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from Breakingviews:

Bank synchrony hints at right kind of collusion

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Banks may finally be participants in the right kind of collusion. In recent days, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Royal Bank of Scotland and UBS each has socked away big sums for legal expenses, much of it related to currency rate manipulation. That suggests a multitude of U.S. and UK regulators are working together on a rare single settlement.

In most cases, agencies join forces to censure or fine a single institution or, sometimes, a subset of a larger group. Consider, for example, the staggered agreements on Libor and mortgage-backed securities. This time, however, regulators have the opportunity to rope in all the major players in one big penalty fiesta.

The scale of the fines seems to be taking clearer shape. In some earlier cases, the amounts discussed have swung in big, unexpected ways. Now, however, Citi sounds more convinced after recent conversations that an extra $600 million over its third-quarter litigation pot of $950 million will suffice. RBS and Barclays were both clear that the $640 million and $800 million they were shoveling respectively into legal reserves were for the forex investigations.

from Breakingviews:

UBS’ legal pain is beginning to look manageable

By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

UBS investors can almost see past the bank’s legal woes. The Zurich-based financial group is still paying for past sins, with a 12 month extension of a U.S. non-prosecution deal and a hefty 1.8 billion Swiss francs ($1.9 billion) addition to litigation provisions in the third quarter. But underlying businesses are now prospering.

from Breakingviews:

EU bank stress-test winners still short of capital

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Investors are turning their noses up at the European bank stress tests. Shares in the sector fell 1.9 percent on average on the morning after publication, with both banks that passed and those that failed being targeted. That’s because a clean bill of health on the test’s headline terms does not necessarily mean a lender has enough capital over the medium term.

from Breakingviews:

Credit Suisse’s future is mid-table drabness

By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Credit Suisse’s future is more workmanlike than its racy third quarter might suggest. The Swiss group revealed on Oct. 23 that its investment bank had trumped Wall Street: fixed income trading revenue leapt by a half year-on-year, against U.S. peers’ average mid-teens increase. But questions linger over Credit Suisse’s ability to maintain that performance if rates rise.

from Breakingviews:

Fragility is bigger worry than volatility for the markets

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

It has been impossible to escape the V-word for the past week. Turn on the television, and it is easy to conclude that central bankers, corporate chiefs, investors and politicians think volatility is the biggest problem vexing global markets. The rollercoaster ride recently experienced by financial assets is nettlesome. But it’s merely a symptom of a bigger malady: the fragility of widely accepted assumptions about where the world is headed.

from Hugo Dixon:

Markets right to worry about euro zone

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

The markets are right to worry about the euro zone, the epicentre of last week’s fright. Its three big economies – Germany, France and Italy – are, in their own ways, stuck.

from Breakingviews:

More is less for Credit Suisse’s three co-heads

By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Three looks a crowd at the top of Credit Suisse’s investment bank. The Swiss firm has promoted Jim Amine and Tim O’Hara alongside existing co-chief Gael de Boissard, adding a new twist to the turf wars typical when big sections of lenders are run by co-heads. But the moves could prefigure a more significant succession – that of Chief Executive Brady Dougan.

from Global Investing:

Strong dollar, weak oil and emerging markets growth

Many emerging economies have been banking on weaker currencies to revitalise economic growth.  Oil's 25 percent fall in dollar terms this year should also help. The problem however is the dollar's strength which is leading to a general tightening of monetary conditions worldwide, more so in countries where central banks are intervening to prevent their currencies from falling too much.

Michael Howell, managing director of the CrossBorder Capital consultancy estimates the negative effect of the stronger dollar on global liquidity (in simple terms, the amount of capital available for investment and spending) outweighs the positives from falling oil prices by a ratio of 10 to 1. Not only does it raise funding costs for non-U.S. banks and companies, it also usually forces other central banks to keep monetary policy tight, especially in countries with high inflation or external debt levels. Howell says:

from Breakingviews:

Goldman pulls every lever to make machine run

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Goldman Sachs pulled every lever to ensure its machine ran properly over the summer. The bank earned $2.1 billion in the three months to September, blowing past Wall Street expectations. Its dealmakers and traders played their part, as did the firm’s own investments. The real fillip, however, to the bank’s annualized 11.8 percent return on equity came from socking away less for pay.

from Breakingviews:

CICC loses a princeling, gains investment appeal

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

To lose a princeling looks careless, but no worse. That should reassure backers of China International Capital Corp, the Chinese investment bank whose well-connected chief executive has just resigned.

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