The independence of the US Federal Reserve seems ever more at risk as Donald Trump continues to try to influence the central bank’s policies, and has even ordered a criminal investigation into its chair, Jerome Powell.

Since the beginning of his second term, Trump has repeatedly called for Powell to be replaced. He has also attempted to remove board member Lisa Cook, accusing her of mortgage fraud. Trump’s attacks on the Fed have widely been seen as an attempt to “force interest rate cuts out of the central bank, in defiance of its mandate and independence”, said Sky News.

Outside the US, too, there is growing (if more restrained) criticism of the idea of central bank independence. The long-accepted notion that a central bank, unsaddled by political turmoil, is the best vehicle for delivering economic results looks weaker in the face of continuing global instability, swelling deficits and high inflation.

Why is independence important?

The pro-independence argument is that politicians are likely to be “tempted by self-defeating monetary policies” in pursuit of short-term electoral goals, such as decreasing unemployment and “inflating away debts”, said The Economist. Monetary policies that “make everyone better off” in the long run are more attainable and more sustainable if they’re “delegated to a conservative central banker, perhaps even an price-obsessed ‘inflation nutter’”.

The principle that central banks should “enjoy some independence” is certainly not new. In 1806, Napoleon Bonaparte said that the recently created Bank of France should “be sufficiently in the hands of the government”, but “not too much”. But it was really after the Second World War that the modern idea of central-bank independence emerged. In 1951, the “Treasury-Fed accord” gave the US Federal Reserve increased independence and, around the same time, Germany’s Bundesbank was given more autonomy, soon becoming “a model for the rest of the continent”.

Central banks have since been seen as a “triumph of applied economics”. As “independence rose, inflation fell” and “recessions became rarer”. But now this “triumph” is “under threat” in the US and elsewhere.

Why is that changing?

Recent surges in inflation have damaged public trust in central banks and sparked vocal criticism from politicians. The global financial crisis, a prolonged period of quantitative easing, and the “pressures of climate risk, geopolitical shocks and fiscal activism” are further raising the “fundamental” question of whether the “orthodox consensus” has “reached its limits”, said Chatham House.

Independence worked well when most politicians and experts “agreed on what central banks should do to stabilise the economy”, said UnHerd. But that consensus has “disappeared” and “independence without consensus is tyranny”.

Should we be worried?

Trump’s interference with monetary policy “could lead to financial panic and economic disaster” that would be felt around the world, said Bloomberg. A monetary policy dictated by “short-term political calculations” might lead to lower interest rates but would then spark higher inflation and, ultimately, “increase the cost of credit, discourage private investment and make public debt (which, in the US, is already rising unsustainably) harder to service”.

But Trump’s “damaging attacks on the Fed shouldn’t obscure its failures”, said Investors’ Chronicle. “Technocratic policymakers with limited democratic accountability shouldn’t be beyond censure.” The Fed’s recent “rate calls” have “contributed directly to house price and asset bubbles” and its “regulatory failures” in the past “helped lead to the subprime mortgage disaster” and the 2008 crash. Changes to how central banks operate are not “inherently a terrible idea”.

"The Great British penny could be at risk of being scrapped," said Chris Matthews in the Daily Mail. This year, for the first time ever, the Treasury has placed no new orders at all for new coins from the Royal Mint, saying that the 27 billion already in circulation in the UK are sufficient. It does not expect to order any new 1p and 2p coins in the coming years, and officials are said to be considering "a range of scenarios" for the future of copper coins, as the UK increasingly becomes a cashless society. Many Britons reacted to the news with "howls of dismay". Get rid of coppers, and with them many "greatly loved experiences" will be consigned to history: penny arcades, piggy banks, penny sweets. 

Don't panic, said Harry Wallop in The Times. Nothing has been decided yet, and the Royal Mint often pauses its coining machines. New 2p coins haven't been made since 2021. Cash is still printed regularly, because torn and tatty notes need to be replaced. But coins, being made of copper-plated steel, "endure". And because electronic money is taking over – last year cash was used for only 12% of all payments – there's a "glut" of coppers, which inflation has made virtually worthless. The cash management company Vaultex has 1,300 cages, each holding tens of thousands of coins, in its vaults, which nobody wants. The simplest solution might be to scrap the 2p coin; the smaller and less "pocket-destroying" 1p coin could easily do its job. The halfpenny, after all, was scrapped in 1984. There was grumbling then, but no one missed it. Copper coins are "a historical anomaly", and eventually they will go. 

We will miss our coppers, said Matthew Lynn in The Spectator. Many people still rely on cash payments. And getting rid of 1p and 2p coins will "inevitably fuel inflation". Retailers are reluctant to cross barriers such as 99p and £1.99. If pennies don't exist, prices will be rounded up "to something far larger". Besides, there's a romance to coins, said The Times. "These intricate metal tokens, smoothed by time and trade, are vehicles for history, art and commerce." A mudlarker can find a Roman coin buried on the Thames foreshore "and feel a flicker of magic. Somehow an expired debit card won't hold the same charm."

A financial meme account run by an anonymous former Wall Street banker has become essential viewing for hundreds of thousands of people in the industry.

The viral posts of the “finmeme-lord” known as Litquidity are “comedic cocaine to banking executives and trading floor interns”, said the Financial Times (FT). Litquidity has amassed more than 790,000 followers on Instagram and more than 330,000 on Twitter with content that takes aim at “everything from monetary policy to bad loafers” in the “eminently lampoonable industry”, the paper added.

But while these posts are “hoovered up by those who love Wall Street and those who love to hate it”, little is known about the figure behind the account.

Who is Litquidity?

The popularity of Litquidity in part “fuelled by the mystery of his identity”, said the FT. “Litquidity could be, and he was, the analyst toiling in the next cubicle, or the associate doling out tedious work about to blow up your Friday-night plans.”

In a 2021 interview with New York Magazine via Zoom “with the video turned off”, the anonymous creator said that he had grown up in Florida, attended an Ivy League school and “went on to work at a couple of big banks and a private-equity firm”.

He started his now-viral Instagram account in 2017, when he was in his 20s and working in private equity, and was reportedly “inspired by a Greek-life parody blog he’d followed as a frat guy in college”.

“It was just going to be a funny thing,” he said, a satire of the “partyish lifestyle” of finance bros. “So, you know, lit is a word for that.”

From satire to ‘Wall Street advocacy’

Given his “niche content”, Litquidity initially expected his account to stay “small”, according to the financial news website Benzinga. In an interview with the site last year, he recalled: “I thought, 'how many people would actually be interested in following investment banking humour and anything Wall Street-related?’”

His early posts focused on “the late nights, Sisyphean workloads and megalomaniacal managers that he and his peers faced”, said Fast Company. But when the Covid-19 pandemic struck “amid one of the biggest bull markets in history”, Litquidity’s posts about financial trends and so-called “meme stocks” proved to be “especially potent”.

As well as capturing the financial market zeitgeist, the magazine added, the meme account also began to turn into “something of an advocacy tool for Wall Street analysts”, tracking salary increases, bonus announcements and even the punishing working conditions endured by some Goldman Sachs analysts.

Now in his 30s, Litquidity has gained an online status as an “astute commentator”, said the FT.

But finance has needed “little help satirising itself” in recent years, the paper continued. The industry has been turned upside down by “meme stocks, cryptocurrency, Goldman Sachs chief David Solomon moonlighting as a DJ, the Miami boom, Sam Bankman-Fried and the collapse of FTX, Dogecoin (an actual joke currency), Elon Musk and Twitter, a Twitter-fuelled bank run, as well as Jeff Bezos’s bizarre turn as a cowboy-boot-wearing bodybuilder”.

Litquidity told the FT that “the market going to shit made everything much easier for me”.

What next for Litquidity?

The meme-maker’s ambitions “go well beyond skewering Goldman Sachs interns for emptying their bank accounts on Hamptons summer rentals”, or mocking “crypto bros for going all in on not-so-stablecoins”, said Fast Company.

Litquidity told the magazine that he planned to build a finance-focused version of Barstool Sports, a media brand valued at more than $400 million that creates pop culture and sports content.

He also writes a popular daily Wall Street newsletter, “Exec Sum”, and has hosted a weekly podcast, “Big Swinging Decks”, about rumours and trends in the financial industry.

Litquidity sells merchandise too, satirising disgraced and defunct financial institutions such as Lehman Brothers and Bear Stearns.

His other ventures include a deal signed in January with headhunting firm Whitney Partners. And according to the FT, Litquidity is “an angel investor and works as a venture capital scout for Bain Capital Ventures”.

The former banker told the paper that having diversified, he was no longer so anxious about whether his memes get laughs. “Now I’ve derisked, so I don’t have to give a shit if the meme is not funny,” he said.

The Treasury has sought to reassure the public that the British banking system is safe after First Republic became the third major US bank to fail in two months.

“As the independent Bank of England has confirmed, the UK banking system remains safe, sound and well capitalised,” a spokesperson for the Treasury told Reuters.

The official added that First Republic was “a matter for US authorities”.

‘Emergency measures’

After its collapse on Monday, First Republic was taken over by US federal authorities. The “substantial majority” of its assets were then swiftly sold to JP Morgan, including $173bn (£138bn) of loans.

The bank’s collapse “follows the failures of US lenders Silicon Valley Bank and Signature Bank after investors withdrew funds”, Sky News said.

The US central bank, the Federal Reserve, has been forced to “step in with emergency measures”, the broadcaster added, in a bid to “stabilise the markets to prevent more funds being withdrawn amid growing fears of a new wider banking crisis”.

‘Confidence crisis’

The rescue of First Republic has “failed to calm market fears about the integrity of the United States banking system,” said Al Jazeera, with “regional bank shares plummeting for a second straight day”.

PacWest Bancorp, based in Los Angeles, saw its share price plunge by nearly 30%, while Western Alliance Bank and KeyCorp fell by 21% and 10%, respectively, said the news site.

Bigger banks, including Citigroup and Bank of America, also saw losses, but not nearly as steep as their mid-sized counterparts.

“If a ‘confidence crisis’ can happen to First Republic, it can happen to any bank in this country,” Jake Dollarhide, chief executive of Longbow Asset Management, told Reuters. “This is potentially a big deal, which hopefully won’t materialise to anything significant.”

‘A delayed reaction not a new phrase’

Some traders believe that following the collapse of First Republic, “other banks could also now be in trouble”, said This Is Money, though many say that this is “not a ‘Lehman’s moment’”.

First Republic’s issues were most likely a “delayed reaction to the turmoil in March rather than the opening of a new phase in the crisis”, the financial website added.

Jamie Dimon, the boss of JP Morgan, sought to calm concerns about a spiralling banking crisis after its hurried takeover of First Republic.

He “played down any other similarities with the 2008 crash, which triggered the start of an international financial crisis that plunged the global economy into recession”, The Guardian said.

Dimon described the US banking system as “extraordinarily sound”, and said that JP Morgan’s takeover meant the sector was “getting near the end” of the spate of bank collapses and would “hopefully help stabilise everything”.

HSBC’s chief executive Noel Quinn also sought to calm concerns about the health of the global banking system “We’re pleased that there was a resolution on First Republic at the weekend so that that situation has been resolved,” The Telegraph quoted him as saying. “We do not believe there is a global banking crisis on the horizon. We think there are some challenges that have been evidenced in some of the regional banks in the US, but we do not believe that’s systemic in the US, or across all banks.”

Discussing the possibility of contagion to the UK banking sector, LBC’s David Buik was equally confident. “Stress tests are regular occurrences and exacting,” the financial commentator said. “Many would be surprised to see a banking crisis in the UK barring an act of God!”

Shares in Credit Suisse jumped this morning after Switzerland’s central bank stepped in to shore up investor confidence.

The “troubled” private lender’s stock plummeted by as much as 30% yesterday after one of its top shareholders, Saudi National Bank, ruled out any further investment, said the Financial Times. The sell-off “weighed on bank stocks in Europe and the US”, which were “reeling” from the collapse of Silicon Valley Bank (SVB).

But the announcement that Credit Suisse will borrow up to $54bn (£45bn) from the Swiss National Bank caused shares to rebound. “The move means Credit Suisse will become the first major global bank to be given an emergency lifeline since the 2008 financial crisis,” said The Telegraph.

What did the papers say?

Switzerland’s second-largest bank has been “plagued by mismanagement for nearly two decades”, said Andrés R. Martínez at The New York Times, but the latest crisis erupted after three US banks – SVB, Silvergate and Signature Bank – collapsed in quick succession. “Their combined fortunes have triggered swings in the markets, pushed Credit Suisse’s shares to a record low and revived fears of a contagion that could lead to a global recession.”

However, the Swiss bank “is largely considered to have brought its troubles upon itself”, according to Quartz.

An “unprecedented” number of its clients had already “voted with their feet” last year following a series of failings, said The Washington Post. These failings included a corporate espionage scandal and a massive leak of client data to the media. Credit Suisse was also convicted by Swiss authorities of failing to prevent money-laundering by an alleged Bulgarian cocaine trafficking gang.

And the bank’s “association with disgraced financier Lex Greensill and failed New York-based investment firm Archegos Capital Management compounded the sense of an institution that didn’t have a firm grip on its affairs”, the paper continued.

A subsequent effort to “woo back nervous clients” appeared to be paying off until the bank was forced to delay its annual report earlier this month, following queries by the US Securities and Exchange Commission. “Panic spread” when SVB collapsed last week, with investors “ditching anything that smelled of banking risk and deposit flight”.

Although the subsequent Swiss National Bank lifeline has provided a “moment of relief for investors”, said CNBC, the “abrupt loss of confidence” has “prompted some to question the ‘true’ worth of Credit Suisse’s stock price”. Fears about the health of the banking system as a whole have also spread from the US to Europe.

“Some Europeans spent the weekend patting themselves on the back that tighter banking regulations would protect them from the fiasco at mid-sized US banks,” said The Wall Street Journal editorial board. “Well, tell that to the Swiss.”

Many hope that the travails of the troubled banks are “idiosyncratic business-model and management failures”, the board added. “But we may not be so lucky.” With the world “witnessing more than one-off management foibles and failures”, we are facing “a global reckoning for years of policy illusions and financial excess”.

Not so, according to Saudi National Bank chair Ammar Al Khudairy. The latest panic was “completely unwarranted, whether it be for Credit Suisse or for the entire market”, he told a CNBC television interviewer.

The Swiss Financial Market Supervisory Authority and Swiss National Bank also put out a statement insisting “the problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets” – translated by the FT’s Alphaville as, “Credit Suisse is fine so please chill”.

What next?

The turmoil is likely to “force the hand of central banks, which have been raising interest rates to tame stubbornly high inflation”, said Martínez at The New York Times. He predicted that the European Central Bank would “play a big part in setting the tone for markets” as policymakers met in Frankfurt to set rates today.

But the ECB stuck with its plans to hike rates by half a percentage point, “judging that inflation poses a bigger immediate threat to the economy than turmoil in the banking sector”, said CNN.

Credit Suisse shares were back to $2.35 this morning, up from a low of $1.76 yesterday, but still below the $2.49 price recorded on Tuesday.

The Swiss National Bank response was “good”, an unnamed banking lawyer told Reuters. “It stopped the sort of immediate burning fire, but I don’t get the feeling the whole fire is out. It’s smouldering.”

Financial markets across the world have plummeted in the wake of the Silicon Valley Bank collapse despite central banks’ attempts to quell fears of a repeat of the 2008 banking crisis.

Amid a global rout in stocks, European banks shed as much as 6% in this morning’s trading, putting them on track for their worst two-day drop since the Ukraine war began.

Fears of a potential global contagion appear to be receding thanks to swift action from financial authorities on both sides of the Atlantic over the weekend, but many predict the impact on the tech sector may be felt for years to come.

What is SVB and why did it collapse?

Founded in 1983 in California, Silicon Valley Bank (SVB) became the go-to bank for tech start-ups and claimed to have provided financing for almost half of US venture-backed technology and healthcare companies in 2021.

Yet despite being among the top 20 American commercial banks, with $209bn in total assets at the end of last year, it collapsed last week in a matter of hours.

In short, “SVB encountered a classic run on the bank”, said CNN Business, although “the longer version is a bit more complicated”, with several forces colliding to take it down.

Higher interest rates introduced over the past year by central banks around the world, including the US Federal Reserve, led to higher borrowing costs, which stalled the momentum of tech stocks. It also eroded the value of long-term bonds just as venture capital began drying up, forcing start-ups to draw down funds. It meant the bank “was sitting on a mountain of unrealized losses in bonds just as the pace of customer withdrawals was escalating”, said CNN.

Attempts to shore up its balance sheet by selling off securities at a loss last week triggered a panic among investors, who began pulling their money out, prompting SVB’s share price to plummet, with regulators called in on Friday.

Vox said the “sudden, swift collapse” was the second largest bank failure in US history – behind only Washington Mutual, which had $434bn in assets when it crashed in 2008 – and the biggest since the height of the financial crisis in that year.

What is the wider impact?

“The incident has sent shock waves across the tech sector,” said Vox.

Garry Tan, president and CEO of start-up accelerator Y Combinator, called SVB’s failure “an extinction level event for startups” that “will set startups and innovation back by ten years or more”, said Wired.

The immediate impact aside, “the collapse of the leading specialist in providing financial services to tech companies could make it harder for the next generation of startups to find what they need to build their business”, said the magazine.

“And after witnessing the herd-like, Twitter-fuelled rush to pull money out of SVB, other banks may be cautious toward tech out of fear of experiencing the same problems SVB faced.”

Beyond the sector, “SVB’s blowup is a big deal and a symptom of bigger forces in motion in tech, finance, and the economy”, Vox added.

Amid warnings from the likes of Axios that the US was “in danger of a catastrophic banking crisis”, financial regulators and the Biden administration moved quickly on Sunday to introduce emergency measures to reduce potential contagion that included ensuring SVB depositors would have access to all their money on Monday morning.

The Guardian reported that “banks will also now be allowed to borrow essentially unlimited amounts from the Federal Reserve for the next year”. This is to avert a situation where financial firms would have to “sell a class of investments that have been losing value because of the Fed’s own high interest rate policies”.

Yet despite efforts to shore up confidence, concerns over America’s regional banks do not appear to have fully abated with shares in several US lenders down by double-digits in pre-market trading.

What about the UK specifically?

There was widespread relief within the UK tech sector on Monday after it was announced that HSBC had bought the British arm of SVB, which had deposits of around £6.7bn and provided banking services for 40% of the UK’s biotech sector, for a “symbolic one pound”, Reuters reported.

The deal with one of the world’s biggest banks with trillions of dollars in assets “brought to an end frantic weekend talks between the government, regulators, and prospective buyers”, said the news agency.

Brokered by the Bank of England, it “involves no taxpayer money”, said the BBC, and means “customers and businesses who had been unable to withdraw their money will now be able to access it as normal”.

Chancellor Jeremy Hunt said: “We were faced with a situation where we could have seen some of our most important companies – our most strategic companies – wiped out, and that would have been extremely dangerous.”

This doomsday scenario has now been averted even if the short-term market turmoil continues.

The UK government could relax ring-fencing rules on banks to attempt to boost the sector and ignite a “big bang” in financial services.

The move is part of a “broader package of City reforms” proposed by City minister Andrew Griffith that will “boost competitiveness”, reported the Financial Times (FT). It is part of the government’s “long-promised liberalisation” of rules to bring “Big Bang 2.0” to the City of London and “take advantage of ‘Brexit freedoms’”, the paper said.

The ring-fencing rules were introduced in response to the 2008 global financial crisis, which resulted in the government bailing out failing banks with taxpayer money. The rules aim to shield consumer services in case other riskier parts of the bank fail, by requiring the investment arm and retail arm to be separate. Although it took until January 2019 to be fully implemented, it was one of the UK’s “boldest post-crisis reforms”, wrote Politico.

Banks with “more than £25bn in deposits” are required to “formally separate” the investment and retail arms, said the FT, and the ring-fence would remain for the “biggest investment banks” including HSBC, Barclays, NatWest and Lloyds. Other banks with “limited trading operations”, including Santander UK, Virgin Money and TSB Bank, could benefit from relaxing the legislation, reducing the “associated costs and complexity of adhering to it”.

The end of ‘too big to fail’

The government has previously sponsored a review of the regulations and their application. The review, led by the former chief executive officer of Standard Life Aberdeen, Keith Skeoch, found that while the rules were “overly rigid” and needed to be “more adaptable, simpler”, it was recommended they remain in place.

Supporters of the regulations argue that removing them would “endanger financial stability” and a possible return of “too big to fail” banks and future tax payer bail-outs, said Politico. Skeoch said in his review that the regulations had succeeded in “improving financial stability” but the benefits would “diminish with time”.

If the ring-fence was fully removed it “would have to be replaced” with alternatives, Lord Andrew Tyrie, former cross-party banking commission chair, told the FT. He argued the sector has already made “a massive investment in the creation of the ring-fence” but did indicate it needed to “keep up with changes in the industry”.

‘Costs outweigh the benefits’

Those lobbying for the scrapping of the ring-fence argue it would give them a “competitive advantage internationally”, said Politico, as it would allow them “to use their retail deposits to make riskier bets on capital markets”.

UK Finance, which lobbies on behalf of some of the major banks, argued that ring-fencing is no longer required as banks hold “far more capital and liquidity”, reported Reuters. It said that the rules added “complexity and costs” and the “costs outweigh the benefits”.

Skeoch’s review said ring-fencing had the potential to “constrain the competitiveness of UK banks” but added the current impact was not “substantial”.

Politically, reversing the regulations could create a “backlash”, said Politico, saying that it has been “symbolic” as a “post-crisis remedy”.

The Treasury is considering removing the cap on bankers’ bonuses as a symbol of the new chancellor’s “Big Bang 2.0” approach to City regulations after Brexit.

Sources close to Kwasi Kwarteng told the FT that he wanted to scrap the cap, which was introduced by EU legislation in 2014, “to boost the City of London’s global competitiveness”.

Bosses in the City have long complained about the EU-wide bonus rules, which cap bonuses at twice an employee’s salary, but removing the restrictions could prove deeply controversial during the cost-of-living crisis.

‘Incentives and attractions’

When the cap was introduced, “banks weren’t happy”, wrote The New Statesman’s Emma Haslett. “Their argument was that they would drive the best finance-sector workers to the US, where big bonuses were still allowed, or that lenders would simply adjust pay to compensate,” she said.

Haslett also noted that Roger Barker, of the Institute of Directors, argued that bonuses are “easier to ‘claw back’ than salaries” because a bank that “pays a high salary and a small bonus has less space to punish an employee who, for example, loses $6.2bn on a series of risky bets on credit default swaps”.

It’s true that the cap was “always opposed by the UK on the grounds that it would damage London’s standing as a global financial hub”, said Sky News.

Scrapping the cap “could also be defended on the basis that Paris is offering an incentive – a 30% income tax rate – to attract investment banking professionals to the French capital”, it added.

‘Banks are bluffing’

However, writing for Left Foot Forward, Luke Hildyard said that banks are “bluffing” when they claim that the cap “prevents them from attracting and retaining high performing staff”. In fact, he argued, “there’s no shortage of people wanting to be senior bankers”.

There is also the argument that “uncapped bonuses lead to the kind of excessive risk taking that spawned the financial crisis of 2008”, said the BBC.

Then there is the question of timing. The FT recalled that when the idea was suggested in June, Labour leader Keir Starmer described the approach as “pay rises for bankers, pay cuts for district nurses”.

Lifting the cap could prove “widely controversial” at a time when households “are struggling to make ends meet amid the cost of living crisis”, said The Guardian.

“The government has already courted controversy by refusing to bring in a fresh windfall tax on the excess profits being enjoyed by energy firms as a result of the war in Ukraine,” noted HuffPost.

Therefore, a source at the Treasury told the FT, “it’s going to be publicly difficult to sell during a time of austerity”.

Leaked details from more than 18,000 accounts at one of the world’s biggest private banks have revealed an extensive list of clients involved in torture, drug trafficking, human rights abuses and other serious crimes.

The accounts hold more than 100bn Swiss francs at one of Switzerland’s “best-known financial institutions”, Credit Suisse bank, reported The Guardian.

The leaks point to “widespread failures of due diligence by Credit Suisse, despite repeated pledges over decades to weed out dubious clients and illicit funds”, said the paper, which was part of a consortium of 48 media outlets given exclusive access to the data.

Analysis reveals how Credit Suisse “repeatedly either opened or maintained bank accounts for a panoramic array of high-risk clients across the world”. These included “a human trafficker in the Philippines, a Hong Kong stock exchange boss jailed for bribery, a billionaire who ordered the murder of his Lebanese pop star girlfriend and executives who looted Venezuela’s state oil company, as well as corrupt politicians from Egypt to Ukraine”, said the paper.

The information was initially leaked to German newspaper Suddeutsche Zeitung by an anonymous whistleblower, who said Swiss banking laws were “immoral”.

The paper then partnered with many media companies across the world to investigate the data linked to tens of thousands of accounts, some of which go “as far back as the 1940s” and “more than two-thirds of which had been opened since 2000”, with many still open today.

The bank has said it “strongly rejects” the allegations against it, arguing that reporting has been based on “selective information taken out of context, resulting in tendentious interpretations of the bank’s business conduct”.

But the data leak is far from the only scandal to hit the financial institution in recent years. The Week takes a look at some of the biggest controversies the beleaguered bank has had to weather.

1. Chairman resigns for breaking Covid rules

Antonio Horta-Osorio resigned as Credit Suisse chairman on 17 January 2022 after “repeated breaches” of Covid-19 quarantine rules, less than a year after taking up the role.

An investigation by the bank’s board found that Horta-Osorio, the former chief executive of Lloyds Banking Group, had broken quarantine rules several times, “including on a trip to London last year to watch the Wimbledon tennis finals”, reported the Financial Times.

His exit was a “severe embarrassment” for the Credit Suisse, which recruited the Portuguese banker to “help reset its strategy” after previous scandals “damaged the bank’s reputation for risk management and raised questions over its leadership”, said the paper.

Credit Suisse immediately appointed board member Axel Lehmann as its chairman, who had been “at the helm for only five weeks” before the massive data leak, said The Guardian.

2. Tuna bonds scandal

The Swiss bank was fined nearly £350m by global regulators in October 2021 after pleading guilty to wire fraud in a long-running scandal that pushed the country of Mozambique “into a financial crisis”, reported The Guardian.

The so-called “tuna bonds scandal” arose from $1.3bn (£940m) worth of loans that Credit Suisse arranged for the Republic of Mozambique between 2012 and 2016, supposedly aimed at “government-sponsored investment schemes including maritime security projects and a state tuna fishery”.

But “a portion of the funds were unaccounted for”, said the paper, and one of Mozambique’s contractors was later found to have covertly arranged hefty kickbacks “worth at least $137m, including $50m for bankers at Credit Suisse meant to secure more favourable deals on the loans”, regulators found.

The international scam then “snowballed” leading the International Monetary Fund (IMF) to suspend its assistance to Mozambique, ultimately causing a financial crisis in the country.

3. Default of Archegos hedge fund

The bank lost $5.5bn when Archegos Capital Management collapsed in early 2021.

The US hedge fund’s “highly leveraged bets on certain technology stocks backfired and the value of its portfolio with Credit Suisse plummeted”, explained Reuters.

An independent report into Credit Suisse’s involvement with the risky hedge fund “slammed the bank’s conduct” and found that its losses were the result of “a fundamental failure of management and control at its investment bank, and its prime brokerage division in particular”, said the news agency.

It said the bank was “focused on maximising short-term profits” ultimately failing to “rein in voracious risk-taking” by the fund “despite numerous warning signals”.

4. Greensill Capital collapse

The bank was forced to suspend $10bn of investor funds in March 2021 when the British supply-chain lender Greensill Capital collapsed.

Credit Suisse had “sold billions of dollars of Greensill’s debt to investors, assuring them in marketing material that the high-yield notes were low risk because the underlying credit exposure was fully insured”, said Reuters.

Several investors have sued the bank over the Greensill-linked funds, with the bank still in the process of trying to “claw back money for clients”, said The Guardian.

The bank said in September last year that it had returned about $6.3bn to investors, but has warned it may not be able to reccover another $2.3bn of losses.

5. Corporate spying

Credit Suisse’s former chief executive Tidjane Thiam was forced to leave the bank in March 2020 after an investigation found that it had spied on two of its employees.

The bank hired private detectives to follow Iqbal Khan, its former head of wealth management who was leaving to join its arch-rival UBS, and on Peter Goerke, its former head of human resources.

Credit Suisse “repeatedly played down” the spying allegations but in October last year the Swiss Financial market Supervisory Authority (FINMA) said that the bank had planned spying operations on “seven occasions between 2016 and 2019, and carried out most of them”, reported Euronews.

6. US sanction breaches

Credit Suisse was fined $536m in 2009 for violating US sanctions against Iran and several other countries, including Libya, Sudan, Burma and Cuba, between 1995 and 2007.

The US Justice Department said that the bank had “processed payments allowing those countries access to American financial institutions – a practice that Washington had banned”, explained Deutsche Welle.

It was the “biggest such fine in the history of violations of US sanctions” and had the bank not cooperated, authorities said they would have “had to pay even more”, said the German news site at the time.

7. Covering for dictators

In 1995 Credit Suisse was among the Swiss banks ordered to return nearly half a billion dollars stored in the accounts of Philippine dictator Ferdinand Marcos, funds which the Philippines said was “plundered from the national treasury”, reported the Associated Press at the time.

It was later revealed that Credit Suisse opened accounts for the dictator and his wife under the names “William Saunders” and “Jane Ryan”, which helped to “shield their funds from scrutiny”, said The Guardian.

NatWest has been fined nearly £265m for failing to stop a money-laundering scheme that lasted five years, took in around 50 branches nationwide, and featured “black bin liners” stuffed so full of cash “that one branch’s two floor-to-ceiling safes proved ‘inadequate’ for storing it all”, said Rupert Jones in The Guardian.

The case centres on the Bradford jeweller Fowler Oldfield – which deposited around £365m from 2012 to 2016, when it was shut down after a police raid. It is the first time a UK bank has faced criminal prosecution by the Financial Conduct Authority under anti-money-laundering laws. When the money laundering was at its height, up to £1.8m of cash was deposited daily – quite an achievement for a supposed “scrap gold” dealer, which had told the bank it had an annual turnover of £15m.

Staff at some branches “thought something was up”, complaining that some deposits, featuring suspiciously large numbers of Scottish bank notes, had a “musty smell”, suggesting they’d been stored for some time, said Alistair Osborne in The Times. But it seems that management had such “heavy colds” they couldn’t smell a rat. Sadly, since the taxpayer owns 55% of NatWest (formerly RBS), “we’re all on the hook” for the fine.

“So far, we only have part of the story,” said Alex Brummer in the Daily Mail: the payees, who are allegedly part of a criminal conspiracy, have yet to come to court. Even so, the failure of managers is mind-boggling. Unlike, say, the HSBC money-laundering case – which involved drug money in obscure Mexican branches – these “shenanigans” were in plain sight. “The only credible defence of NatWest is that after being all but bankrupted by Fred Goodwin, survival was the priority in the years after the financial crisis.” Still, it seems a thin one.

No central banker likes to be put on the spot about interest rate decisions – let alone be accused of “bottling it”. But that, said Phillip Inman in The Guardian, is the criticism being levelled at Bank of England Governor Andrew Bailey and his Monetary Policy Committee (MPC). Having signalled the need to tackle inflation with the first post-pandemic hike, they failed to make the move – prompting tumult in the bond markets and a 2% fall in the pound.

On the eve of the meeting last Thursday, investors had priced in “a full 0.15 percentage point increase”, taking the benchmark rate to 0.25%, said Moyeen Islam of Barclays Capital Securities in the FT. “The market’s surprise” when it didn’t turn up was evident in the “gyrations” of “policy-sensitive” five-year gilt yields, which experienced “the largest intra-day move” since the EU referendum. Traders were left reflecting that the Bank would be “smart to revisit its communication strategy”.

The Bank “blinked”, said Patrick Hosking in The Times. Despite “reams of evidence that inflation is on the rise and going to get worse” (the MPC raised its forecast to 5% in early 2022), it “couldn’t bring itself to pull the trigger”. Sure, there are reasons to delay: growth is slowing, cost pressures may indeed prove temporary, and there is still a risk of an “adverse” Covid development over the winter. But a small rate rise “would have sent a crucial signal that the Bank is serious” about containing inflation. Its credibility “is now on the line”.

The Bank appears to have “failed a test of political independence on interest rates”, said Ben Wright in The Daily Telegraph. At the very least, it looks cack-handed when compared with the US Fed. There was no market “tantrum” following last week’s announcement that the Fed would start reducing bond purchases. Chairman Jerome Powell made the move “without scaring the horses by being extremely transparent and consistent about his intentions”. What a contrast with Threadneedle Street.

For years, the world’s major central banks have moved in lockstep, said the FT. But “the pace of tightening” now splits opinion. While both the Fed and the BoE are signalling that “rates are likely to rise soon” (and the central banks of Canada and Australia have taken hawkish positions), the European Central Bank under Christine Lagarde is “resisting any shift in policy”.

Central banks face an “extraordinarily difficult task”, said The Economist, as they attempt to “normalise” monetary policy “amid sky-high asset prices, heavy debt levels and above-target inflation”. “Don’t rule out a bigger bond brawl.”

Market weathervanes

Reading the runes of UK monetary policy is notoriously difficult, said Stefan Wagstyl in the Financial Times. But there’s “a clear sense” that the era of ultra-low interest rates is on the way out. Even though the top mortgage offers of high-street lenders like Halifax, Nationwide and Santander “have barely risen since the summer” (all are offering five-year, fixed-rate loans at 0.99% for up to 60% of the property value), it can’t last much longer.

Indeed, lenders have already raised rates on equity release mortgages, “which are something of a market weathervane as they often involve very long-term loans”. The lowest rates on these products have jumped from 2.4% a few weeks ago to 2.8%. “There’s no need to panic” – rates were much higher pre-Covid, at 3.5% or more. But it may pay to start thinking about a new deal.

Blessed release?

Over the past decade, equity release products, which allow the over-55s “to tap into the value of their home”, have boomed, said George Nixon in The Times. There are currently 812 loans available, with an average rate of 4.17%. “Most homeowners choose a lifetime mortgage, either taking one large lump sum or releasing money in stages.” The interest is typically added to the debt and repaid when the borrower dies or the house is sold. These schemes can vastly improve people’s quality of life. The catch is that higher rates “make a huge difference” to the amount eventually repaid. A £200,000 loan at 6.82% (the going rate in 2011) would nearly double to £394,802 after ten years – leaving many heirs with a nasty surprise.

ERCsome charges

Unlike “normal mortgages”, there’s “no fixed-rate period that expires” in home-release schemes. But you can still shop around for a better deal. The big caveat is “steep early repayment charges” (ERCs). It’s crucial to “run a calculation to establish how long it will take to reach break-even point”, says financial adviser Abigail Banks of Private Office. “Sometimes the difference in rates does not outweigh the charges.” Borrowers are required under FCA rules to take financial advice before taking out an equity release loan. It’s a good idea to have “a frank conversation” with the family too.

“One way to stop a run on a bank is to drive a lorry-load of cash up to the front door and unload it in full public view,” said Ed Cropley on Reuters Breakingviews. Sadly, that option isn’t available when the economic panic “is caused by a shortage of drivers” and the only long-term solution – sharply higher wages for truckers – “puts further fire under inflation”.

Even before the current crisis, the Bank of England was expecting UK inflation to top 4% in the final quarter of 2021 – “twice its target rate”. Recent events have forced the governor, Andrew Bailey, to toughen his rhetoric, said Russell Lynch in The Daily Telegraph. Observing that “supply chain shocks” were “weakening” the recovery, he has warned of “hard yards” ahead for the UK economy.

Bailey still reckons there are “good reasons” why the inflation spike will prove temporary, but he’s already eyeing his toolbox, said Lizzy Burden on Bloomberg. BoE officials “surprised investors” last week by indicating they had “left the door open” for a potential interest rate hike as early as November.

Still, Bailey is the first to admit the Bank can do little to solve some of the UK’s problems. “Monetary policy will not increase the supply of semiconductor chips, it will not increase the amount of wind, and nor will it produce more HGV drivers,” he said.

Adding to the pressures facing policymakers is the conundrum of the labour market, said Larry Elliott in The Observer. “The biggest state intervention” in “peacetime history” has come to an end, with the winding up of the furlough scheme. The Bank is “nervous” about what will happen to more than one million furloughed workers once employers have to pay their wages in full. At a time of record job vacancies, the outcome is, to say the least, “hard to read”.

“We enter the season of mists and mellow fruitfulness with things looking more precarious than they have in a long time,” said Jeremy Warner in The Sunday Telegraph. There is a sense of the country lurching from one crisis to the next. Expect things to get really “ugly” if the Bank proves to be wrong about transitory inflation, has to jack up interest rates – and debt costs with them. Britain’s bloated public finances are “a matter of growing concern”, given that about a quarter of the national debt is index-linked to inflation.

“It is much too soon to call a halt to the recovery because of shortages and higher prices,” said David Smith in The Sunday Times. But they have taken “some steam out of the economy”. The Bank’s revised Q3 growth figures (down from 2.9% to 2.1%) will leave the economy 2.5% below pre-pandemic levels. “This is becoming a very messy recovery.”

Chasing Blighty

Under CEO Jamie Dimon, JPMorgan Chase “has sought to combat the threat of fintech”, said Ryan Browne on CNBC. Now the Wall Street Bank is heading straight to fintech’s European heartland, launching a digital bank in London this week.

The new outfit, dubbed Chase, will take on a clutch of banking “challengers”, including Monzo, Revolut and Starling – now flourishing as a result of Britain’s “fintech-friendly regulations” – as well as old guard lenders and Wall Street rival Goldman Sachs, which launched its Marcus savings account in 2018. There’s a lot riding on the move: “it marks the first international expansion of JPMorgan’s consumer bank brand in its 222-year history”.

Long haul

The Chase app is the culmination of three years’ development at JPMorgan’s Canary Wharf HQ, “mostly carried out in secret”, said Katherine Griffiths in The Times. The aim is to combine “the nimbleness of a start-up with the financial firepower that comes with being backed by one of the world’s biggest banks”. In June, JPMorgan also bought the UK wealth manager Nutmeg. It won’t be easy, said Lex in the FT. The move “goes against the grain” when big global banks are “cutting back their retail networks”. Britain is already “a very well-banked market”, and big companies can struggle with innovation. “Breaking even could be a long haul.”

Interesting rates

The new venture should “provide a shot in the arm to the stagnant current account market”, said Will Kirkman in The Daily Telegraph. Not least because of its eye-grabbing headline rates. Chase is touting 5% interest to customers – by some distance “the highest rate available on the market today”. There is, of course, “a catch”. That rate will only apply to “small change round-ups” – when the amount deducted from a debit card purchase is rounded up to the nearest pound. As Rachel Springall of Moneyfacts observes, “banking customers looking to switch” should “compare details carefully”. It’s the “overall package” that counts. Many interest-paying current accounts have disappeared over the past year, though there are still a handful to choose from. Virgin Money’s M Plus account pays 2% interest on balances up to £1,000; Nationwide’s FlexDirect account pays 1.98% on balances up to £1,500.

Although still largely hypothetical, govcoins are considered by some to be the most important financial innovation since the invention of banknotes. Formally known as central bank digital currencies (CBDCs), they are legal tender in electronic form – and would be tied penny-for-penny to established currencies such as sterling, the dollar and the euro.

Only one big economy, China, has so far conducted live trials; however, nearly 90% of the world’s central banks have launched exploratory projects, according to the Bank for International Settlements, with Sweden’s “e-krona” and the Bahamas’ “Sand Dollar” out in front. In April, the UK Chancellor, Rishi Sunak, set up a taskforce to examine the viability of a digital pound, or “Britcoin”.

How would govcoins differ from cryptocurrencies?

In some ways, they would be similar: imagine bitcoin, if bitcoin were managed by the Bank of England and backed by the Government. Electronic versions of currency already predominate in most financial systems. However, the electronic deposits and digital accounts used by normal customers are privately managed by commercial banks; central banks have their own reserves of digital money, but they mostly only supply it to other banks.

The most far-reaching version of a CBDC would mean that, instead of holding an account with a retail bank, you could do so directly with a central bank. Rather than paying with a card, you could use the central bank’s system – perhaps through an app similar to PayPal or Apple Pay.

The Bank of England thinks that CBDCs would “exist alongside cash and bank deposits, rather than replacing them”, but even so, it would be a revolutionary step.

What’s driving these experiments?

The fast decline of cash, and the challenge to the monetary system posed by cryptocurrencies. Bitcoin’s emergence as a mainstream, if highly volatile, $1trn asset class has persuaded many other players to join the game.

There are now numerous alternatives to bitcoin – “altcoins” such as ethereum and monero – along with “stablecoins”, which try to reduce the investment risk of cryptocurrencies by pegging them to a currency or commodity: USD Coin is pegged to the dollar, Glint to the price of gold.

Central banks are particularly concerned by Facebook’s plan for a private digital currency called Diem (formerly Libra). Governments fear that the anonymity offered by these currencies will increasingly be used for illegal purposes and that, being unregulated, they could undermine the stability of the financial system.

China (once a centre of bitcoin trading) has now prohibited banks and payment firms from facilitating crypto-transactions. And some central bankers have concluded that they must join the game by creating their own currencies, or risk losing control.

What are the advantages?

Proponents cite all kinds of benefits: CBDCs could create a better financial system. Today’s banks are expensive (we pay an average of £150 per year in fees) and they sometimes fail. They also exclude many: even in the UK, 1.3 million are thought to be “unbanked”.

Govcoins would allow the creation of faster, safer, cheaper payment systems – particularly useful in nations with large numbers of unbanked citizens. Since every currency unit could be tracked, CBDCs would be a powerful deterrent to tax evasion, money laundering and other financial crimes.

Govcoins could also transform monetary policy. E-accounts would give central banks more precise control over systemic risks and the money supply than current tools such as interest rates – enabling them to “nudge” economic behaviour. In China’s recent trial, e-yuan were programmed with an expiry date, to encourage immediate spending.

And the downsides?

CBDCs raise major concerns about data privacy and excessive state control. Without safeguards, the unprecedented power conferred by digital currencies – potentially, to see every purchase – could turn central banks into a financial Big Brother.

The Bank of England has suggested that govcoins could be designed to give a degree of privacy, particularly if intermediaries (most likely domestic banks) provided “payment interfaces”. But that may not satisfy those concerned about the degree of government control (accounts could be shut down at the tap of a button) and state surveillance – not just of bank balances but, because of the transaction trail, of people’s entire financial histories.

What other objections are there to CBDCs?

Environmentalists point to the obscene amount of energy used by bitcoin’s blockchain technology (the digital ledger system used to verify ownership). Studies suggest it consumes as much electricity as a medium-sized European country. CBDCs could, in theory, be much more efficient, but that has yet to be proved.

The cryptofinance industry is also up in arms. When the Britcoin project was announced, Jason Cozens of Glint argued that the Bank of England was “looking to control, or better yet, crush the rise of alternative currencies”. Mainstream banks are also very concerned by CBDCs.

Why are banks worried?

Govcoins could pose an existential threat to commercial banks. Why would anyone use a high-street bank if central banks were to provide the same service, more cheaply and safely? And if banks’ deposits were reduced, the financial system would be greatly changed: banks would have less to invest in mortgages and the economy.

Digital currencies are sure to develop, but depending on which versions win out, the “revolution could go in two directions”, says Prof Randall Kroszner of the University of Chicago Booth School of Business – “either a triumph of decentralisation and market forces, or a triumph of centralisation and government monitoring”.

Disappointed holidaymakers, trying to get their money back for trips disrupted by the coronavirus pandemic, are having their refund applications blocked by banks and credit card operators.

Tourists are currently owed an estimated £7 billion for unused holidays and flights but travel operators are offering credit notes or deferred bookings instead.

However, many customers are unwilling to accept either offer because they fear that the notes will be worthless if the companies go bust, or because they cannot travel at a later date.

The Times says that tourists and the travel industry both want the government to step in to guarantee the notes but ministers have failed to act.

Therefore, thousands of travellers have turned to their banks and card operators, who are legally obliged under Section 75 of the Consumer Credit Act, to refund eligible customers.

Customers who booked their holidays or flights on a credit card can legally claim back the cost from their bank if the cancellation constitutes a breach of contract.

But some are being told that they are either not eligible or that they must exhaust all avenues with their travel company first, which is not required in law.

–––––––––––––––––––––––––––––––For a round-up of the most important stories from around the world - and a concise, refreshing and balanced takeon the week’s news agenda - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––

Some banks are also blocking their customers from making “chargeback” claims.

Customers of several lenders, including Halifax, Metro Bank and RBS, say that they have been told they are not eligible because they have been offered credit notes. This approach contradicts the guidance issued by Visa and Mastercard.

Amid anger over the stalling tactics, the Financial Ombudsman Service, which adjudicates on complaints between banks and their customers, said: “We recognise this is an unprecedented situation but there is no reason not to process these claims as usual.”

Banking bosses say that the issues are “cock up rather than conspiracy” but Gareth Shaw, of Which?, said: “There needs to be greater clarity and consistency about claiming through banks, and the industry should ensure that all customers have a fair chance of getting their money back.”

Last week, Which? accused UK travel operators of breaking the law by refusing to pay out in 14 days. It suggested “extending the processing deadline to 28 days” and for any vouchers to be “guaranteed against insolvency and eventually redeemable for cash”.

Interest rates have been cut by the Bank of England in a bid to counter the effects of the global coronavirus outbreak on the UK economy.

The Bank of England’s Monetary Policy Committee has agreed to reduce the main bank rate from 0.75% to 0.25%, “leaving almost no room to cut rates further”, says the Financial Times.

The decision was announced as Chancellor Rishi Sunak prepared to announce the 2020 Budget, with constraints on government spending and borrowing expected to be lifted.

So who will benefit - and who will lose out - from the interest rate cut?

Savers

The cut is bad news for savers, because High Street banks use the Bank of England base rate as a reference point for savings accounts.

That said, savers have “had to endure years of low returns anyway”, notes the BBC, which adds: “They may take heart from the fact this is a temporary measure from the Bank.”

According to Martin Lewis of MoneySavingExpert.com, the average UK saver currently earns just 0.4%, while the best easy-access accounts pay 1.3%.

“All these rates will likely drop. Yet at the very least make sure your money is in the top payer, not the poorest,” he says.

–––––––––––––––––––––––––––––––For a round-up of the most important stories from around the world - and a concise, refreshing and balanced take on the week’s news agenda - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––

Homeowners

The rate cut may benefit homeowners, although it will not affect fixed-rate mortgages, which account for roughly half of home borrowing in the UK.

But people with variable or tracker-rate mortgages, or those about to take out a new mortgage or remortgage, are likely to be better off as a result of the decision.

Meanwhile, some banks are offering breaks from mortgage repayments for customers affected by the coronavirus outbreak.

Credit card and personal loan borrowers

MoneySavingExpert.com expert Lewis says that “most loans, credit cards and other debts will likely be unaffected or only minimally affected, because the Bank’s interest rate only plays a small part in their rates”.

Again, some banks are offering temporary credit limit increases, repayment breaks or waived fees for missed payments for people affected by the epidemic.

Business owners

The Bank of England’s “emergency action is clearly designed to help protect businesses, particularly small and medium-sized ones, and in turn the employment of millions of people”, says the BBC.

The broadcaster’s economics editor Faisal Islam says the key goal is to protect the cash flow of these companies, which may face “slumping demand, trade difficulties and staff absence” as the virus spreads across the UK.

Although the outbreak is “unique and highly unpredictable”, the Bank of England measures “should provide the firepower for banks to boost lending well above current lending levels”, Islam adds.

The Bank of England carried out due diligence three times on a tech firm that was later revealed to have passed paying clients early access to market-sensitive information.

The technology supplier Encoded Media was probed three times between 2008 and 2019, yet its status as a supplier to the BoE was only revoked following media inquiries in December.

The revelation has struck a fresh blow to the BoE’s credibility in securing crucial national infrastructure.

The BoE disabled the company’s access to a backup audio feed after The Times revealed the breach and said the company would have no part in future press conferences, calling the sale of access “wholly unacceptable” and saying the feed was “misused”.

Although non-public information was not revealed, the audio feed potentially allowed unidentified paying customers to hear the governor Mark Carney’s highly influential words at press conferences as much as eight seconds ahead of rivals listening via other means – giving a potentially lucrative advantage.

“Eight seconds may not sound like a long time. But in the modern financial world, it’s a valuable head start that can give traders a crucial edge,” explained The Guardian last year.

Mel Stride, the chair-elect of parliament’s Treasury select committee, said he expected the MPs to ask “searching questions” of the outgoing governor, Carney, and his replacement, Andrew Bailey, at hearings this week.

Encoded Media director Wand insisted Encoded did not hijack audio feeds, adding that previous reports had “already caused economic loss to Encoded Media and Statisma, as well as considerable distress to its directors who run an entirely reputable small technology business with limited resources”.

The BoE has previously stated that its restructuring was carried out to strengthen its information security and that it is confident in its ability to protect against security threats.

–––––––––––––––––––––––––––––––For a round-up of the most important business stories and tips for the week’s best shares - try The Week magazine. Get your first six issues for £6–––––––––––––––––––––––––––––––

Campaigners are demanding the chancellor holds an independent review into Andrew Bailey’s appointment as Bank of England governor, saying his tenure at the Financial Conduct Authority was characterised by a “toxic cocktail of negligence, incompetence and indifference”.

The True and Fair Campaign group, led by Gina Miller, is calling on chancellor Rishi Sunak, and the head of the Treasury select committee, Tory MP Mel Stride, to force Bailey to face questions over a string of financial scandals that wiped out the savings of small investors during his time as chief executive of the City regulator.

Miller said of Bailey: “On his watch, tens of thousands of Britons have lost money – in many cases losing their life savings which has devastated their lives, families and business.”

She added that if Bailey were confirmed in the “highly responsible and prominent role” of Bank of England governor, “it would be a gross betrayal of the government’s duty to protect consumers and a textbook example of rewarding failure”.

Investment Week says Miller’s report, Asleep at the Wheel: An expose of systemic regulatory failure and consumer detriment, lays the blame for a series of scandals at the door of the FCA.

The Guardian says that the alleged failures included the lack of investigation into allegations contained in Lloyds’ internal Turnbull report, in which a former employee claimed executives covered up fraud at the HBOS branch in Reading.

It adds that there are also allegations of “a lack of sufficient regulation around peer-to-peer platforms like Lendy which collapsed last year” and “the collapse of London Capital & Finance and the liquidation of Neil Woodford’s once-popular flagship investment fund”.

An FCA spokesperson told City AM: “We utterly reject these claims which contain numerous inaccuracies and are made with little understanding of the role of the FCA.”

Miller, a businesswoman, is best known for being at the forefront of anti-Brexit campaigns, coming to prominence through a series of court challenges.

–––––––––––––––––––––––––––––––For a round-up of the most important business stories and tips for the week’s best shares - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––

The American boss of Barclays bank is being investigated by UK regulators over his links to the late financier Jeffrey Epstein.

Jes Staley, 63, from Boston, became Barclays’ chief executive in 2015. The Financial Conduct Authority (FCA) has now launched an inquiry to establish whether Staley was sufficiently clear about his friendship with Esptein when he took the job.

Staley has admitted that during his time as head of the private bank division of JP Morgan in the US, he got to know Esptein, who was found dead in his prison cell in New York last year. Epstein was awaiting trial after being charged with sex trafficking underage girls. He had previously been convicted, in 2008, of soliciting prostitution with a minor. Epstein was already a client when Staley took over the bank.

CNN quotes Barclays as saying today: “The relationship between Mr Staley and Mr Epstein was the subject of an enquiry from the Financial Conduct Authority to which the Company responded.”

The bank added that Staley retains the “full confidence of the board” after an internal review concluded that he had indeed been “sufficiently transparent with the company as regards the nature and extent of his relationship with Mr Epstein”.

The FCA would say no more other than to confirm that Staley was under investigation, says The Guardian. The recently founded Bank of England Prudential Regulation Authority is also looking into the matter.

‘Deep regret’

Staley responded with a detailed statement, saying: “It’s been very well known that I had a professional relationship with Jeffrey Epstein. It goes back to the year 2000 when I was asked to run the JP Morgan private bank.

“And he… already was a client when I joined the private bank. The relationship was maintained during my time at JP Morgan, but as I left Morgan the relationship tapered off quite significantly. We occasionally stayed in contact, and that all ended in late 2015.”

He added that he now regretted pursuing the friendship, saying: “Obviously I thought I knew him well, and I didn’t. And for sure with hindsight of what we all know now, I deeply regret having had any relationship with Jeffrey Epstein.”

Second investigation

The announcement is particularly unfortunate for Staley because this is the second time he has been investigated by the FCA since taking the Barclays job five years ago. In 2018 he was fined £642,430 by the regulator – and lost £500,000 of his bonus from Barclays – after an investigation into his handling of a whistle-blower.

The FCA said Staley had ignored a conflict of interest when he used Barclays’ security unit to hunt down the writer of a series of letters raising concerns about the probity of the appointment of Tim Main to head the bank’s financial institutions group in New York, says The Guardian.

Main was a friend of Staley’s and a former colleague when Staley was at JP Morgan, during the time that he befriended Esptein.

Hedge funds have been snooping on the Bank of England’s press conferences before they are officially broadcast, in an “embarrassing” development for the central bank.

The BoE has discovered that one of its suppliers has been leaking an audio feed of its press conferences to high-speed traders who hope to profit by responding to the governor’s comments before their rivals.

The Times says that hearing what senior officials, including Governor Mark Carney, say before others can be “highly lucrative” for speed traders, who can “make fortunes from early access to information”.

“The revelation that the Bank of England’s systems have been abused to give one set of traders an advantage over another will be an embarrassment because one of its roles is to support fair and efficient markets,” says the newspaper.

The Daily Mail adds that the comments of Carney and co “have the power to shift the value of sterling and other financial markets”.

The Bank has said it “operates the highest standards of information security around the release of the market-sensitive decisions of its policy committees” and the issue identified “related only to the broadcast of press conferences that follow such statements”.

–––––––––––––––––––––––––––––––For a round-up of the most important business stories and tips for the week’s best shares - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––

The third-party supplier is believed to be linked to a market news service that promises clients will gain an edge over rival traders in a field where getting information even microseconds before others can massively inflate profits.

Trading that takes advantage of early access to information is known as high-frequency trading. Though not technically illegal, it is controversial and has been compared to insider dealing because it is a way of trading on information that others do not have.

Although the BoE’s official video feed of press conferences is managed by Bloomberg, the Bank employed contractors to install a separate back-up audio feed several years ago in case the video feed went down.

This back-up feed was never intended to be used by an outsider unless the video failed, but a supplier has allegedly hacked into the audio feed since at least January to provide the service to one of its other companies.

The Bank said: “This wholly unacceptable use of the audio feed was without the Bank’s knowledge or consent, and is being investigated further”. It said that it had “disabled the third-party supplier’s access”.

House price growth has picked up despite on-going economic and political uncertainty, with the biggest monthly rise since July 2018.

According to Nationwide building society, the average price of a home rose by 0.5% in November, up from 0.2% in October. The average price is now £215,734.

The annual growth rate picked up to 0.8% from 0.4%, the highest since April. However, this means it has been stuck below 1% for months, below the rate of inflation, at 1.5%, and wage growth of 3.6%. The BBC says the market is “relatively stagnant”.

Jonathan Samuels, chief executive of property lender Octane Capital, said: "The property market is hardly all guns-blazing but neither has it given up the ghost.

David Westgate, chief executive at Andrews Property Group, told City AM that the data showed that the market “still has some fight in it”.

It was a different story before the EU referendum in June 2016, when house prices were rising at an annual rate of around 5%.

The fate of Brexit will dictate how prices develop, according to Howard Archer, chief economic advisor to the EY ITEM Club forecasting group.

He predicted that if the general election delivers a decisive result and the UK leaves the EU with a deal by 31 January, prices could rise by 2% in 2020. However, if Britain leaves the EU without a deal, house prices could quickly drop by 5%, Archer predicted.

However, Robert Gardner, Nationwide’s chief economist, said: “Past general elections do not appear to have generated volatility in house prices or resulted in a significant change in house price trends. On the whole, prevailing trends have been maintained just before, during and after UK general elections.”

Last week a Reuters poll found that UK house prices are not expected to match low inflation until 2021 and are set to fall in London this year.

–––––––––––––––––––––––––––––––For a round-up of the most important business stories and tips for the week’s best shares - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––

The payment protection insurance scandal could end up costing banks more than £53 billion, as firms warn of mounting bills from last-minute claims.

The deadline for customers to claim PPI compensation expired Sunday, yet a number of major banks have warned they face continued costs to deal with the late surge.

CYBG, which owns Clydesdale, Yorkshire and Virgin Money, warned of a potential £450m bill following an “unprecedented volume” of new claims, prompting its stock price to fall 21% to record lows.

Ian Gordon, analyst at Investec, said the announcement by the UK’s sixth largest bank was “really quite shocking in terms of the anticipated damage”, pointing out that the bill represented 20% of the banking groups’ current market capitalisation.

It follows Royal Bank of Scotland, owner of NatWest, which said on Wednesday it could face a £900m charge. The Co-operative Bank is also assessing the costs.

Around 64 million PPI policies were sold in the UK, routinely added to products such as store cards, credit cards or mortgages. A type of insurance designed to help borrowers keep servicing their debts if they fell ill or lost their jobs, it was widely mis-sold with many customers pressured into buying it, and has since “become the UK’s most expensive consumer banking scandal by far”, says the Financial Times.

Banks have set aside billions to compensate customers, but the exact total cost to the industry has until now been unknown.

The Financial Conduct Authority said last month that compensation for PPI had so far cost the financial services industry £36bn.

However, Dominic Lindley of New City Agenda, who has been keeping a tally of payments, told the BBC the last-minute surge in claims means “provisions from the banks could reach £53bn”.

He believes the bank with the biggest bill, Lloyds Banking Group, could announce an extra provision of £2bn, while Barclays might set aside as much as £1bn more.

The Guardian reports that RBS and its NatWest arm “were hit by technical glitches on 27 August, with both banks’ main websites out of action for several hours”.

“There were more problems on 29 August, when some online PPI claimants were told that ‘due to system problems’ NatWest was unable to progress their application at present, while others reported jammed phone lines” it adds.

While the PPI mis-selling scandal has produced welcome windfalls for the millions of consumers who have submitted claims it has also “made multimillionaires out of the individuals who set up the biggest claims firms”, reports The Telegraph.

The paper estimates around 300 firms are understood to specialise in PPI claims, taking a chunk of the £36bn in compensation that banks have paid out.

However, the lucrative PPI chapter has come to an end now that August deadline has passed, leaving the future of this sector in doubt, with Martin Lewis, founder of the Money Saving Expert website, expecting the “short-term money farms” to cash in their chips and close while others will chase new scandals.

Barclays, Royal Bank of Scotland and three other lenders are being sued by investors for at least £1bn over rigging of the foreign exchange market.

In what The Guardian describes as a “test case for US-style class actions in the UK,” a US law firm that specialises in stock market litigation has filed a claim at the Competition Appeal Tribunal.

The same claim also targets US investment banks JP Morgan and Citigroup, and Switzerland’s UBS.

The action follows a ruling in May by the European Commission that the banks had violated EU competition law.

The Commission ruled that the banks had coordinated their trading strategies via two cartels, swapping commercially sensitive information and trading plans.

They have been collectively fined more than $8.5bn (£6.9bn) by eleven global regulators.

Reuters says that litigators have “long hoped” to replicate in the UK the success of high-profile US class action claims against banks, including Goldman Sachs, HSBC and Barclays, that resulted in $2.3bn settlements for major investors.

The former pensions regulator chair Michael O’Higgins is acting as the class representative.

He told City AM: “The fines imposed on the banks by the European Commission were an important first step, but they will not compensate those who were damaged or suffered losses.

“Just as compensation has been won in the US, our legal action in the UK will seek to return hundreds of millions of pounds to pension funds and other corporates who were targeted by the cartel.”

JP Morgan, RBS, UBS, Barclays and Citi have declined to comment.

Deutsche Bank has begun the first round of 18,000 job cuts announced at the weekend as part of radical global restructuring.

Hundreds of employees in London, New York and Tokyo learned their careers “ended in an envelope, a hug and a cab ride”, says Reuters on Monday morning.

In London, “workers started leaving the bank’s building in the City at around 10am carrying bags of belongings. Some said they were told their passes would stop working at 11am”, The Guardian reports.

By lunchtime, says the Daily Mail, “trade was picking up at the nearby Balls Brothers pub, with many of the employees thought to be making their way to the bar from the office.”

Deutsche Bank is to cut its global workforce to 74,000 by 2022, part of a restructure that will cost the company €7.4bn ($8.3bn; £6.6bn) over the next three years.

The lender says the aim of the changes is to make the bank “leaner and stronger” but the scale of the restructuring has shocked observers.

The BBC's Simon Jack says the news does not mean we are “in the foothills of another financial crisis”, as it is a problem “specific to Deutsche Bank, which expanded rapidly in the 1990s and 2000s”.

He adds that when the financial crisis occurred, Deutsche Bank was slow to respond by cutting its business back to a more sustainable size, and “it is paying the price for that now”.

The Times says that Deutsche has “struggled in the past decade with regulatory investigations and a tough market”. Simon Lambert of This Is Money agrees, saying “the aftermath of the crisis saw much tougher rules brought in for banks, requiring them to hold more capital, rely less on debt and play things safer, leaving Deutsche struggling”.

In a letter to staff, Deutsche CEO Christian Sewing says: “First let me say this: I am very much aware that in rebuilding our bank, we are making deep cuts.

“I personally greatly regret the impact this will have on some of you. In the long-term interests of our bank, however, we have no choice other than to approach this transformation decisively.”

App-based bank Monzo has doubled its valuation to more than £2bn in just eight months, after raising a further £113m of funding.

The UK-based mobile-only bank launched in 2015 and now has two million users. And Monzo founder and chief executive Tom Blomfield, 33, is aiming to top the three million customer mark after the fintech start-up arrives in the US later this year.

What happened?

Monzo raised an extra £113m of investment from US investors to expand its business across the pond. Some eight months since its last round of fundraising, the smartphone bank was backed by start-up accelerator YC Continuity, says the Financial Times.

YC Continuity helped launch Dropbox and Airbnb, says the newspaper. It is responsible for a share of Monzo’s new investment, along with existing backers of the bank Accel, Orange and Stripe.

Anu Hariharan of YC Continuity says Monzo is the first of its kind to redefine the modern banking experience for customers and claims the app-based bank is well on its way to scaling revenue “rapidly and sustainably”, reports the FT.

The new funding means Monzo has “leapfrogged” Revolut, a rival app-based bank, to become the second-wealthiest fintech start-up in the UK, says The Guardian. The first is the small business lender OakNorth.

Monzo launched in the UK four years ago. Initially it offered only a pre-paid debit card managed through a mobile phone app. Two years later, says the FT, it secured a full banking licence and started to offer current accounts.

The bank’s genius, according to The Guardian, lies in realising that “for many millennials, money is a stressful business”. While stopping short of providing a specific avocado toast tracking feature, the app allows users to split bills with friends and keep tabs on types of spending.

Customers can set monthly budgets for categories such as nights out and groceries, according to the paper. Current accounts can be set up from home, with customers uploading a photo of an identity document and recording a brief “selfie video” to prove their identity further.

In a stroke of marketing genius, according to The Guardian, the firm provides customers with an electric pink bank card that’s highly visible when it’s used and distinctive.

What has the response been?

The FT says that news of a fresh round of investment in Monzo has been taken as an encouraging sign that investors are “still keen to back upstart financial technology companies”. However, the newspaper points out that the bank’s decision to seek double the funding comes surprisingly quickly after its last round of fundraising.

The fact the bank sought more backing after just eight months, and when it was already “well-capitalised”, could be a sign that the team who run it and their advisers believe the currently benign environment for investment will soon come to an end, warns the FT.

News that the bank would be opening in the US triggered positive reactions last week. Thousands of people signed up to Monzo’s American waiting list, according to Tristan Thomas, head of marketing.

The Guardian recalls that Monzo created a “whiff of exclusivity” before its UK launch by allowing a long waiting list to build up. Customers could jump the queue if they were given a “golden ticket” by a friend.

This approach allowed the bank to spend “virtually no cash on marketing” until this year, The Guardian says.

What next?

Monzo has said it will use the fresh funds to open and expand its US business, which is due to launch in the next few months, according to the bank’s own blog.

At home in the UK, the bank is hoping to broaden its appeal beyond the urban young people it initially targeted. It is expected to spend a large chunk of it £10-£12m annual marketing budget on a TV ad campaign this year, according to The Guardian.

As for turning a profit, that remains to be seen, says the FT. Monzo made a pre-tax loss of £33.1m in the 12 months to February 2018, the most recent period for which figures have been made public, the newspaper records.

MPs have urged banks to created local hubs in towns where branch closures could leave customers financially excluded.

The Treasury Select Committee has been looking at ways of dealing with the fallout of mass bank branch closures, which have left large sections of society having to travel miles to their nearest branch or relying on online and mobile services which have proved vulnerable to IT failures.

The number of bank branches per million people in the UK has fallen 37% from its peak, according to a report by McKinsey, and the country has relatively fewer branches than most of its European and North American peers.

AOL News says “bank branch closures are particularly likely to affect the elderly or people on lower incomes” so “preserving a branch network, therefore, should help financial inclusion”.

“As things stand, when the last bank in an area shuts down, customers are ushered towards the nearest Post Office to do their banking,” says the BBC, “but while you can take out and deposit money and check your balance, there is no banking specialist on hand and you can't get help setting up basic transactions like direct debits”.

Furthermore, the Post Office actually makes a loss from providing limited bank services, something the Committee said should not be subsidised by tax payers.

“The Post Office is not an optimum environment for customers, particularly vulnerable ones, for banking services as staff are typically not banking specialists. Rather, the service provided is comparable to that of an ATM” says the report. “The Post Office should not be seen as a replacement for a bank branches, but a complimentary proposition where available.”

Under its proposals, the big four banks Lloyds, Barclays, HSBC and RBS would fund local hubs, which could be in post offices, but would have specially trained staff.

In fact, three of the biggest, Lloyds, NatWest and Barclays have already joined forces to provide banking hubs for small businesses in Birmingham, Manchester, Crosby, London, Leicestershire and Bristol.

The Financial Times says the hubs “which will have longer opening hours than traditional branches — will allow businesses to pay in money and cheques and exchange cash”, and comes amid rising concerns increased costs could make it too expensive for small companies to process cash.

In Scotland the deputy first minister, John Swinney, has suggested different banks take turns using the same office on alternate days.

With growing concern about branch closures and the impact of a growing cashless society, “there could be a future for the banking hubs idea if ministers can be persuaded to get behind it”, says the BBC.

Metro Bank took to Twitter this weekend to reassure customers that it remains a “safe and secure haven” for their assets, as hundreds flocked to branches to withdraw cash and valuables from safety deposit boxes.

Despite the bank’s reassurances, its “shares fell more than 7% in early trading today to fresh all-time lows of 492p”, City A.M. reports.

So what is going on?

Founded in 2010 by US entrepreneur Vernon Hill, Metro Bank was once the “darling of Britain’s challenger banks”, winning admiration for its rapid growth, says the Financial Times. However, in January the bank was rocked by an “embarrassing accounting error”, the newspaper continues.

Regulators found that the bank had mistakenly categorised some loans as lower risk than they really were, which meant the company did not have as much capital against large numbers of commercial property and professional buy-to-let loans as it should have done.

The £900m error has prompted investigations by the Financial Conduct Authority and the Prudential Regulatory Authority, while the value of shares in the bank have dropped by three-quarters since the blunder was announced.

Metro is now planning to raise £350m from investors to shore up its finances.

What were the rumours over the weekend?

“A WhatsApp message advised people to pull money out of their accounts and empty safe deposit boxes,” reports The Guardian. Long queues then quickly formed at some of the bank’s branches in west London.

An unnamed source close to the bank claimed the speculation began in a “‘small localised Asian community’ - who tend to keep their wealth in safety deposit boxes” and that the increased queues were also “localised”, says the FT.

What has Metro Bank said?

The bank has dismissed the “false rumours” on social media and messaging apps.

“There is no truth to these rumours and we want to reassure our customers that there is no reason to be concerned. We’re a profitable bank, rated No.1 for personal current account service by the CMA and committed to serving our 1.7 million customer accounts,” the bank said in a statement.

Metro assured its customers that deposits of up to £85,000 were protected by the Financial Services Compensation Scheme, and pointed out that the bank does not take ownership of the contents of safe deposit boxes, which remain customers’ property.

The statement added: “Metro Bank confirms that its plan to raise £350m of equity capital to support its growth is well advanced. Metro Bank has commenced final discussions with existing shareholders and new investors, and the feedback continues to be positive.”

NatWest and the Royal Bank of Scotland have announced plans to trial new biometric bank cards that will allow cardholders to make larger contactless payments.

The bank cards will use fingerprint technology to verify transactions above the £30 contactless limit without the need for a PIN number.

The nationwide pilot project, the first of its kind in the UK, is due to begin in the coming weeks and will involve 200 NatWest and RBS customers.

The banks said the new cards would increase security and make paying at tills easier for customers.

“This is the biggest development in card technology in recent years and we are excited to trial the service,” said David Crawford, head of effortless payments at NatWest.

The biometric technology, which has already been trialled in Cyprus and Italy, was developed by the Dutch company, Gemalto.

“Using a fingerprint rather than a PIN code to authorise transactions has many advantages, primarily enhanced security and greater convenience,” said Howard Berg, UK managing director of Gemalto.

“Cardholders can pay quickly and easily with just a simple touch, and they no longer need to worry about the limit on contactless payment transactions,” he added.

If the pilot gets the go-ahead, “it will be the next step in the contactless spending revolution that has swept Britain since 2013,” says Patrick Collinson, The Guardian’s money editor.

Last year more than six billion payments were made using contactless technology, but the £30 limit is restricting further growth, particularly for people filling up their cars at petrol stations or doing a large weekly supermarket shop, he adds.

In an increasingly cashless society, Britain’s “broken” cash system could leave vulnerable people cut off from the money they need to survive, MPs and regulators have warned.

As UK businesses and consumers move to digital payments, there are concerns that the closure of free-to-use cash machines in rural areas could leave customers isolated.

While there are still more than 60,000 ATMs in Britain, consumer campaign group Which? said that 3,000 cash machines vanished from Britain’s streets in the last six months of 2018.

The London Evening Standard says “concerns about ATM closures were heightened last year when a row broke out about changes to the future funding of cashpoints”.

According to Reuters, “currently banks effectively subsidise uneconomic cash machines through the 'interchange' fee set by Link”. However, the Payment Systems Regulator and Link locked horns last year over closures of “protected” or uneconomic cash machines, and Link’s plan to cut the interchange fee in phases.

Cash machine operators have warned that controversial planned reductions in the fees they receive from card issuers will make thousands of cash points uneconomical to run.

“This has led to fears of 'ATM deserts' being created in areas outside the UK’s large cities,” says the Financial Times.

Nicky Morgan, chair of the Treasury Select Committee, has said “the national system for people to have access to their cash via machines is basically broken”, amid calls for a fundamental rethink of the entire system.

Calling on government to set up a new regulator to oversee cash “and ensure no-one is excluded and left struggling to go about their daily lives” Jenni Allen, from Which? said “cash is also a vital backup as fallible digital payments grow in popularity”.

Last year technological glitches at TSB, when thousands of customers were locked out of their online accounts last year after a bungled IT migration, “illustrated the dangers for customers reliant on digital banking”, says the FT.

Cash use has halved in the last ten years, and is expected to halve again in the coming decade. In 2017, debit cards overtook cash as the UK's most popular payment method.

In December, the Ceeney Report that suggested the UK risked “sleepwalking” into becoming a cashless society with many groups such as the old, disabled and those in rural areas particularly vulnerable.

The closure of rural cash machines comes after two-thirds of the UK’s bank branches have been scrapped over the past 30 years.

It means one-fifth of households are now located more than 3km from their nearest bank, even though almost three quarters of the population still use cash frequently, and banknotes and coins are still a necessity for eight million people, according to Which?.

Security Minister Ben Wallace has pledged to take action against criminals laundering billions of pounds through public schools, football clubs and luxury-car sellers.

Announcing the crackdown, he said: “We have to make sure that when the [criminals] go out to try to spend their ill-gotten gains, that we all take a role in asking: does this pass the sniff test?”

So what is money laundering?

Money laundering is when profits received from illegal activities are disguised by making it look as if the money has come from a legitimate business source.

Under the UK’s Proceeds of Crimes Act 2002 (POCA), money laundering includes all forms of “handling or possessing criminal property, including the proceeds of one’s own crime, and facilitating any handling or possession of criminal property”.

Examples include tax evasion, theft, fraud, bribery, smuggling and illegal arms sales.

How is the UK affected?

The latest report from the National Crime Agency says that organised crime in the UK, including money laundering, poses a greater threat than terrorism, the BBC reports. According to the assessment, organised crime gangs cost the UK economy £37bn a year.

In an interview with The Guardian, the security minister outlined plans for the UK’s new National Economic Crime Centre to crack down on Britain’s most serious money-laundering offenders.

“The ones who pretend their hands aren’t really dirty and profit from moving dirty money... they’re cowards to pretend they’re nothing really to do with it,” Wallace said.

The minister wants to prevent serious offenders from using their illegal cash to boost their reputations, explaining: “If you’re denied your ability to spend your ill-gotten gains... then you strip away the ability for them to launder their reputation.”

Members of the public must take responsibility for the role they played in supporting organised crime, Wallace continued.

“The wink, wink, nudge, nudge, is a guy who might push ten packs of fags... but he is [also] pushing a container [of drugs],” he warned.

Where do schools and football clubs come into it?

Under the crackdown, institutions and people who fail to report suspicious spending will face harsher penalties.

“So the purveyors of luxury goods, the public schools, the sporting institutions, who don’t ask many questions if suspicious people come along with cash or other activities, we will come down on them,” said Wallace.

Such institutions are already regulated and required to file suspicious activity reports, but will now face closer scrutiny.

Football clubs, in particular, have become targets for money launderers. According to a 2009 report by the Financial Action Task Force, links between criminal organisations and the world of football range “from internationally operating organised crime infiltrating top football to locally operating criminals with connections in lower leagues”.

At least one professional football club is currently under investigation, Wallace told the BBC. “I couldn’t reveal how many and what they are, for that is an operational matter,” he said.

From next summer the name of someone receiving a bank payment will be as important as their banking details.

Under the current system, anyone wanting to transfer money must enter the recipient’s name, account number and sort code – although the name is not checked.

“Fraudsters can exploit this loophole by posing as someone else and tricking people into sending money to the wrong account,” says Money Saving Expert - a con known as authorised push payment (APP) fraud.

The BBC says a total of £145m was stolen from bank customers in this way in the first half of the year, “with many victims unable to get the money back because current legislation means they are liable for any losses incurred if they authorise a payment themselves”.

The new plans unveiled by Pay.UK, the UK’s payments operator, will see the sender alerted if the name they enter does not match the account details.

Despite APP scams rising in tandem with the use of smartphones and digital devices to make payments, banks have so far been slow to introduce measures to tackle push payments.

Gareth Shaw, from consumer group Which?, said: “Customers will wonder why banks have dragged their heels and not implemented this system years ago, as it could have prevented a significant amount of fraud. With losses to bank transfer fraud increasing drastically it's clear this measure can't come in soon enough.”

Almost all of Europe’s biggest banks have been sanctioned for money laundering offences over the past decade, according to new research by anti-money laundering experts Fortytwo Data.

The firm found that at least 18 of the 20 biggest banks in Europe, including five UK institutions, have been fined for offences relating to money laundering since the financial crisis, many of them within the last few years, an indication of how widespread money laundering has become.

All 10 of Europe’s biggest banks, including HSBC, Barclays, BNP Paribas, Société Générale and Santander have fallen foul of anti-money laundering authorities, while recent crises at the likes of ING, Danske Bank and Deutsche Bank “only reinforce this impression, demonstrating how no bank is immune to money laundering sanctions, no matter how large”, says Fortytwo Data.

With a number of leading British banks also implicated in money laundering scandals, earlier this year, Donald Toon, director of prosperity at the National Crime Agency, admitted that money laundering in the UK was “a very big problem” and estimated that the amount of money laundered here each year has now risen to a staggering £150 billion.

Julian Dixon, CEO of Fortytwo Data, says: “It is clear Europe’s largest banks are collectively struggling having problems when it comes to anti-money laundering standards. The increasing sophistication of the money launderers makes this an ever more difficult task.”

However, he said: “These days, there are effective solutions to be found. Technology has reached a level where it can vastly improve the efficiency of suspicious activity detection and all major banks have a responsibility to embrace 21st Century solutions to this problem, rather than continuing with outdated legacy systems.”

Fraudsters stole more than half a billion pounds from UK bank customers in the first six months of 2018, newly published figures show.

And of the total £503m taken, almost a third was lost through so-called Authorised Push Payment (APP) scams - where people are tricked into authorising a payment to another account.

This type of crime is “Britain’s fastest growing”, and the latest figures, from industry group UK Finance, suggest that “2018 will see a sharp increase in the amount stolen from 2017, when victims lost £236m over the whole year”, The Daily Telegraph reports.

The Guardian describes APP fraud as a “cruel scam so slick even the vigilant can be duped”.

So how can you protect yourself?

What is an APP scam?

“The scammers usually start with a phone call purporting to be from the police or a bank, or with an email from a cloned address masquerading as a payment request from a genuine conveyancing solicitor or trader employed by the victim,” The Guardian says.

Payments made using real-time payment schemes are irrevocable, so cannot be reversed once victims realise they have been conned. And because payments have technically been authorised by the customer, there’s no redress, the newspaper adds.

“The approach taken by the fraudsters is not new,” says California-based data analytics firm FICO. “They use social engineering techniques and may hack into email and other systems in order to set up their victims.

“These methods of attack are used to perpetrate a wide range of attacks. The defining factor in authorised push payment fraud is the use of real-time payment schemes to transfer the money to the fraudsters.”

According to the experts, the increasing numbers of consumers and businesses adopting simple new methods to send money in real time has given scammers a “wider potential pool of victims”.

How do I avoid an APP scam?

FICO says that “these criminals are devious and clever, and victims cannot simply be written off as gullible fools”.

That warning is echoed by Which? director of policy and campaigns Alex Neill. “We all now regularly use bank transfers to pay for things, but what most of us don’t realise is that if you’re conned into paying out money to a fraudster, you stand to lose all of your money, unlike when you use your credit or debit card,” he says.

“With scams on the rise, consumers can only protect themselves so far, and we believe that banks must do more to tackle bank-transfer fraud and safeguard their customers from scams.”

Although protection is limited, UK Finance has a series of tips for bank customers: internet users should never disclose security details, such as their PIN or banking password, and should never assume an email, text or phone call is authentic.

Never rush a payment, as “a genuine organisation won't mind waiting”, says the trade association, which adds that “listening to your instincts” and “not panicking” are essential if something does go wrong.

Hundreds of former Lehman Brothers employees are planning to mark the 10-year anniversary of the bank’s collapse with a lavish party that has been labelled “sickening” by the shadow chancellor.

The Independent says the “high-end reunion” will consist of “swish cocktails and canapes” and will be held at a secret venue on 15 September; exactly a decade after the bank shut down, triggering a global financial crash that was partially responsible for plunging Britain into austerity.

As well as London, reunions are also planned for New York in September, and Hong Kong in November.

The parties, which were first leaked by Financial News, have been widely criticised with Labour’s shadow chancellor, John McDonnell, calling them “disgraceful”.

Citing the decade of austerity that followed the bank’s collapse, McDonnell said: “It's particularly disgraceful in the context of all the people who lost their jobs and homes to pay for bailing out these bankers who caused the financial crash, as well as against a backdrop of firefighters, police officers and other public servants facing years of brutal Tory pay restraint”.

The collapse of Lehman Brothers is widely seen as the apogee of the global financial crisis and remains the biggest insolvency in US corporate history.

The failure of the banking giant “became one of the most infamous and shocking moments of the crisis, spiralling the credit crunch into full-blown market chaos”, says the Independent.

It prompted a multi-billion pound taxpayer bailout of the banking sector and the part-nationalisation of RBS, Lloyds TSB and HBOS.

And given two-thirds of the British public still don’t trust the banking sector, a decade after the collapse of Lehman Brothers, a reunion might seem a bit premature.

Ten years on from the collapse of Lehman Brothers, two-thirds of Britons still do not trust banks and think they did not face severe enough penalties for their part in the financial crisis, a survey has shown.

The YouGov poll on behalf of campaign group Positive Money found 66% of adults in Britain do not have faith in banks to work in the best interest of society, while 72% believe banks should have faced more severe penalties for their role in the 2008 crash, which led to a decade of austerity.

Many are also critical of the £45.5 billion public bailout of RBS, which on Wednesday resumed paying dividends for the first time since the height of the crisis in a bid to attract investors.

Since 2008, banks globally have paid the price financially and reputationally, paying out more than £252 billion in fines as regulators probed them for mis-selling securities and rigging interest rate and foreign exchange rate benchmarks.

They have also undergone a series of reforms and been subject to stronger regulation; increasing levels of capital banks hold, separating depositors’ money from riskier investment banking activity, and making senior bankers more accountable.

Yet despite years of restructuring and paying fines and compensation for misbehavior, the survey “underlines the extent to which banks still have to work to rebuild trust” says Reuters.

“This should not come as a surprise” says Postive Money’s Simon Youel in Left Foot Forward.

“Banking behaviour is still irresponsible, unfair and neglectful” he writes. “Banks have not changed their lending habits, and continue to divert funds towards speculation on property and other financial assets rather than the productive economy”.

On top of that, “bankers are continuing to pay themselves huge bonuses, while living standards have stagnated for everyone else” he adds.

That is perhaps why, despite much touted reforms over the past decade, 63% of the public are worried that banks may cause another financial crisis.

Royal Bank of Scotland has come bottom of a new personal banking league table, with fewer than half of its customers saying they would recommend it to friends and family.

Under new rules from the Competition and Markets Authority, as of yesterday banks will be ranked for service twice a year and must publish details of how they compare with rivals to allow customers to make better decisions about who to bank with.

Rankings “must be prominently displayed in banks’ branches, as well as on their websites and apps”, the CMA said.

Based on a range of measures such as customer service, online and mobile banking, overdrafts and in branch services, RBS came joint bottom overall, tied with Clydesdale.

The bank also came last for business banking.

At the other end of the spectrum, First Direct, which is owned by HSBC, came top with 85% of its customers satisfied.

Adam Land, senior director at the Competition and Markets Authority, said: “For the first time, people will now be able to compare banks on the quality of the service they provide, and so judge if they're getting the most for their money or could do better elsewhere”.

The regulator hopes its decision to force banks to publish customer ratings figures will increase competition in the sector.

A major banking review by the CMA found consumers could save up to £92 a year by moving accounts, although just 3% of current account holders had changed banks in the past year.

The Financial Conduct Authority has also set out new requirements for information banks must provide to customers, including details of available services and relevant helplines and from February, banks will also be expected to publish figures on how long it takes to open current accounts and replace debit cards.

British banks have been warned their ATMs could be targeted by cyber criminals as part of a coordinated global mass-hack.

A confidential alert from the FBI told international banks that criminals are plotting a concerted global malware attack on cash machines “in the coming days”.

According to the Daily Telegraph, this could take the form of a “highly choreographed fraud scheme” known as an ATM “jackpotting”, in which thieves hack a bank or payment card processor and use cloned cards at cash machines around the world to take out millions in just a few minutes.

Andrew Bushby, UK director at Fidelis Cybersecurity, told the paper that UK banks “are a likely target – and this latest ‘ATM cash-out blitz’ will no doubt send shockwaves to financial institutions”.

While UK-based banking giants such as Barclays and HSBC were made aware of the threat, it is believed that smaller, independent banks are most at risk as criminals are more likely to target banks that issue debit cards but tend to have less stringent security systems.

Krebs on Security says that organised cybercrime gangs that coordinate unlimited attacks “typically do so by hacking or phishing their way into a bank or payment card processor. Just prior to executing on ATM cashouts, the intruders will remove many fraud controls at the financial institution, such as maximum ATM withdrawal amounts and any limits on the number of customer ATM transactions daily”.

The security blog says virtually all ATM cashout operations are launched on weekends, often just after financial institutions begin closing for business on Saturday.

The long-awaited sell-off of Royal Bank of Scotland is to get the green light from the Treasury after the bank agreed a penalty from the US regulator for selling toxic mortgage bonds in the run-up to the financial crisis.

US regulators handed RBS a $4.9bn (£3.6bn) penalty, more than the $3.6bn (£2.7bn) contingency fund set aside to pay the fine, but less than many experts had predicted.

The fine means the way is now clear for the Government to begin selling off its 71% stake in the bank it nationalised at the height of the financial crisis in 2008.

Jane Sydenham, investment director at Rathbones, said the deal with US regulators represents “an important turning point” for the bank. "It... puts the Treasury in a much clearer position to sell their stake, as buyers would be reluctant if there were still significant fines to pay,” he said.

BBC business editor Simon Jack agreed the financial penalty for RBS’s role in the crisis had been the “last obstacle” standing in the way of selling the Government’s enormous stake back to the private sector in what will be “the biggest privatisation in UK history”.

The question which could determine whether the sell-off is deemed a success is how much the Treasury will make from the sale. Will taxpayers get all their money back ten years on from nationalisation?

Based on current valuations, the Government’s stake is worth around £20bn in shares. This will take several years to sell off, and while the first sales will be at a loss, Jack says the Government will hope that “over time, as the huge overhang of shares to sell dwindles and profits continue to rise, the public may get more money back”.

He notes, though, that the public are unlikely to ever recoup the £45bn poured into what he describes as “the biggest banking debacle in UK corporate history”.

Royal Bank of Scotland is to close 162 branches across England and Wales, with the loss of almost 800 jobs, following a controversial review of its high street network.

While previous branch closures have been blamed on the rise of online banking, the latest move has been based on its decision not to sell its Williams & Glynn business.

RBS, which also owns NatWest, said by not creating the challenger bank, as it had once been required to do by regulators, it was removing geographical duplication in its branch network.

It means the bank, which is still majority owned by the taxpayer following the 2008 bailout, has announced a total of 569 branch closures in just over a year.

A spokesperson for the bank said RBS customers would be able to use NatWest branches in England and Wales for “everyday banking needs”

Yet the timing of announcement has been widely criticised, coming just days after RBS reported a 206% rise in profits to £792m in the first quarter of the year, The Independent reports.

Criticising the “shambolically poor management” of its Williams & Glyn business, the Unite union’s national officer, Rob MacGregor, questioned the move: “How does a taxpayer-funded institution spend £1.8bn on a failed IT project and in the next breath demolish the much needed local bank branches?”

It follows a further round of branch closures confirmed by Lloyds just a week before it announced a surge in UK profits – “attracting criticism from a business group which claimed it could easily afford to give its members better access to their money on the ground”, says Sky News.

The boss of TSB has said he is “deeply sorry” for the IT fiasco that has caused fury among customers and attracted the attention of the Government’s technology watchdog.

As the crisis entered its fourth day, TSB Chief Executive Paul Pester apologised for the glitch which has seen customers locked out of their accounts and unable to make payments, and promised no one would be left out of pocket as a result of the issues.

The problem stems from a long-planned switch from the banking platform of former TSB owner Lloyds. Last week TSB moved its customers’ data from the Lloyds system to its own new one but by Sunday many of those customers who were able to access their online accounts were presented with details of other accounts as well.

This data breach was followed by other technical problems, with people reporting not being able to log in or being prematurely logged out of their accounts.

The BBC reports that this is beginning to have a serious impact on customers’ ability to complete transactions, with people “beginning to report a wide range of financial problems caused by being unable to access their online account”.

It could also have long-term implications for the bank. The banking regulator, the Financial Conduct Authority, has said it is “aware of the issue” and has the power to fine banks for system failures, while the Information Commissioner's Office also said it is also making enquiries about a “potential data breach”.

In the end, however, it could be TSB’s disgruntled customers who have the final word and let their feet do the talking by staging a mass exodus.

HSBC has revealed a gender pay gap of 59%, one of the biggest yet disclosed by a British bank.

According to a copy of the lender’s report on the subject seen by Reuters and confirmed by an HSBC spokesperson, last year the bank had a 29% median gender pay gap for its UK banking operations.

However, the company also reported a 59% gap on the mean measure for hourly pay for 2017, rising to 60% as of February this year.

The median figure refers to the midpoint of all salaries from lowest to highest, while the mean describes the total wage bill divided by the number of employees, “which means it can be skewed by a small number of very highly paid workers”, says the BBC.

The bank’s report also shows an 86% difference between average bonuses paid to women and men.

Like other financial institutions, HSBC said the size of the gap reflected the fact there are fewer women in leadership roles. Women make up more than half of HSBC’s UK workforce (54%) yet less than a quarter of its senior roles (23%).

The whopping gender pay gap is one the biggest yet reported by a British financial firm. Of those who have reported their gender pay gap figures, Standard Chartered (30%) and Virgin Money (32.5%), which is the only major UK lender run by a woman, are among the worst offenders.

As part of Theresa May’s drive to bring discrepancies in pay between men and women, all firms with more than 250 staff must report their gender pay gap to the Government by 4 April.

The Daily Telegraph reports that the powerful Treasury committee of MPs, chaired by Nicky Morgan, “is prepared to call big banks into Parliament to give evidence and account for their wide pay gaps”.

Barclays Bank has been charged with “unlawful financial assistance” relating to billions of pounds it raised from Qatar at the height of the financial crisis a decade ago.

In order to avoid a government bailout in 2008, Barclays took a £12bn loan from Qatar Holdings, which is owned by the Qatari state. The Serious Fraud Office, which brought the charges, alleges that £2.3bn which was loaned back to Qatar Holdings as part of that deal was used to buy shares in the bank.

Reuters says that public companies in Britain “are normally prohibited from lending money for the purchase of their own shares, a process known as financial assistance”.

A five-year investigation into the deal by the SFO last year charged the bank’s parent company Barclays PLC and several former executives with conspiracy to commit fraud, “but the move to charge Barclays Bank as well is significant because it holds the banking licence that allows it to operate in different countries”, says the BBC.

If the bank is found guilty, it could lose that crucial licence.

Yesterday’s decision to charge the bank itself is “significant”, says the BBC’s business editor Simon Jack: it makes Barclays the first British bank to face a criminal trial relating to its conduct during the financial crisis.

But the long-term implications are less clear. As indicted by a rise in the bank’s share price on yesterday, “being charged in itself isn’t a problem”, says Jack.

“This incident was ten years and four management teams ago, it was done in order to save the bank (and the taxpayer billions). Even if convicted there are banks (UBS, BNP, Credit Suisse) who have been convicted and continued operating,” in a sign that Barclays can weather the current storm, he adds.

As the value of one Bitcoin nears the symbolic $10,000 mark, warnings are growing that its bubble is about to burst.

The cryptocurrency hit an all-time high on Monday after its price soared to more than 15% over the weekend. The $10,000 landmark is “seen as a critical test of whether Bitcoin’s time has truly come or whether - as many critics argue - it is a house of cards, ready to collapse as soon as it comes under pressure”, says the The Daily Telegraph.

Bitcoin’s value has risen by more than 800% since the beginning of the year. By comparison, the FTSE 100 rose just 3.8% over the same period. One bitcoin is currently seven times more valuable than an ounce of gold and its market capitalisation now exceeds that of IBM, Disney or McDonald’s, according to Neil Wilson of ETX Capital.

The big question is whether investors will choose to cash in once the price hits $10,000 or keep faith with the virtual currency in the hope it will continue to soar.

Unregulated and bypassing traditional banking systems, the growth of the global cryptocurrency market, which is now valued at £300bn, “is of increasing concern to international regulators”, says the BBC.

Reuters says these private currencies keep central bankers awake at night because “they threaten their control of the banking system and money supply, which could undermine the monetary policies they use to manage inflation”.

China and South Korea have already banned any new virtual currency launches and have been shutting down exchanges on which they are traded. J.P. Morgan Chase’s chief executive, Jamie Dimon, recently described Bitcoin as “a fraud” adding: “It’s just not a real thing, eventually it will be closed.”

Despite repeated concerns over its volatility and associations with money laundering and illegal activity, many well-respected hedge funds have begun including virtual currencies such as bitcoin in their portfolios.

“This has felt like the latest, maddest speculative bubble, a tulip fever for the hi-tech era”, says BBC technology correspondent Rory Cellan-Jones.

While Bitcoin has seemed in trouble plenty of times before - splits in the community over how it should be governed, robberies at exchanges, warnings from regulators - “every time that pundits have warned the bubble is about to burst, the currency has stuttered for a few days and then gone charging higher”, says Cellan-Jones.

Whistleblowers in the banking sector are being legally gagged, hunted down and left bankrupt, despite reforms introduced after the financial crisis to protect them, the chair of the All-Party Parliamentary Group on Fair Business Banking has warned.

Speaking at a conference on banking, Lord Cromwell said in the British system, whistleblowers become “unemployable, they have their lives trashed, and they are heavily persecuted in the most intimidatory way”.

Citing rules in the US where genuine whistleblowers who disclose illegal activity are awarded a share of the fine imposed on their institutions, Cromwell said: “You pay for vermin control, so why do you expect people to do the right thing for nothing and then have their lives destroyed.”

Tougher whistleblowing rules was introduced after the 2007-2009 financial crisis, “but they stop short of offering financial rewards”, says Reuters.

As well as the all-party group which is looking into how whistleblowing is working, the industry is also waiting to see how the Financial Conduct Authority deals with attempts by Jes Staley, chief executive of Barclays bank, to unmask a whistleblower’s identity.

Increasing opportunities for speaking out anonymously and a “re-employment” scheme for staff who lose their jobs have both been suggested as alternatives to financial reward.

Bankers bonuses are on the political agenda once again, with Oxfam issuing a new warning on economic inequality as the world's business elite prepare to meet in Davos later this week.

Against that backdrop, Britain's financial institutions have been revealing how much they will be doling out in bonuses in the "biggest week in the City's calendar".

In light of the countless scandals, bankers' bonuses remains highly contentious. Can the dizzying amounts being handed out be justified by the results they produce, or are they still encouraging dangerous risk-taking within the financial sector?

Are bankers still receiving big bonuses?

Yes. On Friday, Goldman Sachs revealed that its senior employees would receive the same bonuses they did last year: payouts that averaged out in excess of £2.5 million each.

However, regulators have been trying to crack down on such payments by introducing tougher regulation since the financial crisis. In 2013 a cap limited bonuses within the EU to 100 per cent of an employee's salary. "Bonuses aren't what they used to be," says the Evening Standard's James Ashton. "For many, the good times that rolled pre-crisis are unlikely to return."

This cap can, however, be increased to up to 200 per cent with shareholder approval and, according to the New York Times, some banks in Europe have responded by getting "creative." Among tactics used to sidestep the regulations are generous "allowances" and "role-based pay" it reports.

How important are these bonuses to bankers?

They can account for at least 60 per cent of their pay, reports suggest. A divisional managing director at an investment bank, on a basic salary of £150,000, would have expected an annual bonus of at least £1m under the old system. "Rainmakers" (traders who drive a bank's profits in lucrative new markets) would expect far more, with bonuses calculated as a generous percentage of the cash they bring in. The rule of thumb at most banks is to channel 45 to 50 per cent of net revenue into salary and "discretionary bonuses". The exact sums are often clouded in secrecy: though directors of publicly quoted banks must disclose earnings, they don't have to reveal what they pay star traders.

Why has the bonus culture come under attack?

Some claim that bankers spend so much time politicking over bonuses that business at investment banks virtually grinds to a halt towards the end of each year. Others say that the huge City payouts inflated the top end of the housing market, while contributing to a socially corrosive widening of inequality. But the biggest charge against bonuses is that, by encouraging bankers to take huge risks, they were a key factor in destabilising financial institutions and may even have precipitated the 2008 crisis.

Why does the system fuel extravagant risk-taking?

Because it handsomely rewards strategies that focus on short-term profit-making, with no regard to long-term consequences. If traders pocketing mega-bonuses lost billions a few years later, tough luck: the bonuses were paid and consumed long before they could be held accountable. And banks rarely, if ever, took steps to claw them back. For the individual trader, the potential downside of engaging in excessive risk is thus far outweighed by the potential upside. In this perverse heads-I-win-tails-you-lose scenario, it was left to shareholders and, ultimately, taxpayers to shoulder the losses. The traditional capitalist balance between personal and corporate risk had been blown away completely.

So why are bonuses still paid?

Now, more than ever, banks want to keep their best staff in order to maximise earnings and rebuild battered balance sheets. Offering key traders a fat bonus is the most powerful way of doing that.

Those in the banking sector argue that bonuses are also an important mechanism to retain executives who 'know where the bodies are buried'. These individuals are vital for identifying how to move a firm forward after it has suffered problems, or in some cases for keeping information out of the public domain.

Often the term 'bonus' really refers to the 'commission' that a broker has earned bringing business to the firm. Defenders of the bonus system argue that the payments have been earned: if a star broker has brought in revenues as agreed, why should he or she be penalised just because traders in another part of the group have lost a packet on sub-prime mortgages? The promise of a share of profits is really the only effective way of providing an incentive for workers to go the extra mile when money is tight and salaries capped, they say.

Could banks stop paying bonuses, even if they wanted to?

Many banking executives say that their companies would lose talent if they reduced or ended bonuses. And in any case, discretionary bonuses have become contractually binding in recent years, meaning that even if companies' profits are falling, they are still legally compelled to pay them. Despite the current public outcry, in many cases there is nothing firms can do to stop giving guaranteed pay-outs.

Is there an alternative?

Shareholders should consider scrapping fancy pay packages and bonuses altogether, says Richard Lambert in The Financial Times. The empirical evidence suggests they don't improve performance and may prompt managers to waste energy manipulating the performance criteria. Non-material rewards such as awards and recognition are a better way of motivating executives, adds Lambert. And let's not forget, "no one is irreplaceable".

Lloyds Banking Group confirmed today that it would close 200 bank branches and lay off 9,000 staff as more customers switch to mobile and online banking.

The group, which owns the Lloyds Bank, Halifax and Bank of Scotland brands, announced that the cuts would take place within the next three years.

Lloyds reported pre-tax profits of £1.61 billion for the nine months to 30 September. According to the BBC, the group is setting aside another £900 million pounds to cover possible payouts related to the PPI mis-selling scandal. In total, PPI compensation has cost the banking group over £11 billion.

The job cuts at Lloyds represent a reduction of more than 10 per cent of the company's workforce of 88,000 and come as the group moves to further "digitise" banking, Sky News reports.

Lloyds chief executive Antonio Horta-Osorio said: "Over the last three years the successful delivery of our strategy has ensured that we have become a safe, highly efficient, UK-focused retail and commercial bank.

"The next phase of our strategy will use these strong foundations as a basis for meeting the rapidly-changing needs of our customers, and sets out how we will grow the business in a way that will deliver increasing and sustainable returns for our shareholders."

Mobile and internet banking now account for transactions worth nearly £1 billion a day, according to research published by the British Bankers' Association in July. More than 15,000 people per day are downloading banking apps, BBA's research shows.

Lloyds is still part-owned by the British government, which holds a 25 per cent stake in the bank. The government has reduced its holding from 39 per cent in two separate share sales since September last year.

In June, Lloyds sold the TSB Bank through an initial public offering to appease European Commission competition authorities.

On Monday, shares in Lloyds Banking Group fell by more than 2 per cent after the company passed European stress tests by the narrowest of margins, The Guardian reports.

Virgin Money, the banking arm of Richard Branson's Virgin empire, has revealed plans for a stock market listing, which could see the financial services brand valued at £2bn.

The plan to float shares on the London Stock Exchange is expected to raise about £150m which will be used to recruit new staff and support the company's growth plans.

If successful, Virgin Money will become the fourth bank to float this year, following the listings of both OneSavings and Aldermore, and the demerger of TSB from Lloyds Banking Group.

After the company is listed it will pay £50m of the proceeds to HM Treasury as part of its acquisition of the "non-toxic" elements of ailing Northern Rock in 2011. The deal was contingent on Virgin Money floating before the end of 2016.

Jayne-Anne Gadhia, chief executive of Virgin Money told the BBC's business editor, Kamal Ahmed, that in her view taxpayers have already gained all their money back from the company's bailout of Northern Rock.

According to Sky News, Virgin Money will appointment Barclays, KBW and Citi to act as bookrunners on the initial public offering (IPO). The three banks will work alongside Bank of America Merrill Lynch and Goldman Sachs on the process.

Gadhia said in "recognition of their hard work to date and their contribution to the future value of the business, I am also delighted to announce that each employee will be awarded £1,000 worth of shares in the business upon flotation".

Virgin Money had been expected to launch its IPO next year, but according to Sky News, Scotland's rejection of independence in the referendum last month and the company's strong recent trading persuaded the bank's board to move ahead with the plans earlier than anticipated. Virgin Money's pre-tax profits had a fourfold increase to £59.7m in the first half of this year on 28 per cent-increased revenues of £210m, the Daily Telegraph reports.

Branson said of the plans: "This is a huge day for Virgin Money. We started this company 20 years ago with Jayne-Anne Gadhia when we set out to challenge the financial services industry. Our wonderful team have come a long way since then and have built a strong and valuable business offering great value products and services and a real challenge to the established players."

Consumers could soon be forced to pay to have a current account and withdraw money from cash machines due to new European Commission regulations.

The regulations aim to cap interchange fees – the fee paid by businesses to banks for card transactions – which has experts warning that the costs could be passed on to the customer.

The commission has proposed the cap at 0.2 per cent for debit card transactions and 0.3 per cent for credit card sales, a move welcomed by business leaders who say it will save UK businesses up to £1bn a year and allow them to pass the savings on to customers.

Currently, UK retailers pay on average 9p per card transaction for debit cards and there is a 0.7 per cent charge for credit cards.

"Capping these excessive and anti-competitive fees will support the UK retail industry and others, boosting our ability to invest and innovate while continuing to deliver lower prices and values for customers," Helen Dickinson, the director general of the British Retail Consortium told The Times.

A report by the research group Europe Economics has estimated that the cap will lead to banks losing out on £785m a year, a cost they warn will simply be passed on to customers in the form of bank charges.

"The British are used to, and like, free banking," Richard Koch, a senior executive at the Cards Association, which represents all major credit, debit and charge card issuers in the UK told the Daily Telegraph. "The commission's model would impact on the card issuers' ability to continue that."

This has been witnessed in countries such as Spain and Australia where similar caps have been introduced.

"The regulation of interchange fees in Australia has been great news for retailers and bad news for banks, but it is consumers who've had the worst deal," said Koch. "It is wrong to assume that what looks bad for banks is always good for consumers."

Changes were approved by the European Council earlier this year and are expected to get the final go-ahead next week.

THE government has blocked the Royal Bank of Scotland, which is part-owned by the taxpayer, from paying its CEO Ross McEwan a bonus worth twice his annual salary. Instead, the bank is giving him an extra "allowance" of £1m to make up the shortfall.

The bank had planned to ask its shareholders for permission to pay McEwan, who earns a salary of £1m, the 200 per cent bonus – but decided against the move when told by the Treasury that it was unlikely to be given permission, as the government still owns 81 per cent of the bank and would oppose the move.

RBS was forced to seek shareholder permission for the massive payment because of an EU rule which restricts bankers' bonuses to 100 per cent of their salaries – unless shareholders agree to the larger payment, explains The Guardian.

RBS warned that the government's refusal to let it pay the 200 per cent bonus would present a "commercial and prudential risk" to its business. Despite intervening in this instance, George Osborne has made it clear he opposes the EU cap on bonuses - and is fighting it in court.

The Treasury intends to support a similar shareholder request made by Lloyds, which is also part-public after being bailed out by the taxpayer during the 2007-2008 financial crisis. A spokesman explains that it vetoed RBS's plan because it is still majority public-owned, while the government stake in Lloyds is just 39 per cent.

The spokesman says: "RBS is heading in the right direction, but it has not yet completed its restructuring and remains a majority publicly owned bank. So an increase to the bonus cap cannot be justified."

Shadow treasury minister Cathy Jamieson says Osborne is in a "terrible muddle" over bonuses and demanded that he drop his legal action against the EU bonus cap.

All Britain's major banks have approached their shareholders for permission to pay 200 per cent bonuses, with Barclays' investors agreeing at their recent AGM, despite protests by some shareholders over high pay for bosses.