It has been literally months in the making and now it has finally come to pass. The agreed upon last minute bailout arrangements for world’s oldest and third largest Italian venerable lending bank Monte dei Paschi di Sienna are at last in place. This comes not a moment too soon, as the bank’s stock shares have been suspended in Milan amidst the announcement that the bank only had four months of operating capital remaining with which to keep its doors open.
As major European banks knuckle under Uncle Sam’s regulatory fines, British global bank Barclays has proven it still has some of that old British Imperial grit left by refusing to settle and instead choosing to fight the U.S. Department of Justice in court over a protracted legal battle. Not to be outdone, the Swiss Financial Regulators are now taking on and taking down the majors of the global banking cartel in an effort to get their own piece of the banking profits pie while there are still some left to steal. Whatever you do, take some of your bank deposit money out if you still can and put at least a part of your assets into gold holdings.
Monte Paschi’s Long Avoided Bailout Passes Italian Parliament Vote
Monte Paschi has been effectively on life support for several years now, but its system was finally about to fail altogether. In the wake of a busy week in Rome which saw the Italian Parliament approve an over 20 billion euro rescue bailout fund for the bank and four other struggling Italian regional banks last Friday, the European Central Bank has announced that the troubled historic lender requires a good 8.8 billion euros worth of fresh capital in order to improve its balance sheet sufficiently to function, following its further deterioration in liquidity this past month.
The ECB arrived at these rather arbitrary-sounding large numbers using the results from their second Eurozone-wide banking stress tests of 2016. Fortunately for the world banking system and Eurozone system in particular, the ECB considers Monte Paschi to be solvent, as it still manages to meet the required Tier 2 capital minimums.
Italian daily newspaper Il Sole 24 revealed on Tuesday that the Italian government will plow 6.3 billion in euros into the struggling 530 year old lending institution. The ECB had requested 4.5 billion euros to be contributed by the Italian government and another 4.3 billion euros from the bank’s bondholders. ECB Supervisory Board member Ignazio Angeloni related to Italian daily newspaper La Stampa that the central bank “will continue to do everything we can to ensure that the bank finds a sustainable business model. The ongoing problems in the Italian banking system do not affect all banks, but only a limited number of them.” The Italian bank’s stock shares remain suspended from Milan-based trading until all details of the bank’s rescue are fully made public and clear, per the Italian stock market regulator Consob.
British Global Barclays Bank Goes to War with U.S. Regulators, Refusing to Settle
Flush from its fresh victories last week over German and Swiss banking powerhouses Deutsche Bank and Credit Suisse, the U.S. Department of Justice announced Thursday it will sue Barclays Plc for what it describes as a case of fraudulently selling its mortgage bonds during the years that ran up to the financial crisis and mortgage meltdown in the United States. They had hoped the British would simply scrape and bow, paying a multi billion dollar fine in settled negotiations, but Barclays proved it still has some of its old British Imperial era fire left by refusing to be held up by the bandits at the US DOJ.
This type of lawsuit is a rarity in the universe of the global banking masters, which mostly accept that every few years, the U.S. regulators will simply hold them up and tell them to stand and deliver a part of their massive profits to the Federal coffers. Such a breakdown in settled negotiations reveals how emboldened Barclays Bank feels that the new incoming Trump administration will prove to be friendlier to banks in general than the blackmail-operating Justice Department of outgoing President Obama.
Barclays stands in solid company with other British and continental European lenders who have refused to kowtow to the regulators in Washington D.C. Among other British heavyweights from the City of London are HSBC Holdings Plc and the Royal Bank of Scotland Group Plc. Swiss giant UBS Group AG is the other holdout. This is brave, as the United States so far has managed to squeeze over $46 billion in fines from six American financial institutions to date. Besides this, it counts as unparalleled successes its settlements with past offender French titan BNP Paribas, Deutsche Bank which is ponying up $7.2 billion, and Credit Suisse which will pay more than $5 billion in order to resolve their mortgage bond sales deals. You can see what the other mostly global banks have paid in protection money to the Feds so far in this chart below:
It is not that Barclays Bank feels it is innocent of any and all wrongdoing with the mortgage backed securities bond sales. Their executive board simply chose to draw the proverbial line at $2 billion in penalties in order to settle the affair with Justice. DOJ would not agree to this limit and wanted a full pound of flesh from the venerable British global banking giant’s fabled treasure hoard. Attorney General Loretta Lynch wrote in a statement, “Barclays jeopardized billions of dollars of wealth through practices that were plainly irresponsible and dishonest. We are sending a clear message that the Department of Justice will not tolerate the defrauding of investors and the American people.”
The actual complaint from the DOJ filing on Thursday stated that the British banking giant continuously and consistently deceived American-based investors regarding the quality of their over $31 billion in loans that backed the securities which they parlayed between the years 2005 and 2007. Over half of the underlying loans then went on to default, which cost literally billions worth of investor losses. As part of the show trial from DOJ, independent lending consultants have been brought in to review these loans. They have colorfully labelled them as “craptacular” and bearing the “distinct aroma of default.” It sounds like Barclays will still pay billions in ultimate fines, but maybe by stretching out the process and fighting the ultimately inexorable power of the DOJ for a few years, they can manage to mitigate the final payoff amount.
Swiss Financial Regulator Flexes Muscles In Imitation of the US DOJ
The Swiss are never to be outdone by their American counterparts at the Department of Justice. Their COMCO Swiss Competition Commission announced on Wednesday that it had fined a few U.S. and European based banks in four cases of operating secretive and illegal interest rate cartels. The biggest fine proved to be a suspiciously revenge-like hit back at the U.S. regulators by fining JPMorgan Chase & Co 33.9 million Swiss francs, or around $32.9 million. COMCO determined that JPMorgan had conspired with Royal Bank of Scotland in order to control the Swiss franc based version of LIBOR benchmark interest rates from March of 2008 through July of 2009. The regulator allowed RBS to walk away on a “get out of jail free card” for voluntarily divulging the cartel’s existence to the COMCO.
They similarly fined Barclays Bank 29.8 million francs for their participation in a secretive euro-based cartel which swayed relevant euro interest rate derivatives. You can be sure these banks are only too happy to see such fines in the low millions as opposed to the bank-busting billions the U.S. regulators are exacting in their blackmailing efforts. All of this should make it plainly clear why you can neither trust the global banking cabal, nor the regulators who plunder the banks’ assets at the expense of your financial institution’s stability. Be sure at least a portion of your retirement holdings are sunk into financial hedge heavyweight gold this coming New Year.