UBS Faces $1bn Fine Over Libor Manipulation

UBS is expected to be hit with a fine of around $1bn to settle Libor manipulation charges.

The total amount - worth around £620m - will be a combined penalty from US and UK regulators, and is expected to be confirmed early next week.

UBS declined to comment on the news.

It comes two days after the Serious Fraud Office made three arrests as part of its investigation into the fixing of the interbank lending rate.

Sky sources suggested that one of the people detained previously worked as a trader at UBS, which has a big presence in the City of London.

Last month, the Financial Services Authority fined the Swiss bank £29.7m for internal failings that allowed a London-based rogue trader to cause the biggest fraud in British history.

Unauthorised trading by Kweku Adoboli resulted in £1.4bn worth of losses for UBS.

To date, Barclays is the only UK bank to have been fined in connection with the rigging of Libor.  

It was fined £290m in June, and its chief executive, Bob Diamond, resigned the following month. 

Libor - or the London Interbank Offered Rate - is the rate used to fix the cost of borrowing on mortgages, loans and derivatives.

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Queen Asks Bank Bosses About Financial Crisis

The Queen has finally had her question answered on why nobody saw the financial crisis coming during a visit to the Bank of England.

Four years ago, during the height of the global crisis, the Queen famously asked: "Why did nobody notice it?"

While on a tour of the Bank with the Duke of Edinburgh, she was given a thorough explanation of the 2008 downturn by Sujit Kapadia, who is on the bank's Financial Services Committee.

During the discussion, the Queen made her thoughts on the crisis clear, saying that the City regulator, the Financial Services Authority (FSA), "didn't have any teeth" and that there was complacency in the City.

She said to the workers: "People got a bit lax ... perhaps it is difficult to foresee (a financial crisis)."

The Queen also asked what authorities were doing now to prevent another global downturn.

When told by an employee that the men and women in the room were there to prevent another one, the Duke jokingly said: "Is there another one coming?"

Sujit Kapadia explained the crisis to the Queen

In the briefing, Mr Kapadia gave the Queen three reasons behind the crash of 2008 that brought banks around the world to their knees.

He told her that financial crises were like earthquakes and flu pandemics and, because they are rare events, they are difficult to predict.

He also said there was a new paradigm where people thought that markets were efficient and risks could be managed better than before.

"People thought markets were efficient, people thought regulation wasn't necessary," he told the Queen.

"Because the economy was stable there was this growing complacency.

"(Thirdly) people didn't realise just how interconnected the system had become."

Mr Kapadia said the Queen was very interested in what the Bank was trying to do to prevent another crisis.

"(She asked) what initiatives are in place, is the system less interconnected than it was before.

"The strongest thing I got (from the Queen) is what are we trying to do so it doesn't happen again.

It was the Queen's eighth visit to the Bank of England

"She actually agreed that it was very difficult to predict and she did latch on the idea that it is probably a bit like the flu pandemic."

Mr Kapadia said he then explained various reforms that had been put in place to keep economies stable.

The FSA has responded to the Queen's comments.

"We've widely acknowledged that the regulatory approach before the financial crisis in 2008 was flawed and has since been completely changed," a statement said.

"Parliament is now awaiting Royal Assent for the Financial Services Bill, which will determine the powers for the new regulators that will be created next year."

During the visit to the Bank, the Queen and the Duke also toured vaults full of thousands of slabs of gold worth billions of pounds and briefly inspected some of the gold.

The royal couple then signed a million pound note each for the bank's guest book.

The Queen was intrigued when she was shown the very first banknote she had signed for the guest book on November 29, 1937, as an 11-year-old.

The signature was a simple "Elizabeth" written in a neat young girl's script on a thousand pound note in the book.

On signing the note, the Queen said of her signature: "It hasn't improved much you know."

It was the Monarch's eighth visit to the Bank of England. As she walked out of the building towards a large crowd of people waiting outside, she said of her visit: "Very interesting, isn't it?"

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EU Leaders To Give Bank Deal Timetable

European leaders are expected to set a loose timetable for "genuine economic and monetary union" in the region later today.

It comes a day after European finance ministers took a major step towards full banking union by agreeing to create a single supervisor for Eurozone banks.

But the UK will not be subject to the scrutiny, continuing to supervise its own institutions.

Prime Minister David Cameron said he was happy to endorse the move towards greater economic coordination because Britain could opt out.

"Britain's not in the euro, we're not going to join the euro so we won't be part of that integration, but this change taking place does give us the opportunities to argue for the things that we want in Europe and get a better deal for Britain in Europe," he said.

"That's what I'm interested in discussing and pursuing for Britain."

The deal gives the European Central Bank (ECB) oversight for lenders in the 17 EU countries that use the euro - and any other country that wants to opt in.

It also paved the way for Europe's bailout fund to give direct aid to ailing banks - a measure seen as vital to helping the Eurozone break free of its debt crisis.

The agreement, which follows months of negotiations, was described by the president of the European Commission, Jose Manuel Barroso, as  a "deep and genuine economic and monetary union", which requires "steps towards political union".

Meanwhile, the finance ministers agreed to release a further pay 34.3 billion euros (£27.8bn) of aid to Greece after months of disagreement.

Greece was left on the brink of bankruptcy after the badly-needed funds were withheld over fears the country was not meeting its strict bailout commitments.

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Brussels: Deal On ECB Banking Supervision

European finance ministers have taken a major step towards full banking union by agreeing to create a single supervisor for Eurozone banks.

The deal reached just before dawn in Brussels follows months of negotiations and will be put before European Union leaders later on Thursday.

The political agreement will give the European Central bank oversight for banks in the 17 EU countries that use the Euro and any other country in the union that wants to opt in.

It will give the ECB sweeping powers and pave the way for Europe's bailout fund to give direct aid to ailing banks - a measure seen as vital to helping the Eurozone break free of its debt crisis.

"Piece by piece, brick by brick, the banking union will be built on this first fundamental step today," said EU Commissioner Michel Barnier.

The EU had promised markets to have an outline deal by New Year, and the finance ministers delivered - after yet another all-night emergency session.

Herman van Rompuy's plans aim to prevent another Eurozone debt crisis

"We stick to what we promised," said German Finance Minister Wolfgang Schaeuble.  "Painstakingly, we advance the cause of Europe."

But markets seemed to largely shrug off the deal, perhaps because the broad strokes have been known for some time.

Under the deal, banks with more than €30bn (£23bn) in assets or those that represent 20% of gross domestic product of their national economies will be placed under the direct oversight of the European Central Bank.

The ECB can also decide to supervise any other bank it wants when it gains supervisory powers - which could be in place by 2014.

The deal marks a compromise for France and Germany, who had been at loggerheads on the structure of banking union.

EU leaders believe this first step towards banking union can be put in place without having to change current treaties - but the UK's House of Lords EU Committee has said it does not believe effective banking union can happen without new agreements.

David Cameron has vowed to fight hard for British interests

Other issues are on the agenda at the summit of EU leaders, including how to enforce fiscal discipline in the Euro area and a push for implementation of the so-called "two-pack", which would involve Eurozone governments showing their budgets to EU officials before submitting them to their own parliaments.

So-called "out" countries which have retained their currencies, including the UK, are concerned that any move towards tightening the inner core could distort the single market.

David Cameron and the Swedish PM Fredrik Reinfeldt, want to ensure they retain their voice at the top table on financial matters and that the London-based European Banking Authority is not usurped by the new proposals.

A senior EU official has also indicated that Britain wants to ensure there is not a rush to amend the EU treaties, which is a long and often divisive process.

Any significant power-shift from London to Brussels could automatically trigger a referendum. The UK government knows a vote on Britain's involvement with the EU is perhaps unavoidable, but would rather wait until the next parliament.

The issue of the UK's budget spat with the European Union will not be discussed - that is waiting for another summit in the New Year.

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Fracking Could Get Green Light From Ministers

The Government is set to announce today whether it will lift a ban on the controversial process of shale gas exploration known as fracking.

Ministers are expected to allow gas company Cuadrilla to resume operations in Lancashire after they were halted in 2011 when test-drilling caused two minor earthquakes.

Fracking involves drilling holes deep into the ground and then using high-pressure liquid to fracture shale rocks to release gas trapped inside.

Cuadrilla believes it could supply a quarter of the UK's gas needs from the resource in Lancashire, leaving the country less reliant on foreign imports from Qatar or Russia.

There are also hopes it could help bring down energy prices.

The Treasury has already signalled its support for the budding industry, proposing tax relief for shale gas and unveiling a gas generation strategy.

But environmentalists argue that the fuel has no place in the move to a low-carbon economy and insist continuing to rely on gas could stop the UK meeting its emissions targets.

There are also concerns that fracking can cause local environmental problems, including polluting water supplies and damaging development.

Friends of the Earth senior energy campaigner Tony Bosworth said: "A green light to fracking would spell bad news for local communities and their environment, jeopardise UK climate change targets and help keep the nation hooked on dirty gas for decades.

"Gambling on shale gas is a risk we don't need to take - developing our huge clean power potential and cutting energy waste will create jobs, reduce our fossil fuel dependency and keep the lights on."

A decision on whether Cuadrilla can resume their work will also have consequences for other companies keen to potentially exploit the resource elsewhere in the UK.

Its chief executive Francis Egan told the Commons Energy and Climate Change Committee earlier this week that he believes it can provide 25% of the UK's gas demand.

He insisted that pursuing fracking would have huge benefits, including creating tens of thousands of jobs and raising significant tax revenues.

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HMV Warns Of Covenant Breach As Sales Fall

HMV has warned that uncertainties facing the business mean it is likely to breach its banking covenant in January.

The high street stalwart - which sells CDs, DVDs, games, music players - said it was in "constructive discussions" with banks about its performance.

Despite numerous promotions, including "2 for £15" on chart CDs and "2 for £10" on DVDs, total sales fell 13.5%, while like-for-like sales were down 10.2% in the six months to October 27.

HMV reported a loss before tax of £37.3m - an improvement on the £48.1m loss over the same period the year before.

But net debt at the the 91 year-old company increased from £163.7m to £176.1m.

Following the release of the results, shares in the company fell 39% valuing HMV at just £10.1m.

Its new chief executive Trevor Moore admitted HMV had experienced a difficult first half of the year. 

"However, the business has started to deliver a number of new initiatives which will help to maximise the seasonal sales opportunity and provide a platform for growth in 2013," he said.

"Additionally, as we trade through this period we will continue to develop further initiatives with our suppliers and I will provide updates at the appropriate time."

He added that closing more stores or placing the business into administration was not "part of our plan".

HMV had responded to declining sales of music and films by focussing on games and technology products.

But the company said that despite the reduced high street presence of rival GAME - and the division's 6% sales - growth was "not as strong as the business had believed it would be".

Performance at HMV Live - the company's music venue, festival and ticketing division - was also poor, following the sale of the Hammersmith Apollo for £32m.

It also blamed the cancellation of the Vintage festival and an unpopular Lovebox festival for the fall in sales, to £25.4m from £31.2m in the previous year.

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Virgin Atlantic Takes On BA With Delta Deal

Singapore Airlines has sold its 49% stake in Virgin Atlantic to rival Delta, in a move that will bolster Virgin's reach in the United States and intensify its rivalry with British Airways.

The deal was announced just 24 hours after a verbal spat between the chief executive of BA's parent firm and Virgin founder Sir Richard Branson over Virgin's future.

In their statement, Delta and Virgin said their joint venture would enhance competition between the UK and North America, offering greater benefits for customers travelling on those routes.

As part of the agreement Delta, which is the largest carrier in North America, will invest $360m (£224m) in Virgin Atlantic.

Virgin Group and Sir Richard will retain a majority 51% stake and Virgin Atlantic Airways will retain its brand and operating certificate.

Between them, they will jointly operate up to 31 round-trip flights between the US and UK each day.

Delta is taking a 49% stake in Virgin Atlantic

Steve Ridgway, Virgin Atlantic Chief Executive, said: "Consumers will reap the rewards of this partnership between two great airline brands on services from the UK to the USA, Canada and Mexico through a shared ethos in the highest standards of customer service.

"This unique joint venture will deliver much more effective competition at Heathrow.

"Both airlines are confident that the Department of Transportation will be as convinced as we are of the extensive consumer benefits arising from this joint venture, with expedited approval being granted by the end of 2013.

"The transatlantic market is Virgin Atlantic's heartland - it's where we started. By aligning with Delta we can continue to grow our North American network and offer greatly enhanced connectivity across the USA."

Sir Richard Branson and Willie Walsh are at each other's throats

Sir Richard, who is Virgin Atlantic's President, commented: "This is an exciting day in Virgin Atlantic history. It signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business.

"I truly look forward to the possibilities our partnership with Delta will offer. We have always been known for our innovation and service and have punched above our weight for 28 years. That is why our customers love us so much.

"We will retain that independent spirit but move forward in a strengthened partnership with Delta."

News of the deal followed the latest spat between BA and Virgin. Sir Richard offered to pay staff at BA £1m if the Virgin brand disappeared within five years as the boss of BA's parent firm, Willie Walsh, had suggested would be the case if Delta sided with Virgin.

Mr Walsh is reported to have responded that he did not have £1m as he was not a billionaire banker (referring to Virgin Money) but would settle for a 'knee in the groin' instead.

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SuperGroup's Profits Up After Sales Boost

The owner of the SuperDry fashion brand has reported a hike in profit, as a broader product range boosted sales.

SuperGroup - whose products are favoured by celebrities including David Beckham and Pippa Middleton - said pre-tax profit over the 26 weeks to October 28 was up 13% to £14.7m. 

Sales of its trademark t-shirts, hoodies and jackets, among other clothing products, were up 3.9% at UK stores open for over a year, while revenue at the group increased by over 16% to £158.2m.  

The retailer's chief executive, Julian Dunkerton, said the company's recent investment was starting to pay off. 

"Although the trading environment has remained challenging and volatile, the group's sales performance in the first half of the year has been encouraging,"  he said in a statement.

"There have been a number of positive factors that have supported this performance but it is clear that the ongoing investment in design and the growing presence of the brand have enhanced sales both in the UK and overseas."

The results come after an overhaul of the group's management structure following a series of profit warnings in 2011.

"Good progress is being made but the full infrastructure upgrades, and the associated benefits, will take a number of years to deliver," Mr Dunkerton added.

He said that despite global economic uncertainty, he remained confident that company could meets its full-year profit targets.

Since SuperGroup listed on the stock market in 2010, its shares have rocketed from 500p to a high of 1,899p in early 2011.

Its share price fell dramatically last year after a string of management mistakes led to stock availability issues and "arithmetic errors", before beginning to recover this summer. 

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Adam Posen: Osborne's Plan Is 'Misguided'

George Osborne's economic strategy is "misguided" and has left Britain "malnourished", according to a former Bank of England policymaker.

Adam Posen, who stepped down from the Monetary Policy Committee (MPC) in August, accused the Government of focusing on "the wrong goal".

Adam Posen: There are alternatives

He attacked the Chancellor and David Cameron for doggedly pursuing deficit reduction, which he claimed was "self-defeating", and urged them to change course.

His comments come a week after Mr Osborne's mini-Budget, in which the Chancellor insisted that to switch approach now would lead to "disaster".

Mr Posen told Prospect magazine: "Sitting central bankers should not publicly comment on fiscal policy. Silence, however, was not assent on my part.

"For two-and-a-half years the Government's economic policies have focused on the wrong narrow goal, been self-defeating in pursuit of that goal and in so doing have eaten away at British economic capabilities and confidence."

He continued: "Unfortunately, his Autumn Statement reiterated the same misguided priorities of deficit reduction and the same failed approach, with only minor variations."

Arguing for a change of direction, he said: "It is not enough for Messrs Cameron and Osborne to claim that they have done what they promised to so.

"Their policies have left the British economy malnourished, and indeed made parts of it quite ill. There are alternatives available, and the British government should switch to these now."

George Osborne delivering his Autumn Statement

Mr Posen, an American economist, joined the MPC in September 2009 but left earlier this year to become director at a US think tank.

On the committee, he was the only member to vote consistently for quantitative easing - the practice of printing more money to try and boost the economy.

He has previously advised parts of the US government, the European Commission, the Cabinet Office and the International Monetary Fund.

In his Autumn Statement last week, Mr Osborne admitted the Government is set to miss his target of reducing debt by 2015 and that slashing the deficit will take longer.

Despite criticism that he is not doing enough to stimulate growth and that his drastic austerity measures are holding back the recovery, the Chancellor refused to give ground.

"We cannot relax our efforts to make our economy safe but Britain is heading in the right direction. The road is hard but we're making progress. It's taking time, but the British economy is healing," he insisted.

However, official growth forecasts have been slashed - with the economy predicted to shrink by 0.1% this year and only grow by 1.2% in 2013.

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HSBC To Pay £1.2bn In Money Laundering Case

Record Fine: HSBC's Statement

Updated: 8:39am UK, Tuesday 11 December 2012

HSBC released the following statement after confirming it will pay $1.9bn (£1.2bn) to the US Department of Justice over money-laundering.

HSBC has reached agreement with United States authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanctions laws.

This includes a Deferred Prosecution Agreement (DPA) with the US Department of Justice. HSBC has also reached agreement to achieve a global resolution with all other US government agencies that have investigated HSBC's past conduct related to these issues and anticipates finalising an undertaking with the United Kingdom Financial Services Authority shortly.

Under these agreements, HSBC will make payments totaling $1.921bn, continue to cooperate fully with regulatory and law enforcement authorities, and take further action to strengthen its compliance policies and procedures.

Stuart Gulliver, Group Chief Executive, said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes. Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters.

"While we welcome the clarity that these agreements bring, ensuring the highest standards wherever we do business is an ongoing process. We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world."

In the past several years, the Board of HSBC Holdings plc has taken decisive action to direct management to fix past shortcomings as they have come to light. Since 2011, with new senior leadership teams in place at both HSBC Group and HSBC North America, HSBC has taken extensive and concerted steps to put in place the highest standards for the future.

The Department of Justice has recognised these efforts in the DPA: "Management has made significant strides in improving 'tone from the top' and ensuring that a culture of compliance permeates the institution. The efforts of management have dramatically improved HSBC Bank USA's and HSBC Group's Bank Secrecy Act / Anti-Money Laundering and Office of Foreign Assets Control compliance programmes."

As noted in the DPA, HSBC Bank USA already has, over the past several years, undertaken the following voluntary remedial measures:

• increased its spending on anti-money laundering (AML) approximately nine-fold between 2009 and 2011;
• increased its AML staffing nearly ten-fold between 2010 and 2012;
• revamped its Know Your Customer programme, including treating non-US HSBC Group Affiliates as third parties subject to the same due diligence as all other customers;
• exited 109 correspondent relationships for risk reasons;
• clawed back bonuses for a number of senior officers, and
• spent over $290m on remedial measures.

HSBC Group has also undertaken a comprehensive overhaul of its structure, controls, and procedures. A number of these improvements is included in the DPA. Among other measures, HSBC Group has:

• simplified its control structure, allowing the Group to manage risks worldwide more effectively;
• elevated the role of Group Compliance and given it direct oversight over every compliance officer globally, so that both accountability and escalation now flow directly to and from HSBC Group Compliance;
• created the new role of Head of Group Financial Crime Compliance and Group Money Laundering Reporting Officer, who will help to establish a Global Financial Intelligence Unit;
• made other new senior hires with extensive experience handling relevant international legal and regulatory issues, including a new Chief Legal Officer and a new Global General Counsel for Litigation and Regulatory Affairs;
• adopted a set of guidelines limiting business in those countries that pose a high financial crime risk;
• issued a new global sanctions policy using a more extensive and consistent set of lists to screen all cross-border payments;
• commenced a review of all Know Your Customer files across the entire Group - the first phase of this remediation will cost an estimated $700m over five years, and
• undertaken to implement single global standards shaped by the highest or most effective anti-money laundering standards available in any location where the HSBC Group operates.

Over the five-year term of the agreement with the Department of Justice, an independent monitor will evaluate HSBC's progress in fully implementing these and other measures it recommends, and will produce regular assessments of the effectiveness of HSBC's compliance function.

The agreement notes that HSBC Bank USA and HSBC Group have "provided valuable assistance to law enforcement." HSBC conducted multiple extensive internal investigations, voluntarily made employees available for interviews, and collected, analysed and organised voluminous evidence and information.

HSBC is firmly committed to putting in place robust standards that will help promote the integrity of the global financial system. 

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