Euro banks downgraded

February 4, 2015 10:06 AM

Six European banks, including Credit Suisse Group AG and HSBC Holdings Plc, had their ratings cut by Standard & Poor’s on the prospect that their governments are less likely to provide aid in a crisis.

Barclays Plc and Lloyds Banking Group Plc also had the long-term ratings on their holding companies reduced. Standard Chartered Plc and Royal Bank of Scotland Group Plc had their short-term ratings lowered as well, S&P said in a statement Tuesday. Deutsche Bank AG was among other banks in Germany and Austria that may have their credit ratings cut, S&P said.

The lenders in the U.K., Austria and Germany were singled out for downgrades because those countries implemented rules requiring creditors to take losses before taxpayers at the start of this year, 12 months earlier than the rest of their peers in the 28-member European Union. S&P said in November it would review the banks’ ratings because of the move.

The EU enacted the bank-resolution law last year in a bid to end taxpayer bailouts that prevailed in the financial crisis.

Under the new rules, authorities will generally require 8 percent of a struggling bank’s liabilities to be wiped out before recourse can be made to industry funds or taxpayer support.

RBS said in a statement that S&P’s move wasn’t specific to the bank and welcomed the ratings company’s decision to upgrade its long-term outlook on the lender to stable from negative.

Officials at Barclays, Lloyds and HSBC in London, Frankfurt-based Deutsche Bank and Zurich-based Credit Suisse declined to comment. A spokesman for Standard Chartered in London didn’t immediately respond to a request for comment.

Compliance Action

ICAP Fined $17 Million by EU for Aiding Banks’ Yen Libor Cartels

ICAP Plc, the world’s largest broker of transactions between banks, was fined 15 million euros ($17.2 million) by the European Union’s antitrust arm for helping traders to manipulate yen Libor derivatives.

ICAP spread misleading information to lenders on a panel that set the interbank rate for yen Libor and aided contacts between traders, the European Commission said Wednesday in an e- mailed statement from Brussels. ICAP in 2013 refused to join financial institutions in paying fines to settle the EU case.

UBS Group AG, Royal Bank of Scotland Group Plc, Deutsche Bank AG, JPMorgan Chase & Co., Citigroup Inc. and brokerage RP Martin Holdings Ltd. previously agreed to a combined penalty of 669.7 million euros. ICAP has paid fines of $88 million in a deal with U.S. and U.K. regulators to settle charges over contacts with UBS traders.

ICAP said it would appeal the fine to the EU courts because the decision was “wrong both in fact and in law,” according to an e-mailed statement.

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