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Libor brokers acquitted of fraud- business live Libor brokers acquitted of fraud- business live
(35 minutes later)
4.33pm GMT
16:33
Markets are moving higher on the back of the improvement in the oil price. Tony Cross, market analyst at Trustnet Direct said:
The threat of the early sell-off for oil prices this morning failed to materialise with crude bouncing above the $30 mark and this has in turn lent a raft of support to equity markets on both sides of the Atlantic. Even what could at best be described as a mixed bag in terms of US oil inventory data has failed to knock sentiment so London’s FTSE-100 is rounding off the day – where we tested highs not seen for two weeks – with a bullish tone. Next up however it’s the latest Federal Reserve Open Market Committee meeting and anything that is interpreted as being overly hawkish here could readily unseat equity markets globally that are still clearly rattled by recent events.
4.27pm GMT
16:27
US crude stocks rise to new high
Elsewhere, US crude stocks rose to their highest level on record - ie back to 1930 - last week while gasoline stocks increased but inventories of distillates fell.
The figure for distillates, which include heating oil, follows the cold front hitting the country in the past few days. Distillate inventories fell by 4.1m barrels compared to expectations of a near 2m fall.
But crude stocks climbed by 8.4m barrels last week, well above expectations of a 3.3m increase, to 494.9m, the highest level since the Energy Information Administration began compiling records.
Refinery crude runs fell by 551,000 barrels a day.
Gasoline stocks climbed by 3.5m barrels compared to forecsats of a 1.5m increase.
But despite the rises, Brent crude is up 0.79% at $32.05 a barrel. Joshua Mahony, market analyst at IG, said:
US crude oil inventories rose by the highest level since April 2015 last week, pushing overall oil in storage to near levels not seen in 80 years for this time of year.
Crucially, we did see domestic production fall ever so slightly. This distinction highlights the reaction in global trade, which has seen oil prices rise off the back of seemingly bearish headline data. With sentiment driven by record output from Iraq and Russia, alongside the entry of Iran on the mainstream oil market, any news that US output is starting to turn lower is certainly welcome for oil bulls.
3.46pm GMT3.46pm GMT
15:4615:46
Here’s our take on the libor verdicts:Here’s our take on the libor verdicts:
Related: Five brokers found not guilty of Libor riggingRelated: Five brokers found not guilty of Libor rigging
3.33pm GMT3.33pm GMT
15:3315:33
Five of the six brokers were acquitted of conspiring to rig Libor, reports Reuters.Five of the six brokers were acquitted of conspiring to rig Libor, reports Reuters.
The jury also reached a not guilty verdict on one count of conspiracy to defraud for former Icap broker Darrell Read, said Reuters, but it has yet to reach a verdict on a second count. The judge has asked the jury to reach a majority verdict.The jury also reached a not guilty verdict on one count of conspiracy to defraud for former Icap broker Darrell Read, said Reuters, but it has yet to reach a verdict on a second count. The judge has asked the jury to reach a majority verdict.
3.24pm GMT3.24pm GMT
15:2415:24
The six brokers on trial were Darrell Read, Danny Wilkinson and Colin Goodman from Icap, Noel Cryan from Tullett Prebon, and Jim Gilmour and Terry Farr from RP Martin.The six brokers on trial were Darrell Read, Danny Wilkinson and Colin Goodman from Icap, Noel Cryan from Tullett Prebon, and Jim Gilmour and Terry Farr from RP Martin.
3.12pm GMT3.12pm GMT
15:1215:12
Libor brokers acquitted on fraud chargesLibor brokers acquitted on fraud charges
Five out of six brokers accused of manipulating libor bank rates have been acquitted of fraud at Southwark crown court.Five out of six brokers accused of manipulating libor bank rates have been acquitted of fraud at Southwark crown court.
A jury is still discussing one count against one of them, but the others have been freed.A jury is still discussing one count against one of them, but the others have been freed.
The six were accused of conspiring with Tom Hayes and others in a trial brought by the Serious Fraud Office which has lasted 15 weeks. But a jury took just a day to acquit them.The six were accused of conspiring with Tom Hayes and others in a trial brought by the Serious Fraud Office which has lasted 15 weeks. But a jury took just a day to acquit them.
Breaking: #Libor brokers acquitted on fraud charges. Huge loss for Serious Fraud Office. https://t.co/tvUhVfdn8HBreaking: #Libor brokers acquitted on fraud charges. Huge loss for Serious Fraud Office. https://t.co/tvUhVfdn8H
Jury still discussing one count against Darrell Read. All others unanimously freed.Jury still discussing one count against Darrell Read. All others unanimously freed.
UpdatedUpdated
at 3.43pm GMTat 3.43pm GMT
2.52pm GMT2.52pm GMT
14:5214:52
The Federal Reserve is holding its first meeting since December’s now-contentious decision to raise interest rates for the first time in nearly a decade.The Federal Reserve is holding its first meeting since December’s now-contentious decision to raise interest rates for the first time in nearly a decade.
The subsequent market turmoil, focused on a slowdown in China and the tumbling oil price, has made many wonder whether the Fed was a bit premature in pulling the rate trigger.The subsequent market turmoil, focused on a slowdown in China and the tumbling oil price, has made many wonder whether the Fed was a bit premature in pulling the rate trigger.
The Fed is highly unlikely to change rates at this meeting, and there is no press conference for Fed chair Janet Yellen to be quizzed about her thoughts on the aftermath of last month’s move. So the statement accompanying the rate decision is likely to be scrutinised for clues as to the Fed’s latest thinking.The Fed is highly unlikely to change rates at this meeting, and there is no press conference for Fed chair Janet Yellen to be quizzed about her thoughts on the aftermath of last month’s move. So the statement accompanying the rate decision is likely to be scrutinised for clues as to the Fed’s latest thinking.
It must surely acknowledge the market slump and fears of a global downturn which have increased since December, and may even hint that it no longer expects three or four more rate rises this year. The wording of its comments on the current state of the global economy will be key, but analysts are divided on what the Fed’s tone will be.It must surely acknowledge the market slump and fears of a global downturn which have increased since December, and may even hint that it no longer expects three or four more rate rises this year. The wording of its comments on the current state of the global economy will be key, but analysts are divided on what the Fed’s tone will be.
Simon Smith, chief economist at FXPro said:Simon Smith, chief economist at FXPro said:
All eyes will be back on the Federal Reserve today as they make their first interest rate decision and monetary policy statement of the year but there are no economic projections or press conference this time round, which come at the next meeting in March. We’ve seen a rise in risk appetite in this final week of January which so far has been a bit of a blood bath, although the recovery from lows in many indices has softened the blow for many investors. This has come as a result of a bounce in oil prices but also a growing expectation that central banks will have to do more to support the global economy.All eyes will be back on the Federal Reserve today as they make their first interest rate decision and monetary policy statement of the year but there are no economic projections or press conference this time round, which come at the next meeting in March. We’ve seen a rise in risk appetite in this final week of January which so far has been a bit of a blood bath, although the recovery from lows in many indices has softened the blow for many investors. This has come as a result of a bounce in oil prices but also a growing expectation that central banks will have to do more to support the global economy.
Today’s Fed meeting as a result is likely to see a more dovish tone to it, especially since the market consensus is that we will see fewer rate hikes this year than the Fed is currently pencilling in.Today’s Fed meeting as a result is likely to see a more dovish tone to it, especially since the market consensus is that we will see fewer rate hikes this year than the Fed is currently pencilling in.
Even though we saw a higher than expected rise in US consumer confidence yesterday a big warning shot has come from one of the world’s largest companies Apple which saw its first fall in revenue since 2003.Even though we saw a higher than expected rise in US consumer confidence yesterday a big warning shot has come from one of the world’s largest companies Apple which saw its first fall in revenue since 2003.
But lya Spivak, currency strategist at DailyFX, said:But lya Spivak, currency strategist at DailyFX, said:
The rate-setting FOMC committee is broadly expected to keep the benchmark lending rate unchanged this time around. Indeed, priced-in probability of an increase is a mere 14.3%. This puts the spotlight on the text of the statement accompanying the rate decision and the forward guidance contained therein.The rate-setting FOMC committee is broadly expected to keep the benchmark lending rate unchanged this time around. Indeed, priced-in probability of an increase is a mere 14.3%. This puts the spotlight on the text of the statement accompanying the rate decision and the forward guidance contained therein.
Investors appear positioned for a dovish outcome having scaled back 2016 tightening bets amid risk aversion since the beginning of the year...Investors appear positioned for a dovish outcome having scaled back 2016 tightening bets amid risk aversion since the beginning of the year...
For its part, the Fed will have to attempt a difficult balancing act. On one hand, it will have to acknowledge recent market turmoil as well as softening US growth dynamics in the final months of 2015. On the other, it will have to re-focus investors’ attention on mandate-relevant fundamentals and establish the possibility of tightening in March. This is necessary so that such a move, if deemed appropriate, does not trigger an overly violent response.For its part, the Fed will have to attempt a difficult balancing act. On one hand, it will have to acknowledge recent market turmoil as well as softening US growth dynamics in the final months of 2015. On the other, it will have to re-focus investors’ attention on mandate-relevant fundamentals and establish the possibility of tightening in March. This is necessary so that such a move, if deemed appropriate, does not trigger an overly violent response.
On balance, the case for policy normalization remains compelling. Realized and expected inflation is firming: the latest readings on core year-on-year CPI and hourly earnings growth registered at multi-year highs while 2-3 year breakeven rates have trended upward since August. On the jobs front, the unemployment rate is at the lowest level since 2008 and nonfarm payrolls growth is running at a reasonably brisk pace, with the 12-month trend average at 220k.On balance, the case for policy normalization remains compelling. Realized and expected inflation is firming: the latest readings on core year-on-year CPI and hourly earnings growth registered at multi-year highs while 2-3 year breakeven rates have trended upward since August. On the jobs front, the unemployment rate is at the lowest level since 2008 and nonfarm payrolls growth is running at a reasonably brisk pace, with the 12-month trend average at 220k.
This means that the Fed statement will have to reassure investors that it will adjust policy if market stress infects the real economy. In the same breath, it will have to explain that as of now, the projected rate hike path has not materially changed since the first post-QE rate hike in December.This means that the Fed statement will have to reassure investors that it will adjust policy if market stress infects the real economy. In the same breath, it will have to explain that as of now, the projected rate hike path has not materially changed since the first post-QE rate hike in December.
The markets’ subsequent reaction will depend on the degree of wishful thinking that traders are prepared to entertain. If they emphasize the first point – a possible result considering the dovish shift in expectations in spite of the aforementioned fundamental evidence – risk appetite is likely to strengthen. This will see the stocks rising alongside sentiment-geared currencies like the Australian and New Zealand Dollars while the greenback as well as the anti-risk Euro and Yen decline. A focus on the second point will probably deliver the opposite result.The markets’ subsequent reaction will depend on the degree of wishful thinking that traders are prepared to entertain. If they emphasize the first point – a possible result considering the dovish shift in expectations in spite of the aforementioned fundamental evidence – risk appetite is likely to strengthen. This will see the stocks rising alongside sentiment-geared currencies like the Australian and New Zealand Dollars while the greenback as well as the anti-risk Euro and Yen decline. A focus on the second point will probably deliver the opposite result.
2.36pm GMT2.36pm GMT
14:3614:36
Wall Street opens lowerWall Street opens lower
As investors await the latest US oil inventory figures and the outcome of this month’s Federal Reserve meeting, Wall Street is on the slide again.As investors await the latest US oil inventory figures and the outcome of this month’s Federal Reserve meeting, Wall Street is on the slide again.
In early trading the Dow Jones Industrial Average has fallen 113 points or 0.7%, partly due to Apple which is down 3.8% at $96.24 following its disappointing figures.In early trading the Dow Jones Industrial Average has fallen 113 points or 0.7%, partly due to Apple which is down 3.8% at $96.24 following its disappointing figures.
2.22pm GMT2.22pm GMT
14:2214:22
Ahead of the start of US trading, here are some opening calls:Ahead of the start of US trading, here are some opening calls:
US Pre-market movers: $CAPN +34.9% $RPTP +12.1% $BIIB +5.4% $SUNE +4.9% $TEX +3.2% $BBBY -2.9% $AAPL -3.1% $FCAU -5% $BA -6.7% $X -7.7%US Pre-market movers: $CAPN +34.9% $RPTP +12.1% $BIIB +5.4% $SUNE +4.9% $TEX +3.2% $BBBY -2.9% $AAPL -3.1% $FCAU -5% $BA -6.7% $X -7.7%
Note Apple is quoted as falling more than 3%.Note Apple is quoted as falling more than 3%.
2.11pm GMT2.11pm GMT
14:1114:11
Oil has come back from its worst levels of the day, on renewed hopes that Opec and other producers such as Russia would act to stem the supply glut which has hit prices.Oil has come back from its worst levels of the day, on renewed hopes that Opec and other producers such as Russia would act to stem the supply glut which has hit prices.
Brent crude is now down 0.8% at $31.52 a barrel having fallen to $30.83 earlier. But US inventory figures due later will undoubtedly have an impact on the price, not to mention the Federal Reserve rate setting meeting and any effect the US central bank’s comments have on the dollar.Brent crude is now down 0.8% at $31.52 a barrel having fallen to $30.83 earlier. But US inventory figures due later will undoubtedly have an impact on the price, not to mention the Federal Reserve rate setting meeting and any effect the US central bank’s comments have on the dollar.
Meanwhile the recovery in crude has helped support stock markets. Both the FTSE 100 and Germany’s Dax are marginally in positive territory after earlier falls, while France’s Cac is only narrowly down.Meanwhile the recovery in crude has helped support stock markets. Both the FTSE 100 and Germany’s Dax are marginally in positive territory after earlier falls, while France’s Cac is only narrowly down.
US futures are showing a 57 point decline on the Dow Jones Industrial Average after Tuesday’s 282 point surge.US futures are showing a 57 point decline on the Dow Jones Industrial Average after Tuesday’s 282 point surge.
Apple’s shares will of course be in focus after its disappointing update.Apple’s shares will of course be in focus after its disappointing update.
1.41pm GMT1.41pm GMT
13:4113:41
Ben van Beurden is upbeat about today’s vote, despite the small revolt.Ben van Beurden is upbeat about today’s vote, despite the small revolt.
Shell’s CEO says:Shell’s CEO says:
“I am delighted with the positive shareholder vote and the confidence that shareholders have shown in the strategic logic of the combination of Shell and BG.“I am delighted with the positive shareholder vote and the confidence that shareholders have shown in the strategic logic of the combination of Shell and BG.
Our immediate focus is on the successful completion of the transaction and we now await the results of tomorrow’s BG shareholder vote.Our immediate focus is on the successful completion of the transaction and we now await the results of tomorrow’s BG shareholder vote.
Assuming BG’s shareholders approve the deal (they will), Shell will become the world’s biggest liquefied natural gas (LNG) trader.Assuming BG’s shareholders approve the deal (they will), Shell will become the world’s biggest liquefied natural gas (LNG) trader.
12.53pm GMT12.53pm GMT
12:5312:53
It’s worth reiterating that 17% of Shell shareholders opposed the BG merger at today’s vote.It’s worth reiterating that 17% of Shell shareholders opposed the BG merger at today’s vote.
That suggests that some big City investors have reservations about the deal, despite Shell chief Ben van Beurden’s best efforts to persuade them of its merits.That suggests that some big City investors have reservations about the deal, despite Shell chief Ben van Beurden’s best efforts to persuade them of its merits.
Standard Life was the only large investor to go public - their head of equities, David Cumming, reckoned the deal only made sense when oil was over $60 per barrel, not $30ish.Standard Life was the only large investor to go public - their head of equities, David Cumming, reckoned the deal only made sense when oil was over $60 per barrel, not $30ish.
But Standard Life owned less than 2% of the company, so others have clearly found the deal too risky.But Standard Life owned less than 2% of the company, so others have clearly found the deal too risky.
Our financial editor, Nils Pratley, reminds me that even Royal Bank of Scotland’s disastrous merger with ABN Amro in October 2007 got the support of 99% of shareholders (who then suffered huge losses). So a 17% revolt may sting, a little.Our financial editor, Nils Pratley, reminds me that even Royal Bank of Scotland’s disastrous merger with ABN Amro in October 2007 got the support of 99% of shareholders (who then suffered huge losses). So a 17% revolt may sting, a little.
UpdatedUpdated
at 12.53pm GMTat 12.53pm GMT
12.41pm GMT12.41pm GMT
12:4112:41
Thousands of workers at Shell and BG now face the axe, once the merger goes through.Thousands of workers at Shell and BG now face the axe, once the merger goes through.
Shell announced last month that it will cut around 2,800 positions, or some 3% of the combined company.Shell announced last month that it will cut around 2,800 positions, or some 3% of the combined company.
Related: Shell to shed further 2,800 jobs after BG takeoverRelated: Shell to shed further 2,800 jobs after BG takeover
12.28pm GMT12.28pm GMT
12:2812:28
Shell shareholders approve BG dealShell shareholders approve BG deal
Newsflash from The Hague - Royal Dutch Shell shareholders have just voted in favour of its £35bn merger with rival oil firm BG.Newsflash from The Hague - Royal Dutch Shell shareholders have just voted in favour of its £35bn merger with rival oil firm BG.
That’s despite pressure from some shareholders to renegotiate the tie-up, which was negotiated before the oil price slumped to just $30 per barrel.That’s despite pressure from some shareholders to renegotiate the tie-up, which was negotiated before the oil price slumped to just $30 per barrel.
During the meeting, Shell chief executive Ben van Beurden told the meeting that the deal would be a “springboard to simplify Shell”, the Evening Standard reports.During the meeting, Shell chief executive Ben van Beurden told the meeting that the deal would be a “springboard to simplify Shell”, the Evening Standard reports.
Van Beurden also argued that a merger still made sense despite the cheaper oil price.Van Beurden also argued that a merger still made sense despite the cheaper oil price.
The deal was approved by 83% of shareholders, with 17% opposing the plan.The deal was approved by 83% of shareholders, with 17% opposing the plan.
BG investors give their verdict tomorrow, but there’s little chance that they will block the deal.BG investors give their verdict tomorrow, but there’s little chance that they will block the deal.
UpdatedUpdated
at 1.59pm GMTat 1.59pm GMT
12.23pm GMT12.23pm GMT
12:2312:23
RBS is helping to drag the London stock market down into the red today.RBS is helping to drag the London stock market down into the red today.
As traders scoff a quick sandwich (or three courses at Gaucho), the FTSE 100 is down 22 points at 5888.As traders scoff a quick sandwich (or three courses at Gaucho), the FTSE 100 is down 22 points at 5888.
RBS are the second biggest faller, down 3.8% at 251p. The only biggest faller is Anglo American, the mining company, which has shed 5.2%. Other miners are also in the red, reflecting ongoing concerns over global growth.RBS are the second biggest faller, down 3.8% at 251p. The only biggest faller is Anglo American, the mining company, which has shed 5.2%. Other miners are also in the red, reflecting ongoing concerns over global growth.
Other European markets are also in the red, as investors wait to hear from the US Federal Reserve at 7pm GMT (when it will surely leave interest rates unchanged).Other European markets are also in the red, as investors wait to hear from the US Federal Reserve at 7pm GMT (when it will surely leave interest rates unchanged).
12.02pm GMT12.02pm GMT
12:0212:02
Here’s more reaction to RBS’s latest financial woes, via Press Association:Here’s more reaction to RBS’s latest financial woes, via Press Association:
Russ Mould, investment director at AJ Bell, said:Russ Mould, investment director at AJ Bell, said:
“It’s another bitter pill, but putting legacy issues behind it is essential if Chancellor George Osborne is going to off-load the Government’s stake during this parliament.”“It’s another bitter pill, but putting legacy issues behind it is essential if Chancellor George Osborne is going to off-load the Government’s stake during this parliament.”
But banking analyst Gary Greenwood, at Shore Capital, said that, while “disappointing”, the latest financial charges are not unexpected.But banking analyst Gary Greenwood, at Shore Capital, said that, while “disappointing”, the latest financial charges are not unexpected.
11.42am GMT11.42am GMT
11:4211:42
Over in America, traders are expecting Apple’s share price to slide after it warned that revenue will fall this quarter, for the first time in 13 years.Over in America, traders are expecting Apple’s share price to slide after it warned that revenue will fall this quarter, for the first time in 13 years.
Apple set to open 3.5% lower. HT: @sunchartist pic.twitter.com/XLGH8YhlZeApple set to open 3.5% lower. HT: @sunchartist pic.twitter.com/XLGH8YhlZe
Market caps of huge companies. Will Google soon overtake Apple? pic.twitter.com/SoWrGyC9RXMarket caps of huge companies. Will Google soon overtake Apple? pic.twitter.com/SoWrGyC9RX
11.11am GMT11.11am GMT
11:1111:11
RBS isn’t the only bank counting the cost of the PPI scandal today.RBS isn’t the only bank counting the cost of the PPI scandal today.
Santander, the Spanish financial giant, has announced it is setting aside another £450m to cover compensation to customers who were missold Payment Protection Insuranace.Santander, the Spanish financial giant, has announced it is setting aside another £450m to cover compensation to customers who were missold Payment Protection Insuranace.
The move will dent profits at Santander UK.The move will dent profits at Santander UK.
It could be the bank’s final bill for the scandal, but we won’t know for sure until the deadline for PPI claims in 2018.It could be the bank’s final bill for the scandal, but we won’t know for sure until the deadline for PPI claims in 2018.
Related: Santander sets aside another £450m as PPI still haunts UK banksRelated: Santander sets aside another £450m as PPI still haunts UK banks
UpdatedUpdated
at 11.14am GMTat 11.14am GMT
10.48am GMT10.48am GMT
10:4810:48
A wave of ‘challenger banks’ have sprung up since the financial crisis, hoping to win business from scandal-splattered big players such as Royal Bank of Scotland.A wave of ‘challenger banks’ have sprung up since the financial crisis, hoping to win business from scandal-splattered big players such as Royal Bank of Scotland.
And one of them, Metro Bank, has announced plans to float on the stock market. Metro, which is losing around £10m per quarter, wants to raise £500m from shareholders.And one of them, Metro Bank, has announced plans to float on the stock market. Metro, which is losing around £10m per quarter, wants to raise £500m from shareholders.
Related: Metro Bank to pursue stock market listing in FebruaryRelated: Metro Bank to pursue stock market listing in February
Random fact: Metro encourages dogs into its branches, and even lays on water bowls and doggie toys. If only bankers had spent more time doing that before the crisis, instead of churning out toxic debt and lumbering customers with PPI contracts....Random fact: Metro encourages dogs into its branches, and even lays on water bowls and doggie toys. If only bankers had spent more time doing that before the crisis, instead of churning out toxic debt and lumbering customers with PPI contracts....
10.19am GMT10.19am GMT
10:1910:19
The British public had better face the truth - we’ll all be shareholders in the banks for a while longer yet.The British public had better face the truth - we’ll all be shareholders in the banks for a while longer yet.
So argues Chris Beauchamp, senior market analyst at City firm IG.So argues Chris Beauchamp, senior market analyst at City firm IG.
He told clients:He told clients:
RBS’s ability to surprise investors with fresh bad news has been one of the hardy perennials of the past six years, and yet still the news keeps coming. George Osborne’s decision to sell a chunk of the government’s stake last August, which was derided at the time, now looks like a sound financial decision, but it does mean any further sales are essentially off the table.RBS’s ability to surprise investors with fresh bad news has been one of the hardy perennials of the past six years, and yet still the news keeps coming. George Osborne’s decision to sell a chunk of the government’s stake last August, which was derided at the time, now looks like a sound financial decision, but it does mean any further sales are essentially off the table.
Coincidentally, with Lloyds down 2% this morning in sympathy, it seems the government will remain a key asset manager when it comes to UK banks.Coincidentally, with Lloyds down 2% this morning in sympathy, it seems the government will remain a key asset manager when it comes to UK banks.
10.05am GMT10.05am GMT
10:0510:05
RBS CEO promises 'clean-up' after £2.5bn profits hitRBS CEO promises 'clean-up' after £2.5bn profits hit
If you’re just tuning in, here’s Jill Treanor’s news story about the latest problems at RBS:If you’re just tuning in, here’s Jill Treanor’s news story about the latest problems at RBS:
RBS takes £2.5bn hit to profits as chief executive announces bank ‘clean-up’RBS takes £2.5bn hit to profits as chief executive announces bank ‘clean-up’
Royal Bank of Scotland is set to report its eighth consecutive year of full-year losses after announcing a string of charges for legal bills, compensation and a pension payment.Royal Bank of Scotland is set to report its eighth consecutive year of full-year losses after announcing a string of charges for legal bills, compensation and a pension payment.
The bank, which is more than 70%-owned by the taxpayer, said it would take a £2.5bn hit to profits in 2015 as a result of a clean-up exercise, driving its share price to a three-year low in Wednesday’s early trading.The bank, which is more than 70%-owned by the taxpayer, said it would take a £2.5bn hit to profits in 2015 as a result of a clean-up exercise, driving its share price to a three-year low in Wednesday’s early trading.
RBS shares fell 5% to 246p – below the 330p at which George Osborne sold off the the government’s first tranche of shares in August, and less than half the 502p average price at which taxpayers pumped £45bn into the bank.RBS shares fell 5% to 246p – below the 330p at which George Osborne sold off the the government’s first tranche of shares in August, and less than half the 502p average price at which taxpayers pumped £45bn into the bank.
Issuing an unscheduled trading update on Wednesday, Ross McEwan, the chief executive of RBS, said the move was part of a continued clean-up but conceded that that the bank would make another full-year loss for 2015. It has not reported a profit since 2007.Issuing an unscheduled trading update on Wednesday, Ross McEwan, the chief executive of RBS, said the move was part of a continued clean-up but conceded that that the bank would make another full-year loss for 2015. It has not reported a profit since 2007.
“I am determined to put the issues of the past behind us, and make sure RBS is a stronger, safer bank. We will now continue to move further and faster in 2016 to clean up the bank and improve our core businesses,” said McEwan.“I am determined to put the issues of the past behind us, and make sure RBS is a stronger, safer bank. We will now continue to move further and faster in 2016 to clean up the bank and improve our core businesses,” said McEwan.
“We’ve always been open about the scale of past issues facing RBS and although there is clearly much more to do, this announcement is a further step towards addressing legacy issues and building a great bank for our customers and delivering long-term value for our shareholders,” he added.....“We’ve always been open about the scale of past issues facing RBS and although there is clearly much more to do, this announcement is a further step towards addressing legacy issues and building a great bank for our customers and delivering long-term value for our shareholders,” he added.....
Here’s Jill’s full story:Here’s Jill’s full story:
Related: RBS takes £2.5bn hit to profits as chief executive announces bank 'clean-up'Related: RBS takes £2.5bn hit to profits as chief executive announces bank 'clean-up'
9.45am GMT9.45am GMT
09:4509:45
The latest problems at RBS show that bankers need keeping on a tight leash, argues campaigners for a financial transaction tax.The latest problems at RBS show that bankers need keeping on a tight leash, argues campaigners for a financial transaction tax.
David Hillman, spokesperson for the Robin Hood Tax campaign, says:David Hillman, spokesperson for the Robin Hood Tax campaign, says:
“It’s groundhog day in the City as RBS announces yet another huge provision for dodgy dealing and fleecing its customers.“It’s groundhog day in the City as RBS announces yet another huge provision for dodgy dealing and fleecing its customers.
“Try as it might, the banking sector is incapable of shaking off its past sins. The government must take note — now is not the time for it to ease up on financial sector reform.”“Try as it might, the banking sector is incapable of shaking off its past sins. The government must take note — now is not the time for it to ease up on financial sector reform.”
There are signs that Britain is taking a softer line with the City. An inquiry into banking culture was curiously abandoned at the end of last year, alarming campaigners. And yesterday, Bank of England deputy governor Andrew Bailey was appointed as head of the Financial Conduct Authority - and hand-picked by George Osborne for this crucial job.There are signs that Britain is taking a softer line with the City. An inquiry into banking culture was curiously abandoned at the end of last year, alarming campaigners. And yesterday, Bank of England deputy governor Andrew Bailey was appointed as head of the Financial Conduct Authority - and hand-picked by George Osborne for this crucial job.
UpdatedUpdated
at 9.48am GMTat 9.48am GMT
9.26am GMT9.26am GMT
09:2609:26
Citigroup analysts have warned that RBS could suffer even more legal charges this year, points out the BBC’s Kamal Ahmed:Citigroup analysts have warned that RBS could suffer even more legal charges this year, points out the BBC’s Kamal Ahmed:
“We still see significant additional litigation charges in 2016, on top of the charges that have been announced today.“We still see significant additional litigation charges in 2016, on top of the charges that have been announced today.
Citi describes RBS announcement as "profit warning" "We still see significant additional litigation charges in 2016" https://t.co/z44noTclTdCiti describes RBS announcement as "profit warning" "We still see significant additional litigation charges in 2016" https://t.co/z44noTclTd
9.21am GMT9.21am GMT
09:2109:21
A quick explanation. When RBS says it is setting aside £1.5bn to cover “various US residential mortgage-backed securities (“RMBS”) litigation claims”, it is referring to one of the more noxious elements of the 2007-08 financial crisis.A quick explanation. When RBS says it is setting aside £1.5bn to cover “various US residential mortgage-backed securities (“RMBS”) litigation claims”, it is referring to one of the more noxious elements of the 2007-08 financial crisis.
In the build-up to the crisis, milions of mortgages were sold to US citizens with shaky credit histories, who could not really afford them. Those loans were repackaged by investment banks into new financial products (the RMBSs) and sold onto investors who weren’t told how dangerous they might be.In the build-up to the crisis, milions of mortgages were sold to US citizens with shaky credit histories, who could not really afford them. Those loans were repackaged by investment banks into new financial products (the RMBSs) and sold onto investors who weren’t told how dangerous they might be.
Cue the credit crunch, and the collapse of the subprime market. Mortgage-backed securities plunged in value, as the borrowers behind them failed to meet their payments and handed back the key to their homes.Cue the credit crunch, and the collapse of the subprime market. Mortgage-backed securities plunged in value, as the borrowers behind them failed to meet their payments and handed back the key to their homes.
And the smaller banks, credit unions, insurers and suchlike who had been left holding them when the music stopped (and the Big Short paid out) launched waves of legal action against Wall Street.And the smaller banks, credit unions, insurers and suchlike who had been left holding them when the music stopped (and the Big Short paid out) launched waves of legal action against Wall Street.
RBS had a finger in this unsavoury pie though its US subsidiary, Greenwich Capital Markets. In 2013, the SEC accused it of “misleading investors” and cutting corners, by selling loans that didn’t meet underwriting guidelines.RBS had a finger in this unsavoury pie though its US subsidiary, Greenwich Capital Markets. In 2013, the SEC accused it of “misleading investors” and cutting corners, by selling loans that didn’t meet underwriting guidelines.
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at 9.21am GMTat 9.21am GMT
8.53am GMT8.53am GMT
08:5308:53
Important point: The £1.5bn in new US legal charges announced by RBS this morning does not cover any potential settlements with the US Department of Justice, or various US State Attorney General investigations.Important point: The £1.5bn in new US legal charges announced by RBS this morning does not cover any potential settlements with the US Department of Justice, or various US State Attorney General investigations.
Ian Gordon of Investec warns that:Ian Gordon of Investec warns that:
The timing and the cost of resolving those cases remains highly uncertain.The timing and the cost of resolving those cases remains highly uncertain.
8.39am GMT8.39am GMT
08:3908:39
City analysts are punting out their opinions now.City analysts are punting out their opinions now.
And Sandy Chen of Cenkos Securities isn’t too alarmed by RBS’s announcement. He argues that the bank is simply cleaning up the mess of previous eras (or possibly ‘previous errors’).And Sandy Chen of Cenkos Securities isn’t too alarmed by RBS’s announcement. He argues that the bank is simply cleaning up the mess of previous eras (or possibly ‘previous errors’).
The new £1.5bn provision against US mortgage-backed security costs brings the total bill to £3.8bn - “closer to the £4-6bn totals that most analysts have had in mind”, Chen says.The new £1.5bn provision against US mortgage-backed security costs brings the total bill to £3.8bn - “closer to the £4-6bn totals that most analysts have had in mind”, Chen says.
And the £500m payment protection insurance top-up should be one of the last big ones, given the FCA’s consultation on a 2018/19 time-bar on PPI claims, Chen adds.And the £500m payment protection insurance top-up should be one of the last big ones, given the FCA’s consultation on a 2018/19 time-bar on PPI claims, Chen adds.
His conclusion:His conclusion:
Bad news – really? More like putting their past in their behind, as Pumba said (in the Lion King).Bad news – really? More like putting their past in their behind, as Pumba said (in the Lion King).
[I think Pumba actually says “you got to put your behind in your past.” -- but we get the gist][I think Pumba actually says “you got to put your behind in your past.” -- but we get the gist]
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at 8.43am GMTat 8.43am GMT
8.29am GMT8.29am GMT
08:2908:29
The UK government currently owns almost 73% of RBS, and at today’s share price I fear we’re stuck with it for some time.The UK government currently owns almost 73% of RBS, and at today’s share price I fear we’re stuck with it for some time.
The taxpayer paid around 502p per share when it bailed the stricken bank out in 2008.The taxpayer paid around 502p per share when it bailed the stricken bank out in 2008.
Today, RBS shares are trading at just 250p, so we would take a stonking loss if George Osborne sells another slice of the bank.Today, RBS shares are trading at just 250p, so we would take a stonking loss if George Osborne sells another slice of the bank.
Last summer, he sold £2.1bn of stock at around 320p - crystallising a £1bn loss for the taxpayer. That deal was criticised, but with hindsight the hedge funds who bought the stock are now sitting on a loss themselves.Last summer, he sold £2.1bn of stock at around 320p - crystallising a £1bn loss for the taxpayer. That deal was criticised, but with hindsight the hedge funds who bought the stock are now sitting on a loss themselves.
All the people who complained about Osborne selling RBS shares at 330p will of course notice that it dropped back below 250p this morning.All the people who complained about Osborne selling RBS shares at 330p will of course notice that it dropped back below 250p this morning.
8.13am GMT8.13am GMT
08:1308:13
RBS shares hit lowest point since 2012RBS shares hit lowest point since 2012
RSB shares have just hit their lowest level since September 2012, I reckon.RSB shares have just hit their lowest level since September 2012, I reckon.
That’s not good news for George Osborne, as he tried to sell the bank back to the private sector.That’s not good news for George Osborne, as he tried to sell the bank back to the private sector.
8.06am GMT8.06am GMT
08:0608:06
RBS shares fall 5% after new wave of costsRBS shares fall 5% after new wave of costs
Shares in Royal Bank of Scotland have slumped by 5% at the start of trading, shedding 12.1p to 248p.Shares in Royal Bank of Scotland have slumped by 5% at the start of trading, shedding 12.1p to 248p.
That makes RBS is the biggest faller on the FTSE 100.That makes RBS is the biggest faller on the FTSE 100.
Bad news for shareholders - which in RBS’s case is every member of the UK public, as we bailed the bank out in 2008.Bad news for shareholders - which in RBS’s case is every member of the UK public, as we bailed the bank out in 2008.