ZH: Is The Bank Of England About To Be Dragged Into Lie-borgate, And Which US Bank Is Next

Source: ZeroHedge

While the Lieborgate scandal gathers steam not so much because of people’s comprehension of just what is at stake here (nothing less than the fair value of $350 trillion in interest-rate sensitive products as explained in February), but simply courtesy of several very vivid emails which mention expensive bottles of champagne, once again proving that when it comes to interacting with the outside world, banks see nothing but rows of clueless muppets until caught red-handed (at which point they use big words, and speak confidently), the BBC’s Robert Peston brings an unexpected actor into the fray: the English Central Bank and specifically Paul Tucker, the man who, unless Goldman’s-cum-Canada’s Mark Carney or Goldman’s Jim O’Neill step up, will replace Mervyn King as head of the BOE.

From the BBC:

In making false submissions about their borrowing costs, managers at Barclays believed they were operating under an instruction from Paul Tucker, deputy governor of the Bank of England, I have learned.

This belief was fostered after a telephone conversation in the autumn of 2008 between Mr Tucker and Bob Diamond, who at the time ran Barclays’ investment bank, Barclays Capital, and is today chief executive of Barclays.

The heart of the matter is that in 2008, at the height of the credit crunch, the perception of banks’ financial strength was linked to how much they had to pay to borrow. Barclays managers were very worried that the appearance of the bank paying more to borrow than other banks was damaging confidence in its health.

So Barclays so-called “submitters”, the managers who gave borrowing data to the British Bankers Association’s Libor-setting committees, consistently told these committees that Barclays was paying a lower interest rate to borrow than was actually the case.

And what is striking is that after their conversation took place, senior Barclays’ management on October 29 2008 gave an explicit instruction to reduce Libor submissions.

We hope it comes as no surprise to anyone that central banks, already known to sell Treasury puts in order to game interest rates on global benchmark securities, would go so far as to advise BBA member (which as noted last week was shocked to find that epic manipulation was going on here) banks to do all in their power to lie and cheat to the market in order to avoid the perception of reality.

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Moody’s set to downgrade banks in wake of solstice

Source: Bloomberg

Moody’s Investors Service has told banks it may later today announce downgrades of the credit ratings of as many as 17 lenders and securities firms with global capital markets operations, according to two people with knowledge of the plans.

The announcement may come after the close of trading in New York today, said one of the people, who asked to not be identified because the information is private.

Moody’s Investors Service Inc. headquarters in New York. Photographer: Scott Eells/Bloomberg

“As a policy we don’t comment on the timing of potential future rating actions,” Abbas Qasim, a New York-based spokesman for Moody’s, said in a telephone interview today.

The company said in February it may lower the ratings of firms including UBS AG (UBSN), Credit Suisse Group AG (CSGN) and Barclays Plc (BARC) as part of a review of how Europe’s sovereign debt crisis was hurting more than 100 lenders. Any downgrades could raise borrowing costs and force banks to increase collateral.

The 43-member Bloomberg Europe Banks and Financial Services Index fell 0.5 percent to 73.92.

UBS, Credit Suisse and Morgan Stanley (MS)’s credit ratings may be cut by as many as three levels, Moody’s said in February. Barclays, BNP Paribas SA (BNP), Credit Agricole SA (ACA), HSBC Holdings Plc (HSBA), Goldman Sachs Group Inc. (GS), Deutsche Bank AG (DBK), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), and Royal Bank of Canada (RY) may be lowered by two, Moody’s said.

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Rothschild buys 37% stake in Rockefeller Financial Services

This is big, and it’s hard to really understand how big it is or what it means without an understanding of the context surrounding this decision.  It is well known that the Rothschild and Rockefellers have worked together for decades, but what this specific investment signals is intangible at the current moment.

Source: Financial Times:

Source: Bloomberg

Two of the best-known business dynasties in Europe and the US will come together after Lord Jacob Rothschild’s listed investment trust and Rockefeller Financial Services agreed to form a strategic partnership.

RIT Capital Partners is to buy a 37 per cent stake in the Rockefeller’s wealth advisory and asset management group for an undisclosed sum, giving Lord Rothschild’s London-listed trust a much sought-after foothold in the US.

The transatlantic union brings together David Rockefeller, 96, and Lord Rothschild, 76 – two family patriarchs whose personal relationship spans five decades.

The Rockefeller group traces its roots back to 1882 when John D. Rockefeller established one of the world’s first family offices dedicated to investing his wealth. It has since developed into a provider of wealth and asset management services to other families, foundations and institutions. It is majority-owned by the 19th century oil magnate’s family and has $34bn of assets under administration.

The partnership with RIT will focus on setting up investment funds, eyeing joint acquisitions of wealth and asset managers and granting each other non-executive directorships.

RIT Capital Partners is minority-owned by Lord Rothschild and its net assets of £1.9bn are spread across global investments from public equities to government bonds and private equity.

The deal stemmed from a meeting two years ago when Mr Rockefeller introduced Lord Rothschild to the US group’s chief executive, Reuben Jeffery.

In a follow-up meeting one year later at Lord Rothschild’s office at Spencer House in London, the financier won Mr Jeffery’s blessing for opening talks to buy a stake in the Rockefeller group.

He then launched long negotiations with Société Générale Private Banking, which has owned the shareholding since 2008.

The French bank’s wealth management arm has had several suitors for the minority stake – estimated to be worth less than £100m – but Lord Rothschild was the only one supported by the Rockefellers.

Lord Rothschild concentrated on RIT Capital Partners three decades ago after he fell out with his cousin Sir Evelyn de Rothschild and disposed of his stake in NM Rothschild, the family’s UK branch.

Sir Evelyn at the time ran NM Rothschild, which rose to fame in 1815 when Nathan Meyer Rothschild made a fortune buying British government bonds in anticipation of Napoleon’s defeat at Waterloo.

Baron David de Rothschild, chairman of the Rothschild Group, is currently bringing the UK-based investment bank under a joint roof with the French family operations.

At the same time Lord Rothschild launched an investment partnership in March with the Franco-Swiss private bank Edmond de Rothschild Group, which is yet another separate branch of the sprawling banking dynasty.