Barclays reveals £12.8bn balance sheet hole (FT)
Barclays has revealed a £12.8bn hole in its balance sheet as it announced a £5.8bn rights issue, buttressed by a plan to shrink its balance sheet and issue £2bn of contingent convertible debt. The bank’s shares, which fell 4 per cent on Monday after the Financial Times reported news of the rights issue, fell a further 5.5 per cent to 291.8p in early trading in London. The rights issue is the biggest since 2009, and the fourth biggest in British banking history. Barclays blamed a recalculation of the Prudential Regulation Authority’s leverage ratio, under new European definitions of capital for the expansion of the capital shortfall. It said it had a 2.2 per cent leverage ratio under that measure, when factoring in expected losses and other charges, as at the end of June. That compared with a 2.5 per cent number reported by the PRA last month on the basis of older figures. The rights issue will be priced at 185p a share, equivalent to a 35 per cent discount to the theoretical ex-rights price of 284p.
JPMorgan Accused of Gaming Energy Bids as FERC Deal Looms (Bloomberg)
JPMorgan Chase & Co. (JPM) manipulated power markets in California and the Midwest, the U.S. Federal Energy Regulatory Commission claimed in a proceeding that sets up a settlement to be announced as early as today. A JPMorgan trading unit gamed wholesale electricity markets from September 2010 to June 2011, leading to overpayment of “tens of millions of dollars at rates far above market prices” in California alone, FERC staff said in a Notice of Alleged Violations yesterday. The nation’s biggest bank and its chief energy-market regulator have agreed to settle the matter with sanctions that include a fine of about $400 million, according to a person familiar with the case who asked not to be identified because the terms aren’t yet public.
Deutsche Bank’s Earnings Tumble on Legal Costs (DealBook)
Deutsche Bank, Europe’s largest investment bank, said on Tuesday that net profit fell by half in the second quarter as it earned fewer fees from financial market trading and absorbed costs related to lawsuits. Responding to criticism that it is overly dependent on borrowed money, the bank also announced plans to shrink its total financial holdings to reduce risk and address demands by regulators that lenders increase their ability to absorb losses. ... Net profit fell to 335 million euros ($444 million) from 666 million in the second quarter of 2012, Deutsche Bank said. Revenue rose 2 percent in the quarter, but the gain was offset by additional expenses, including the cost of legal proceedings.
UBS Posts Higher Net, Plans to Buy Back Fund From SNB (Bloomberg)
UBS AG plans to buy back the fund set up by the Swiss central bank in 2008 to help it shed toxic assets, as Switzerland’s biggest bank seeks to boost capital. The purchase will lift the bank’s common equity ratio under Basel III rules, which stood at 11.2 percent at the end of June, by 70 basis points to 90 basis points in the fourth quarter, Zurich-based UBS said in a statement today. ... Buying back the fund, which was set up at the height of the financial crisis to help bail out UBS, would close a difficult chapter for the bank as it concentrates on managing money for wealthy clients. UBS’s capital ratio is “at the highest level among global peers,” JPMorgan Chase & Co. analysts Kian Abouhossein and Amit Ranjan, who rate UBS overweight, said in a note to clients today. The stock is “cheap considering its business mix.”
Camper's kiss sparks lawsuit (Greenwich Time)
The family of a 15-year-old Westport girl, caught necking behind the arts and crafts shed at summer camp earlier this month, claims in a lawsuit their daughter was given a big kiss-off by the camp director. "It was an innocent kiss between two young kids, condoned by the camp's counselors, but instead of treating it as a sensitive situation, the camp's director yelled at the girl for being promiscuous in front of everyone and had her escorted from the camp by an armed guard," said the family's lawyer, Rosemarie Arnold. ... She said the girl suffers from low self-esteem issues and her parents sent her to the camp hoping she would gain some self-confidence. "Instead, this quiet, withdrawn girl was hauled out in front of all her friends, in essence called a tramp and then run out of the camp," she said. Arnold said the girl's parents were made to wait outside the camp for their daughter and were told she was a security risk. She said the girl was not given back her belongings or the money her parents paid to send her to the camp. Arnold said the 15-year-old boy, who was high-fived after kissing the girl, was also kicked out of the camp.
Bank of Italy Inspecting Top Lenders' Books (WSJ)
The Bank of Italy is quietly inspecting the finances of some of the country's top lenders, which could push some Italian banks to sell assets or take other major steps, according to a central-bank document reviewed by The Wall Street Journal. The central bank's examinations, which were previously undisclosed, come against a backdrop of increasing worry among regulators, investors and bank executives about the health of some of the country's lenders amid a rise in souring loans. The current inspections are a follow-up to a previous round last fall that resulted in the Bank of Italy ordering banks to set aside a total of about €3.4 billion ($4.5 billion) more to guard against losses on bad loans.
Santander Profit Soars on Lower Charges (DealBook)
The Spanish lender Banco Santander posted a sharply higher second-quarter profit of 1.1 billion euros on Tuesday, as it benefited from a fall in charges tied to delinquent loans. Santander, one of Europe’s largest banks by market capitalization, wrote off billions of dollars’ worth of faulty real estate loans last year, primarily in its home market, where record levels of unemployment and weak domestic growth continue to plague the Spanish economy.
Groups That Are Often at Odds Join Forces to Oppose Spitzer’s Campaign (NYT)
Alarmed by Eliot Spitzer’s momentum in his unexpected bid to win citywide office, an unlikely coalition of business leaders, women’s groups and labor unions is vowing to finance an ambitious effort to thwart the former governor’s ambition. The interest groups, which often spar with one another over competing agendas and priorities, have found rare common cause in their antipathy toward Mr. Spitzer, who infuriated the business community with his aggressive posture toward Wall Street, who offended feminists by paying for sex with prostitutes and who alienated unions by taking on a labor-backed candidate. Now, they are pledging to raise and spend at least $1.5 million on advertising, direct mail and field work in an effort to persuade voters that Mr. Spitzer would be a poor choice for comptroller, New York City’s chief financial officer.
Bitcoin banned in Thailand (CNBC)
Virtual currency bitcoin has been banned in Thailand, according to a prominent bitcoin exchange that operates in the Southeast Asian country. According to Bitcoin Co. Ltd, a Bangkok-based website that trades the digital currency, the firm had been in the process of registering with governmental agencies but the application was turned down and the currency has now been made illegal.
Long Island tradition changes to save the sharks (CBS)
Sixty-four sharks were reeled in this weekend during a tournament about 20 miles off the coast of Montauk. For the first time ever in the long, bloody history of shark tournaments in this area, all of the sharks were released. Jason Behan, a third-generation fishing captain, has been catching and killing sharks in the area since he was a young boy. He says there's a whole different mood in a tournament where you're not killing sharks. "In a tournament like this ... it's going to change a lot of people's minds and it's going to open a lot of people up to 'Hey, there is another way to do this,'" said Behan.
Florida Police Sergeant Played Nude Online Sex Game While On Duty (Gawker)
A veteran police officer was forced to resign last week after an internal affairs investigation revealed she had used police department equipment to post nude photos of herself online as part of a virtual sex game. Daytona Beach Police Sergeant Penny Dane reportedly confessed to investigators that she regularly spent hours playing Red Light Center — described as "a porn-themed version of Second Life" — while she was supposed to be on duty supervising officers.