by Roger McCormick and Chris Stears, The Conversation
The major international banks are being lumbered with more and higher fines as the fallout from the financial crisis continues. Our research as part of the Conduct Costs Project at the CCP Research Foundation is providing evidence of the escalating financial penalties, but the banks remain mute and there needs to be much more to the sector’s renaissance than a simple shaming through sanctions.
For the five years to the end of 2012 the conduct costs for ten key banks were at just under £150 billion. For the five years to the end of 2013 they were just under £160 billion. The figures for the period ending 2014 cannot be produced yet, of course, but this year has already seen record costs imposed on Bank of America – $16.65 billion (£10.3 billion) – for mis-selling mortgage-backed securities (MBS) and a massive $8.9 billion fine slapped on BNP Paribas (much to the consternation of the French government) for violating US sanctions against doing business with some pretty unpleasant regimes.
Citigroup took a $7 billion hit over MBS and UBS took around $300m on the chin to settle a German case about assisting tax evasion. Space is tight, but there are plenty more: Standard Chartered’s money-laundering issues; Lloyds and LIBOR….
Measuring the pain
We started the Conduct Costs Project, around two years ago, because no one was keeping a log of these massive fines, compensation payments and other costs associated with misconduct. No national regulator or international body, seemed to think it would be of interest to the public or relevant to how we assessed banks’ post-crisis behaviour.
However, at a time when banks are telling the public that they want to regain our trust, surely the track record of those facing regulatory action is an important indicator as to just how trustworthy they actually are? And our net is spreading; the study will cover more than 20 international banks by the end of this year.
