Profit Time

The Royal Bank of Scotland axes jobs

Royal Bank of Scotland has decided to axe near about 500 jobs from its UK wealth management business, with the maximum number of pink slips handed over to the employees at the Coutts & Co, the Queen’s banker. Coutts employs about 2,600 in the UK.

RBS will fire people over the next three years while replacing outdated technology with a more modern sophisticated IT system. Its headcount now stands at 160,000.The redundancies bring the total number of roles to 23,100 removed since RBS was helped out by the taxpayer in October 2008 when it had experienced a huge crash in global stock and credit market when inflation stymied the growth and proper functioning of the major central banks

RBS employs 5,000 people in wealth management which includes 3,500 in the UK. Employees outside the UK will not be affected. Adam & Co, its Edinburgh-based operation for the wealthy, will also be feeling the pressure of job cuts.

The bank has claimed that the cuts were necessary for funding investments in the business and work towards the main aim of reducing costs across the group by £2.5 billion.

A spokesman for RBS said that they are declaring a major investment in the processes and technology in the wealth management division to help the bank deliver even better services and a greater number of choices for clients. Because of the changes, the bank is reconstituting the operations inevitably leading to unfortunate job losses.

Unite, the union, has criticized RBS’s decision of cutting jobs stating clearly that it does not believe that the introduction of and investing in new technology would inevitably result in job losses. It also mentioned that RBS should concentrate on making sure that the staff can continue to provide clients with the high levels of service generally expected from the Queen’s bank.

Tags: redundancy

J P Morgan fined by FSA

J P Morgan Chase & Co, the U.S. investment bank, has been slapped a fine of a whopping 33.32 million pounds ($48.2m) by the The Financial Services Authority (FSA) in Britain for failing to protect billions of dollars of money of its own clients over a time period of nearly seven years. FSA has warned other banks in Britain, stating on Thursday that a UK unit of the bank, J P Morgan Securities Ltd, has been unable to properly protect about $1.9 billion and $23 billion of customers’ money between Nov. 2002 and July 2009

The FSA has issued the rule that all firms will have to keep their customers’ money in separate accounts from the firm’s money for protecting it in case the financial firm becomes unable to meet financial obligations. But J P Morgan has failed to separate client money held by its futures and options business (F&O) with J P Morgan Chase Bank N.A. (JPMCB). The error went unnoticed for almost seven years.

Margaret Cole, the FSA’s head of enforcement has said that this fine will alert other firms of all possible sizes to segregate client money following the FSA rules. She severely mentioned that firms shouldn’t delay in this matter. She also mentioned that several other cases are also pending.

Reportedly, the act was not deliberate on part of the bank and no clients has suffered losses. JP Morgan had informed about the error the moment it found out and had helped the FSA during the investigation. For that action, it has received a total 30% discount on the original fine of £47.6m.

Simon Morris from CMS has said that if this penalty doesn’t make every senior manager sit up and make sure that he or she is managing the risks adequately, then nothing else can. He has expressed surprise over the fact that FSA hasn’t charged the senior managers as it usually does.

Tags: Finance

Departure from Bank Secrecy in Latvia

The Latvian Credit Institutions Law has been established in some of the most extraordinary ways for new principles along with bank secrecy and new establishments for country laws and codes. There has now been new bank secrecy which related to the new clients and accounts of deposits along with their transaction modes. The secrecy has been disclosed along with invitations through new transactions along with setting of new legal authorizations. However there are new exceptions with safeguarding of public interests that have come to the rule. The credit institution has come to bring new provisions of safety along with new institutions with official pursuant.

The cases of bank security have been quite extensive with new institutes that are now working for it. These include Financial and Capital Market along with Commission, courts and other investigation instates involved. The State Control along with the newly released article would mean paying attention to the Revenue Service. This would come through new notifications along with proper exceptions which would affect the local clients. Any Latvian bank client was certainly being affected through these processes. The recent rules through provisions of information along with credit institutions have been affecting the Council of Europe Convention of Laundering. This has also extended in effect into the department of Search, Seizure and Confiscation of the Proceeds of Crime and even on the Financing of Terrorism through developing practices that need to address these issues.

The State Revenue Service has been working on the transaction payments and the proper legalization of the bank services. The State Revenue Service has been declaring the foreseen tax regulation systems along with respective tax law auditions. There have been established violations along with accountancy of the records that come with proper tax payment schemes.

Tags: Bank

Hector Sants’ Contribution to the Banking World

Hector Sants has been a prominent name with the origin of the banking world bringing transformation to the financial marketing regulations with combined industrial experience. His understanding of the industry along with a fierce drive of intellect brought great public service. He has been leading the role of the chief executive of Financial Services Authority with modesty and the flaming desire of service to the people. Few people have been able to bring such improvisations to the financial alchemy of the market than Hector Sants. His first task as the head of FSA was to deal with the fallout coming from the collapse of the Northern Rock that happened just a few months before his joining during the summer of 2007. Prior to him John Tiner was the leader of the FSA and when Hector joined, leaving the plum job of Credit Suisse’s Europe business. He was dealing with the wholesale market divisions there and the switch to FSA’s head was quite a surprise but no shock for those who knew him because of his incredible ability to deliver changing leadership within industries. In his late forties, Sants, with all his credibility, could have climbed up the corporate ladder chasing a ravishing position. Instead he directed his energies to bring some real growing change in the banking sector with industrial knowledge to bring more services to people.

Hector’s ethics had been that he maintained about giving back to community in his later age and so the cut out in his salary was not his concern. Instead he wanted to give to the people whatever he wanted to give in terms of creating a new, growing structure with the FSA. He chose this role over offers of non-executive directorships or advisory roles in order to make the best turn of his career for a greater purpose. This was quite a challenge for him personally but Hector has been visionary enough to bring this shift from investment banking to regulation. This was his call to bring a greater form of motivation with assertiveness, in order to retain the best the staff at FSA had to bring. He went on to implore senior bankers to make this shift into the gears of regulation. Calling for closer cooperation with the “poachers and gamekeepers” of the financial markets, he brought a general theme of tenure at the FSA. This indeed became a turning point for FSA though the success was not immediate or even constant. But what the new changes brought was the bigger vision for a future with a more regulated and well conducted finance management.

Hector Sants was initially the director of the wholesale division at FSA from 2004 to 2007. His technical knowledge was applied for bringing out the best of services and sorting out older issues that required unbundling of the soft commissions in the equity markets for FSA. As these impacts got monitored closer there were new hedge funds and private equity firm dealings that were being looked after by FSA. Since then till the current times he has been working with monitoring the greater risks that involve USA’s banking systems. He has been effectively advocating the more intrusive style application in terms of style regulation for FSA undertaken projects.

Tags: Banking, Hector Sants, World Banking