Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Friday, July 13, 2012

Cost Of Libor Scandal May Reach $14 Billion For Banks

July 12 (Reuters) - A group of 11 global banks linked to the Libor scandal may face $14 billion in regulatory and legal settlement costs through 2014, according to estimates by Morgan Stanley analysts.

Taking into account the damping effect that rate-rigging accusations may have on market share and activity, Morgan Stanley estimates that earnings and book value will be reduced even further.

The analysts estimated that regulatory penalties will reduce 2012 earnings per share by anywhere from 2 percent to 33 percent for Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, Credit Suisse Group AG, UBS AG , Deutsche Bank AG, Societe Generale , Royal Bank of Scotland Group Plc, HSBC Holdings Plc and Lloyds Banking Group Plc.

The analysts estimated that regulatory fines and litigation settlements would reduce book value per share by a median of 0.5 percent in 2012 for those banks as well as Barclays PLC , which announced a $453 million settlement with UK and U.S. regulators last month.

While the analysts, led by Betsy Graseck, acknowledged that the estimates were "crude," their attempt at quantifying the Libor-related damage to the banking industry was the most specific yet.

The Libor, short for London Interbank Offered Rate, is a key interest rate that underlies an estimated $350 trillion worth of loans and derivatives. A group of 16 global banks sets the rate by giving daily estimates of how much it would cost them to borrow funds from other banks at varying durations.

Morgan Stanley's estimates were given in a best-to-worst case scenario for each bank and based on the Barclays agreement, as well as the individual banks' exposures to Libor-pegged assets.

Original Article
Source: huffington post
Author: Reuters 

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