Out of Ashes, An Opportunity!

The rate-fixing scandal is quite simply a systemic cultural failure. London burns and the ramifications are difficult to quantify. Even so, you cannot deny the gift-wrapped opportunity for the US. Opportune US regulators can now, at last, justify / demand or fix associated trade in US dollars. The expected shift in trading and jobs away from London to New York should, if nothing else, convince the global community that Europe's star has waned.

As for the individuals specifically implicated in the so-called rate-fixing scandal, whether they emanate out of Whitehall, the BOE or from the formal financial community only, there are a range of criminal sanctions and punitive guidelines covered by legislation. Deliberate attempts to rig or manipulate interest rates allow for little justification and although there is evidence of unsubstantiated mudslinging, the ramifications for the individuals so implicated, are dire.

In a remarkable quirk of timing, today's testimony by a US-born ex-CEO of a UK bank could denote a banking shift away from London to the US. Free at last?

Wishing our US friends a safe and Happy 4th of July. 

UBS - lies, damn lies & statistics..

In scenes reminiscent of the bewigged slap-stick reality TV's 'Apprentice', UBS's Oswald Gruebel quit as CEO immediately after the public disclosure of a substantial loss from an unauthorised trade in a London-based equity division. The question of where the buck stops becomes interesting if not a little contentious........ ?

Take today's UBS AG 3rd-quarter results as a point of departure. Net income for the period:  $1.16 billion. Tier 1 Capital ratio: 18.4%. Wealth Management & Swiss banking earnings:  up 67%. Notwithstanding the once-off accounting-gain and the sale of sovereign treasuries those results are pretty impressive...

Now, if falsified reports which resulted in the unauthorised trading loss in London did in fact trigger internal risk controls and they weren't sufficiently investigated or escalated then logic dictates that the fault lies not in the system itself but with the front-line staff responsible for compliance. As it turns out both line-head managers have subsequently tendered their resignations.

At face value and if these results are anything to go by, it's impossible to fault Gruebel's vision or strategic performance. Expanding the trade-loss witch-hunt and implying the same inconsistencies to the Group CEO as its logical conclusion, smacks of an undisclosed agenda not necessarily in the best interests of shareholders. Time will tell.