UK banks have pulled billions of pounds of funding from the eurozone as fears grow about the impact of a “Lehman-style” event connected to a Greek default.

Senior sources have revealed that leading banks, including Barclays and Standard Chartered, have radically reduced the amount of unsecured lending they are prepared to make available to eurozone banks, raising the prospect of a new credit crunch for the European banking system.
Standard Chartered is understood to have withdrawn tens of billions of pounds from the eurozone inter-bank lending market in recent months and cut its overall exposure by two-thirds in the past few weeks as it has become increasingly worried about the finances of other European banks.
Barclays has also cut its exposure in recent months as senior managers have become increasingly concerned about developments among banks with large exposures to the troubled European countries Greece, Ireland, Spain, Italy and Portugal.
In its interim management statement, published in April, Barclays reported a wholesale exposure to Spain of £6.4bn, compared with £7.2bn last June, while its exposure to Italy has fallen by more than £100m.
One source said it was “inevitable” that British banks would look to minimise their potential losses in the event the eurozone crisis were to get worse. “Everyone wants to ensure that they are not badly affected by the crisis,” said one bank executive.

 

Read More

Spain’s energy regulator proposed that power companies not receive the full value of 7 billion euros ($10 billion) of power-tariff debt they plan to sell to a government-backed investment vehicle.

Spain’s energy regulator proposed that power companies not receive the full value of 7 billion euros ($10 billion) of power-tariff debt they plan to sell to a government-backed investment vehicle.
The proceeds should be reduced to achieve an “equilibrium” between the government, consumers and the companies, which all bear the burden of financing the power-rate deficit, the Comision Nacional de Energia said in a report on its website.
“This Commission considers there should be an adjustment in the price that companies receive,” the report dated April 28 said.
The 7 billion euros of debt is a portion of the total on the books of Iberdrola SA (IBE), Endesa SA (ELE), Gas Natural SDG SA (GAS) and EON AG that the utilities were authorized by the government to sell. The sale reimburses them for subsidizing energy prices to consumers over the last decade. Iberdrola is Spain’s largest power supplier and its biggest producer of renewable energy.
The Spanish utilities have already sold 7 billion euros of the debt to the tariff-deficit amortization fund, known as FADE.
Under Spanish law power companies are obliged to lend cash to consumers to cover the gap between government-controlled power prices and the government-approved cost of delivering electricity.
The so-called tariff deficit it paid back over 15 years from power bills.

Read More

Bank of England uses Google for research

The Bank of England has said it is using Google features to investigate unemployment, consumer spending and the housing market, reports the Guardian.

Its latest Quarterly Bulletin provides three examples of where it has used search volume patterns sourced from Google's Insights for Search.

"Internet search data have the potential to be useful for economic policy making," they say. "As further developments are made in this area, and the backrun of the data increases, these data are likely to become an increasingly useful source of information about economic behaviour."

The most striking results in the Bank's searches came from the "estate agents" search term, which appeared to closely track the change in average house prices over the last eight years. According to the pair, the Google search data, when correctly handled, gave a more accurate picture than other housing surveys.

The Bank has also monitored the popularity of searches for jobseeker's allowance and unemployment to obtain insights into the jobs market, and for VAT to look at consumer spending. It admits, however, that Google search data has its limitations, such as a lack of information on the volume of search, and possible changes in the backrun of data.

Previously, the Bank has used surveys of business leaders and consumers, and reports from its regional agents, to paint a picture of the UK economy. The move to include internet data has been welcomed in the City, although the Bank has been cautioned against putting too much faith in it.

 

Read More

Barclays PLC (BCS) Monday said it would reimburse all customers who complained about mis-sold payment protection insurance on or before April 20

Barclays PLC (BCS) Monday said it would reimburse all customers who complained about mis-sold payment protection insurance on or before April 20, as a gesture of goodwill for those whose claims had been put on hold pending the outcome of a legal case.

A spokesman said those customers would get a full refund of the PPI premiums they had paid, as well as 8% compensatory interest.

Barclays and its U.K. bank peers in May dropped a legal fight to delay or change the terms of PPI repayments, which are being made after the industry conceded that customers for years had frequently bought insurance they didn't understand or that wasn't suitable for their needs.

The spokesman said the bank hasn't changed its estimated GBP1 billion provision to settle all PPI claims. Customer complaints made after April 20 will continue to be considered for reimbursement in line with guidelines put in place by the U.K. Financial Services Authority last year.

"Working in close cooperation with the FSA and the [Financial Ombudsman Service], and in recognition of the delay customers have experienced whilst awaiting the outcome of the High Court judgment, we can confirm that we are contacting customers whose complaint was put on hold on or before April 20 with an offer to settle their complaint in full as a gesture of goodwill," Barclays said in a statement.

"We have said before that when we get things wrong, we apologize, and work hard and work fast to put them right as quickly as possible," the bank said.

The sale of PPI policies to cover customers payments on mortgages and credit cards and personal loans was a booming, multibillion-pound business for the U.K. banking industry in the 2000s but tapered off in the past few years as regulatory authorities started to crack down on how some of the policies were marketed. The FSA implemented new rules last year that were contested by banks until their step-down over the issue in May.

The FSA on Monday laid out a new timeline for PPI complaints to address the backlog many banks face. It said Barclays, Lloyds Banking Group PLC (LYG) and Royal Bank of Scotland Group PLC (RBS) have until the end of August to deal with complaints that were put on hold during the legal proceedings. Those received after the legal case was dropped on May 9 and before Aug. 31 must be responded to within 16 weeks, while PPI complaints received between Sept. 1 and Dec. 31 must be responded to within 12 weeks.

After that, the previously set response time of eight weeks must be met, the FSA said.

Read More

The International Monetary Fund (IMF) says it has been targeted by a sophisticated cyber attack.

Officials at the fund gave few details but said the attack earlier this year had been "a very major breach" of its systems, the New York Times reports.

Cyber security officials said the hack was designed to install software to create a "digital insider presence".

The IMF, which holds sensitive economic data about many countries, said its operations were fully functional.

The cyber attack took place over several months, and happened before former IMF chief Dominique Strauss-Kahn was arrested over sexual assault charges.

"I can confirm that we are investigating an incident," said spokesman David Hawley.

"I am not in a position to elaborate further on the extent of the cyber security incident."

The New York Times said IMF staff had been told of the intrusion on Wednesday by e-mail, but that the Fund had not made a public announcement.

The e-mail warned that "suspicious file transfers" had been detected and that an investigation had shown a desktop at the Fund had been "compromised and used to access some Fund systems".

There was "no reason to believe that any personal information was sought for fraud purposes," it said.

High profile breaches
A cyber security expert told Reuters the infiltration had been a targeted attack which installed software designed to give a nation state a "digital insider presence" at the IMF.

"The code was developed and released for this purpose," said Tom Kellerman, who has worked for the Fund.

Bloomberg quoted an unnamed security expert as saying the hackers were connected to a foreign government. However, such attacks are very difficult to trace.

The World Bank said it briefly cut its network connection with the Fund out "an abundance of caution".

"The World Bank Group, like any other large organisation, is increasingly aware of potential threats to the security of our information system and we are constantly working to improve our defences," said spokesman Rich Mills.

The incident is the latest in a string of high-profile cyber security breaches.

In April, the Sony Playstation network was shut down after hackers stole the personal data of about 100 million accounts and in May, US defence firm Lockheed Martin said it had come under a significant cyber-attack.

CIA Director Leon Panetta told the US Congress earlier this week that a large-scale cyber attack while would cripples power, finance, security and governmental systems was "a real possibility in today's world".

Read More