection to the government and industries. And they are getting maximum support from the banks and insurance industry.
And the young generation, a lot of people we are seeing in Bangladesh, they are coming for work, for different industries. And we are getting more interest from industry compare to other countries. We have got cheap labour, of course. In Bangladesh we have a lot of… we are giving them a lot of training facilities, to the workers. And insurance cover they are getting … we are expecting the developed countries to take more labour from Bangladesh.
World Finance: So can you tell me Nasir is it mostly corporate or personal insurance that they are looking for?
Nasir Choudhury: It is both, but mostly in Bangladesh’s insurance industry at the moment, we are giving more attention to the corporate. Because we are getting business from them. Unless you give proper cover, proper insurance protection, the industry will not succeed, you know?
World Finance: Now Farzana tell me how do you start to overcome barriers related to lack of awareness about your industry?
Farzana Chowdhury: We are the largest insurance company in Bangladesh for the last 30 years. Even having the market share of 15 percent you will be surprised to know that our market penetration of insurance is lower than one percent. Awareness is actually embedded everywhere, in every activity. We have a motto; to have insurance coverage for everyone.
We do a lot of activities, we do branding, improving our brand image. And we do a lot of marketing activities. Green Delta has always been a pioneer in coming up with innovative products and services.
We have also gone into the health sector; we have developed a health package for the people of our country. Also, we have joined hands with the government, where we will be giving insurance packages to 30,000 people in one area. That is their pilot project; and then we can, you know, increase all over the country. This is how we are trying to create awareness and branding at the same time.
World Finance: Nasir tell me, what do you think is going to be the growth projections for your country, in the decade ahead?
Nasir Choudhury: This is fast growing now, our people are not very much insurance minded, you know. And we have to teach them how to get their protection from the insurance industries, you know. And we have got an insurance association with all the insurance companies and we are trying together to increase the capacity of interest cover even to the people who are penetrated into the share market. We have gone to the capital market and we are going to the insurance training side. And all the insurance companies are coming together and go for even better services, better covers to the public, to the insurance public.
World Finance: Finally, can you tell me Farzana where do you place your company in the growth plans Nasir has just spoke off?
Farzana Chowdhury: We have the largest market share in the country and the insurance market. We are having 15 percent growth roughly every year. So with the penetration, like I mentioned, the government project that we are in. There are other innovative products that we have: we are into a crop insurance project with the IFC – IFC with us as an equity partner.
We launched a health insurance product for the corporate sector, and we have a comprehensive insurance package for women: which gives trauma allowances for the acid victims, rape victims and those who are exposed to road rage, in addition to the personal accident. So that will give us a first mover advantage. So we will be having 20 to 25 percent growth. This is what we are thinking of: improving the corporate governance. You have the international standard enterprise risk management and give better services to our people and, you know, maximising their benefits at a minimum cost.
World Finance: Farzana and Nasir thank you so much for joining me today.
Concern about the potential disruption by the use of algorithms in trading has forced regulators in the US to decide how best to rein in such automated trading. On November 24, 2015, the Commodity and Futures Trading Commission released a proposal outlining how it plans to regulate automated traders.
The US regulator also outlines that automated traders “must implement standards for development, testing and monitoring
The need for new regulation was underpinned by CFTC chairman Timothy Massad, who noted at the that CFTC open meeting commission, where the new regulations were announced that “over the last few years, more than 70 percent of all trading has become automated.” While he pointed out that automated trading had brought a number of benefits to markets, he also noted that it had been the cause of a number of market mishaps, most infamously the 2010 Flash Crash. Therefore, “the Commission,” had been forced to take a “number of steps to respond to the development of automated trading in our markets.”
According to a fact sheet released by the CFTC, the agency is “is proposing a series of risk controls, transparency measures, and other safeguards to enhance the regulatory regime for algorithmic order origination and electronic trade execution on U.S. designated contract markets.” Massad noted that these new regulations would focus “on minimizing the potential for disruptions and other operational problems that may arise from the automation of order origination, transmission or execution.” Such problems “may come about due to malfunctioning algorithms, inadequate testing of algorithms, errors and similar problems.”
The “interconnection of markets and increased use of high-speed and algorithmic trading,” the CFTC noted, means that there is an increased need for pre-trade risk controls. These pre-trade risk controls include “maximum order message and execution frequency per unit time, [as well as] order price and maximum order size parameters”
The US regulator also outlines that automated traders “must implement standards for development, testing and monitoring,” which includes “the designation and training of algorithmic trading staff.” These standards require “keeping the development environment separate from the production environment; testing prior to implementation; a source code repository; real-time monitoring of such systems; and standards to ensure that systems comply with the Commodity Exchange Act and Commission regulations.” Traders must also submit regular compliance reports.
“No set of rules can prevent all such problems,” Massad argued. “But” he continued “that doesn’t discharge us from our duty to take reasonable measures to minimize these risks. It is our responsibility as regulators to create a framework that promotes the integrity of these markets. And I believe this proposed rule helps do that.”
Saudi Arabia has opened its stock market to foreign investors with more than $5bn in assets under management. The initial reaction was extremely positive, explain Khalid Al-Muammar and Ali Imran from Saudi Hollandi Bank, but significant investments may be delayed until Saudi Arabia enters the MSCI index in 2017.
World Finance: Saudi Arabia has opened its stock market to foreign investment. Here to share insight on how the investment community will mature and diversify, Khalid Al-Muammar and Ali Imran.
So, Khalid, first let’s talk about how the investment community reacted to this news?
Khalid Al-Muammar:The response has been great. Before the announcement, before the actual law went live, the market expectation was extremely high. That has been damped a little bit later on, due to a number of factors.
First of all, the drop in oil prices obviously had an impact on the appetite of foreign investors to come into the market. But also foreign investors would require time to digest the law and to see it played action; and also to be comfortable with the legal framework in Saudi Arabia.
World Finance: What competitive advantages do you think that the Saudi stock market and its respective local industries have over regional players?
Khalid Al-Muammar:We will experience change in the investment environment and investment strategy in Saudi Arabia. I envisage two main changes to be there: first enhanced market sophistication as well as fostering of the international best practices.
Sophistication: currently the market is dominated, the daily trading volume is dominated, by individuals. Individuals really have a short-term speculation in the investment arena, whereas a foreign institutionalised investor will have a much longer-term interest in the market.
World Finance: Given these opportunities, let’s talk about the depth of the foreign investment community and how that’s going to shift given this news.
Khalid Al-Muammar:The registration of QFIs – qualified financial institutions – has been slow. However going forward, the depth of investment will relate to the timing of Saudi Arabia entering into the MSCI index for emerging markets, which is expected in 2017. Then, international funds will have to allocate percentages to the Saudi stock market, and we will be able to see major funds flow into the economy.
World Finance: Ali, we just heard about some of the upcoming changes that are going to arise. Tell me about how the needs of your clientele are equally going to keep pace?
Khalid Al-Muammar:In the past the traditional methods of outreaching communication has served the industry well. But the new generation of young millennial customers are very demanding, and they are on multiple channels.
The test doesn’t work in the sense of being connected with the financial services not through the traditional methods. Today most of them, spend their lives on smartphones and social media. These are probably the two most important platforms where they expect their service providers to be. And so that is the case in our area – we are very active and visible in mobile banking, as well as the various social media platforms.
World Finance: Let’s be more specific about trends relating to in-demand services for smart banking in Saudi Arabia.
Khalid Al-Muammar:It is essentially providing all sorts of financial services, products and offerings accessible on the go.
The demand primarily that we see is the service delivery in terms of ease, intuitive design, and making sure that simple, easy products are delivered through the mobile banking platforms, which are relevant, and suited to their life styles.
World Finance: Finally gentlemen, let’s talk about global macro trends. We know that lower oil prices of course have an impact on markets all over the world. Let’s talk about Saudi Arabia in particular.
Ali Imran:The investment banking in particular in Saudi Arabia has been the first to feel the hit with the market correcting itself back in October as result of the falling oil prices.
Furthermore, we should expect that the appetite for industries to list their companies, for example, will be lower and they will have to wait until valuations are improved further. Having said that, I believe that with challenges come opportunities. And I believe that the mergers and acquisitions area of investment banking will flourish, given the fact that companies would see merit in consolidating their expenses and their costs by merging.
Furthermore, the government is intent on privatising the public sector, which will further help the government to reduce the cost burden, since the income has definitely reduced by 50 percent over the same period last year. As a result of that, I see more opportunities for investment companies to act as financial advisers and underwriters of potential privatised sector of the economy going public and being floated in the stock exchange.
World Finance: Very interesting, so you know, we are talking about global oil prices right now, tell me how is that having an impact on the local financial sector?
Ali Imran: As far as the retail banking is concerned the demographics of the Kingdom are extremely compelling. More than 65 percent of the population is under 25, which makes a very strong business case for retail banking growth in the medium to long term.
The non-oil GDP reforms: I believe the government will continue to focus, and that should lead to sustainability in terms of employment creation. That’s one of the most important attributes that will fuel the continuous growth of retail banking.
As far as the Kingdom is concerned, it is still under-branched compared to developed markets, so we expect there will continue to be an expansion in the branch network, into the ATMs, as well as the point of services terminals as well.
World Finance: Phenomenal discussion today thank you so much gentlemen.
Khalid Al-Muammar: Thank you for having us, thank you.
At a conference in Frankfurt, Deutsche Bank’s co-CEO, John Cryan, told onlookers that he believes bankers are still earning too much money. He added that staff bonuses should not be based on short-term profits, but rather long-term value generated in order to stop reckless behaviour.
“Many people in the sector still believe they should be paid entrepreneurial wages for turning up to work with a regular salary, a pension and probably a health-care scheme and playing with other people’s money,” said Cryan. “There doesn’t seem to be anything entrepreneurial about that except the compensation structures.”
Since taking the helm, Cryan has taken steps to reduce the size of Deutsche Bank’s securities division
“We should reflect on people’s contribution over a much longer period of time than one year,” he said. As it stands, there is a tendency to “promise to pay first and then be in the ridiculous position where the baby’s been given the candy and you’ve got the difficulty of taking it away.”
Since taking the helm, Cryan has taken steps to reduce the size of Deutsche Bank’s securities division. He is not alone, however. In fact, many European banks are doing the same in response to stricter regulations and harsher capital requirements being implemented after the financial crisis.
The co-CEO of Deutsche Bank also mentioned at the conference that he is sceptical about the merits of massive bonuses and whether performance-related pay really motivates people.
“I sit on trading floors and wonder what drives people,” he said. “I don’t fully empathise with anyone who says they turn up to work and work harder because they can be paid a little bit more, but that may be a personal view.
“I’ve never been able to understand the way additional excess riches drive people to behave differently.
“I have no idea why I was offered a contract with a bonus in it because I promise you I will not work any harder or any less hard in any year, in any day because someone is going to pay me more or less,” he added.
The boards of Pfizer and Allergan announced November 23 that the two have entered into a definitive merger agreement to create the world’s biggest drug maker by sales, with the transaction stated to close in 2016’s second half. And while the scale of the merger is greater than anything seen in the pharmaceuticals industry to date, the focus, more than anything else, has fallen on its tax implications.
The merger, once completed, will see Pfizer relocate to Dublin and the company’s tax bill shrink considerably
“The combination of Allergan and Pfizer is a highly strategic, value-enhancing transaction that brings together two biopharma powerhouses to change lives for the better,” said Brent Saunders, Chief Executive of Allergan, in a statement. Chairman and Chief Executive of Pfizer, Ian Read, added, “Through this combination, Pfizer will have greater financial flexibility that will facilitate our continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders, and continued investment in the United States, while also enabling our pursuit of business development opportunities on a more competitive footing within our industry.”
The merger, once completed, will see Pfizer relocate to Dublin and the company’s tax bill shrink considerably. Obama has in the past labelled inversion deals like this “unpatriotic” and American politicians have been quick to condemn the practice. Republican candidate Donald Trump said in a statement, “The fact Pfizer is leaving our country with a tremendous loss of jobs is disgusting,” whereas Hillary Clinton said inversion deals would “leave US taxpayers holding the bag.”
According to the FT, Pfizer’s shift to Ireland should generate a one-off earnings windfall of up to $21bn, and the company’s reported tax rate will likely fall from 26 percent currently to as little as 17 percent.
Natural resource commodities have had a tough year. From oil to metals, prices have been persistently low. According to Goldman Sachs, however, this trend is not going to shift anytime soon – and prices could fall even further.
The banking giant has said that the bearish nature of commodity markets is set to continue, with prices not yet bottoming out, unless supply is restricted or demand picks up again.
The banking giant has said that the bearish nature of commodity markets is set
to continue
The Bloomberg Commodity index – a basket of 22 different commodity futures prices – has fallen by 16 percent and is at its lowest level since 2009. Copper is its lowest point since 2009 – hitting a low of $5,000 in November 2015. Due to its wide range of uses in the world economy, copper is often considered a yardstick for the general health of the world economy. Other commodities have also hit record lows, with oil sitting at historically low levels since the summer of 2014.
As Goldman Sachs notes, unless supply is restricted or demand increases, prices are likely to slide again. The slowdown in China is generally seen as having caused contributed to a fall in demand for commodities, as it underpinned the commodity super cycle that peaked in 2011. As China rebalances away from heavy investment, its demand for hard commodities has slowed down. Whether or not China’s demand for natural resource commodities will pick up again seems unlikely.
However, a restriction in supply for oil seems more likely, as the Saudi decision to keep OPEC production levels high, creating a market glut and price decline, is becoming more untenable. OPEC countries reliant upon oil for national budget increasingly feel the fiscal constraints of low oil prices.
A meeting between Greece and its international lenders on November 17 has successfully unlocked €12bn in bailout funds. The much needed capital will contribute €2bn towards the country’s mounting debt and €10bn for the recapitalisation of the country’s banks, which will, crucially, allow them to rebuild cash reserves.
The development in negotiations was reached through a new formula whereby the state can continue offering protection to homeowners from foreclosure. Under the new rules, around a quarter of Greek homeowners that are deemed the most vulnerable will be shielded from foreclosures. A further 35 percent is also eligible for protection based on their mortgage payment history and property value.
The conditions for the €86bn bailout that Greece received in July required the state to increase taxes and increase spending cuts further
The Greek parliament will vote the terms of the deal on November 19; many expect the notion to be passed as the coalition government holds the seat majority in the legislature.
The conditions for the €86bn bailout that Greece received in July required the state to increase taxes and increase spending cuts further. Yet, the Syriza-led government has failed to implement the strict measures following September’s national elections and various disagreements. Unsettled issues include bad bank loan procedures and potentially scrapping a proposed levy on private education.
Although a series of economic measures were passed by parliament last month, EU finance ministers argued that they did not fully meet the requirements needed to secure a further €2bn loan from international creditors. Creditor demands for the leftist government to enforce mortgage foreclosures has been a stumbling block in negotiations as the governing coalition argued the necessity of protecting families from losing their homes in order to ensure social stability.
The new deal signifies a promising milestone in Greek talks with lenders and one that will also help to secure social cohesion among a disgruntled population.
Barclays is set to be hit with even more fines from financial authorities. The institution is set to be slapped with a $100m fine to the New York Department of Financial Services for manipulating foreign exchange markets.
These new fines come off the heels of the British financial giant paying a number of other large fines. Recently Barclays has agreed to pay $120m in private litigation for its role in the LIBOR manipulating scandal, as well as being hit by British regulators in May 2015 with the biggest fine it had ever handed out.
Since the 2008 financial crisis, banks have come under increasing scrutiny and tougher regulation
and enforcement
As the UK’s Financial Conduct Authority noted at the time, the FCA imposed the fine on the bank “for failing to control business practices in its foreign exchange (FX) business in London. This is the largest financial penalty ever imposed by the FCA, or its predecessor the Financial Services Authority (FSA).”
Similar charges are behind the new expected penalties by the New York regulator; however the fine itself is slightly less due to the scale of the markets involved. Since the 2008 financial crisis, banks have come under increasing scrutiny and tougher regulation and enforcement, leading them to rack up record fines.
Moody’s, the independent financial regulator, recently tallied up the total cost of all fines imposed on financial institutions since 2008, finding that it reached a total of 219bn, with US banks accounting for the largest share of this.
Barclays had recently announced Jes Staley – formerly the CEO of JP Morgan’s investment bank – as their new CEO. This new fine will provide with his first major test, as he assumes his new role in December 2015.
KPMG’s Jeremy Anderson talks to World Finance on the conference floor of Felaban 2015, on the five big trends in banking change, and what the next business model for the banking industry could look like.
