You are here: Home / Archives for Bank

UK Hot Topic: Structured Products Plot Their Comeback

May 27, 2010 By Leave a Comment

A comeback has been structured for once-maligned structured products, despite a backlash against derivative-based financial products. UK debt markets have become awash in these exotic securities issued by no less than Barclays, Bank of America and Société Générale. Their quite-creative products offer the opportunity, in effect, of betting on fluctuations in the price of copper, the rate of inflation in Mexico, and the even food prices. In total, these new, exotic securities tell two tales: the return of structured products, and the onset of betting on where the global economy is likely to go.

Structured products are a type of financial alchemy that investment banks undertake in order to turn movements in base assets into precious profits. A structured product is a market linked financial instrument that provides banks with capital and pays out investors on the basis of a predefined formula tied to an underlying asset. A few of these structured products don’t just offer returns that match underlying assets, and in a few cases they offer accelerated gains where payments are ratcheted up if assets hit certain high watermarks.

Leading the way with some of the more unusual structured products is Bank of America. It issued a 500 billion Mexican Pesos structured note programme on both the London Stock Exchange and the Mexican Stock Exchange recently, with a formula tied to the Unidad de Inversion Index of the Banco de Mexico (the official inflation index of Mexico). The structured product which forms part of Bank of America’s Euro Medium-Term Note Program, tracks the Mexican inflation index, paying investors out at a defined rate for any gain in the rate of inflation. This product allows investors in both Mexico and the UK to speculate on an increase in the rate of inflation in Mexico, something that is difficult to achieve directly. This Mexican inflation tied product also suggests that Bank of America is betting that inflation in Mexico is set to rise until 2025.

Alongside Mexico, other emerging markets’ fortunes are the subject of financial speculation. Barclays announced recently a £10 million zero coupon note due May 2016 which is tied to the MSCI Emerging Markets Index, a free float-adjusted market capitalisation index that is designed to measure equity market performance in global emerging markets. This exotic Barclays’ product is structured so that investors receive index linked warrants for Class 42K Redeemable Preference Shares in Barclays Capital (Cayman) Limited at the maturity of the note programme. The note programme includes a final payment guarantee at the end of the 6 year period and offers a 75% capital gain on any positive index performance on top of initial capital. Also included in the programme is a volatility dampener that is designed to stop volatility of up to 17% from affecting the underlying value of the fund.

via UK Hot Topic: Structured Products Plot Their Comeback.

LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , ,

BofA’s Countrywide in $624 mln lawsuit settlement | Reuters

May 10, 2010 By Leave a Comment
Former Countrywide Logo
Image via Wikipedia

Countrywide Financial Corp, the mortgage lender acquired by Bank of America Corp (BAC.N), has agreed to a $624 million settlement of a lawsuit accusing it of misleading investors about its lending practices.

Countrywide will pay $600 million and its former auditor KPMG LLP will pay $24 million to resolve the class-action litigation, which covers investors who bought the lender’s securities between March 12, 2004 and March 7, 2008.

The case was led by several pension funds, including the New York State Common Retirement Fund, that state’s $129.4 billion public pension fund, and five New York City pension funds.

“This is a very good settlement that helps repair the damage Countrywide has done,” New York State Comptroller Thomas DiNapoli, who oversees the Common Retirement Fund, said in a statement.

Bank of America spokeswoman Shirley Norton said that the bank agreed to the settlement to avoid further costs and uncertainty of litigation, and that Countrywide denied wrongdoing.

KPMG spokesman George Ledwith confirmed the settlement, without elaborating.

via UPDATE 3-BofA’s Countrywide in $624 mln lawsuit settlement | Reuters.

Related articles by Zemanta
LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , , , , ,

‘They Can Sue You’: Navigating the Foreign e-Discovery Mine Field | Corporate Counsel

April 21, 2010 By Leave a Comment

Handling electronic discovery in a foreign country means navigating a mine field of competing legal interests, in-house lawyer Alexander Shapiro told a group of in-house and outside counsel last week.

Shapiro, managing director and senior managing counsel at The Bank of New York Mellon Corporation, spoke at the 2010 spring meeting of the American Bar Association Section of International Law in New York. Prior to joining BNY Mellon, he spent 10 years as a government lawyer, including as an assistant U.S. attorney in New York.

“Private communications in the workplace are a fundamental freedom in Europe,” Shapiro warned. “You have a duty of privacy to your customers in the foreign jurisdiction, and to your employees. They can sue you if you violate it. And some of these foreign laws have criminal provisions.”

One unidentified lawyer in the audience pointed out that in Europe both a company’s in-house lawyer and outside counsel can be charged for violating those laws, as well as the corporation itself.

In addition, Shapiro said some countries have a blocking statute that bars a bank from sending documents out of country for a pretrial proceeding.

So what if you have a U.S. judge demanding discovery of bank documents in Germany? “Your job is to navigate the competing pressures,” Shapiro said. He advised talking to all parties and judges involved, and trying to obtain privacy waivers from employees in a form consistent with local law.

via ‘They Can Sue You’: Navigating the Foreign e-Discovery Mine Field.

LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , , , , , ,

HIRE power: new reporting requirements and penalties for holders of offshore bank accounts | Lexology

March 30, 2010 By

Holders of offshore bank accounts, along with their accountants and tax advisors, should be aware of recently enacted changes in their reporting requirements. Under the HIRE Act signed by President Obama on March 18, individuals are required to include certain information with their tax returns beginning with the 2011 tax year. The newly required information reporting is in addition to the information already provided to the U.S. Treasury Department on the Form 90-22.1 (“FBAR”).

The scope of the new reporting requirement is greater than what is currently covered on the FBAR. Therefore, individuals who have never had an FBAR filing requirement may be subject to the reporting requirement, and individuals who are familiar with FBAR filing requirements may have to provide additional information. Taxpayers should be aware of the new information that is subject to reporting and the applicable penalties for failing to report the information.

Assets Subject to Reporting

Any of the following assets may be subject to reporting if the value of all of the specified assets held by the taxpayer is greater than $50,000:

Any financial account maintained by a foreign financial institution.

Unless regulations provide otherwise, this could include a bank account maintained with a U.S. branch of a foreign financial institution.

Investments with foreign private equity or hedge funds may need to be reported.

Stock or securities issued by a non-U.S. person.

Any financial instrument or contract held for investment that has an issuer or counterparty that is a non- U.S. person.

Interest rate and other swap agreements, futures and forward contracts, and other derivatives to which a foreign entity is a party could be subject to reporting, regardless of whether the instrument is considered to be a “foreign” instrument.

via Lexology – HIRE power: new reporting requirements and penalties for holders of offshore bank accounts.

LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , , , ,

EUROPEAN UNION: Striking a Balance between Privacy and Security : Internet Business Law

March 29, 2010 By

EU prepares new negotiations with US government on transfer of bank data for purpose of fighting terrorism.

The commission is asking EU leaders to authorise new talks after parliament rejected the previous so-called SWIFT deal amid concerns that it posed a threat to privacy. MEPs also expressed their desire to be consulted more during the negotiating process.

Cecilia Malmström, the new commissioner for home affairs, says she will press for stronger privacy safeguards and make sure parliament is informed at all stages of the talks.

The future agreement should also be reciprocal, so that the US would have to provide similar banking data if the EU decides to set up its own programme for tracking funds supporting terror groups.

“Terrorism remains among the main threats that EU security has to face and we need to put in place tools that are up to the task, allowing for effective international cooperation,” she said.

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication, a messaging network used by some 8000 banks and financial institutions worldwide. The SWIFT database records millions of international bank transfers every day.

via EUROPEAN UNION: Striking a Balance between Privacy and Security : Internet Business Law.

LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , , , , ,

Justices to Consider a Border Battle Over Lawsuits | Law.com

March 27, 2010 By

“Foreign-cubed” is the name of the latest legal nemesis that keeps lawyers for companies ranging from Toyota to Vivendi up at night.

The term refers to securities class action litigation in which the investors are foreign, the issuers are foreign and the fraudulent conduct took place on foreign soil. And yet, because of some company tie to the United States, large or minuscule, they end up in U.S. courts, where plaintiffs usually can do a lot better than if the suits were filed abroad.

Six years after the moniker was first coined, a foreign-cubed suit has made its way to the U.S. Supreme Court, which will hear the case, Morrison v. National Australia Bank, today. Foreign investors accused Australia’s largest bank of fraud involving a Florida subsidiary, but the bank insists all of the disputed activity took place in Australia. So far, the bank has won.

Foreign companies and countries have flooded the Court with friend of the court briefs, signaling the importance of the case worldwide. Even parties litigating over the Toyota safety meltdown are watching; several securities class actions have been filed in federal courts against the company, which trades on the Tokyo Stock Exchange, based on statements made by Toyota officials in Japan.

The case comes to a Court that has grown increasingly skeptical about U.S. courts exerting extraterritorial jurisdiction. In the 2007 case Microsoft v. AT&T, a 7-1 majority spoke approvingly of the presumption that “United States law governs domestically but does not rule the world.” Three years earlier, in Hoffman-LaRoche v. Empagran, a unanimous Court said extending the reach of American antitrust laws too far into foreign situations would be “an act of legal imperialism.”

via Law.com – Justices to Consider a Border Battle Over Lawsuits.

LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , , , , , , , , , ,

E.C. launches new drive for bank data-sharing agreement

March 24, 2010 By

The European Commission today began work on a new set of negotiations with the U.S. on the transfer of E.U. citizens’ bank data for counterterrorism purposes, after a previous agreement was vetoed by the European Parliament.

The agreement is needed because while European data protection laws prohibit the passing of personal data to the U.S., American authorities say the data has been a valuable tool with which to track the funding of terrorist acts.

The Parliament torpedoed the agreement last month partly because it felt that European civil liberties were being compromised, but also because it was excluded from the decision-making process.

As a result, SWIFT, the Belgian bank networking firm that transmits billions of financial transactions every day and lies at the center of the debate, is in legal limbo, with the U.S. demanding the data, while E.U. laws forbid it from continuing such cooperation.

via E.C. launches new drive for bank data-sharing agreement.

LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , , , , ,

Toothless No More? FSA’s Sweep Sends Signal on Insider Trading – Law Blog – WSJ

March 24, 2010 By

On Tuesday, U.K. authorities arrested six men—including an employee of U.S. hedge fund Moore Capital Management, another from Deutsche Bank and a third from a company affiliated with French bank BNP Paribas — in what the government billed as a major crackdown on insider trading in London’s financial center.

According to the Journal reports, it was a big and well-coordinated crackdown, the type you’ve seen in movies, with agents fanning out to a whole bunch of addresses at dawn. Some 143 agents from the Financial Services Authority and the Serious Organised Crime Agency moved across London and southern England Tuesday to arrest the suspects at their homes and to execute search warrants.

The FSA, the U.K.’s primary regulator of financial institutions and markets, trumpeted the insider-trading case as its largest ever.

via Toothless No More? FSA’s Sweep Sends Signal on Insider Trading – Law Blog – WSJ.

LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , , , , ,

Europe Rejects U.S. Deal on Bank Data – NYTimes.com

February 11, 2010 By Leave a Comment

The European Parliament on Thursday broadly rejected an agreement with the United States on sharing information on bank transfers that was aimed at tracking suspected terrorists through their finances.

The vote in Strasbourg, France, underlined differences between the United States and the European Union over how to balance guarantees of personal privacy with concerns about national and international security.

A resolution to reject the deal passed 378-196, with 31 abstentions. The vote means that the agreement, which provisionally went into force at the beginning of February, cannot be used as planned.

The agreement would have freed the United States from having to seek bank data on a country-by-country basis. But Washington still could press for access to the data through such avenues.

Many members of the Parliament complained that the agreement — meant to last for nine months while a more permanent arrangement was sought — failed to guarantee the privacy rights of European citizens.

via Europe Rejects U.S. Deal on Bank Data – NYTimes.com.

LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , , , , , , , ,

What’s Next for Swiss Bank Secrecy? – DealBook Blog – NYTimes.com

February 4, 2010 By Leave a Comment

Switzerland’s long tradition of bank secrecy has been under assault as a number of countries try to thwart tax evasion by citizens who keep money hidden in secret accounts. While the edifice of secrecy has shown some cracks lately, it is still an open question whether there will be a serious breach in the wall of silence that the Swiss have built around their banking institutions.

The criminal and Internal Revenue Service investigations of the Swiss bank UBS for assisting Americans evade taxes resulted in a historic agreement between the United States and Switzerland under which the identity of nearly 5,000 account holders would be disclosed to the I.R.S. and Justice Department.

For the first time, the Swiss government became committed to helping reveal individuals who used secret accounts to avoid taxes, something it had long resisted. As a result of a voluntary disclosure program, the I.R.S. has learned of a number of individuals who used offshore accounts to hide assets.

As Lynnley Browning reported in The New York Times, however, Swiss courts have thrown up a roadblock by finding that the agreement with the United States violates bank secrecy laws, and therefore the identity of UBS clients cannot be revealed. As part of the deal between the I.R.S. and UBS, the process by which about 4,450 names would be turned over by the bank to American authorities was the key provision that ended the quest to compel the bank to disclose records on more than 50,000 accounts. If that process cannot be completed, then the I.R.S. can revive its case seeking to enforce what is known as a “John Doe Summons” that would require UBS to turn over the records of its customers.

via What’s Next for Swiss Bank Secrecy? – DealBook Blog – NYTimes.com.

LinkedInPinterestEvernoteWordPressBlogger PostEmailShare
Filed Under: From The News Tagged With: , , , , , , , , , , ,
« Older Posts
Newer Posts »