The Bank of England predicted that UK banks will face a further £40bn in “misconduct costs” – penalties, fees and other charges arising from various scandals – over the next four years, says Bloomberg.
The estimates were part of the Bank’s latest round of stress tests and it warns that the sum could rise if new issues come to light. In 2015, misconduct costs wiped out £15bn of pre-tax profit – about half the total generated across the industry.
RBS still faces a multi-billion dollar fine from US authorities to settle allegations that it mis-sold mortgage securities, which could cost more than £8bn.
Viewpoint
One of the scariest statistics in contemporary economics is “how China’s debt mountain has grown in the past few years from under 150% of total national income to almost 260% today… Unless President Xi drops his 6.5% growth target imminently, the eventual outcome will be a debt implosion, falling asset prices, mass insolvencies and an outright Chinese recession – perhaps half a decade away, perhaps sooner. Given the world has become reliant on steady, strong Chinese demand and cheap Chinese goods, this is a problem for all of us.
This – not Brexit, not President Trump, not [last] weekend’s Italian referendum – is the biggest risk in economics today.”
Ed Conway, The Times