RBS, Barclays In For A World Of Pain: JP Morgan

Any money the banks are making now should apparently be earmarked for future payouts to regulators, of which there will be many.

If you liked yesterday's $3 billion in fines, you're gonna love what's coming next for the European banks, says JPM.

Barclays Plc and Royal Bank of Scotland Group Plc...will have to set aside another 7 billion pounds ($11 billion) for misconduct within two years, JPMorgan Chase & Co. said. Barclays faces a further 900 million pounds for alleged manipulation of the foreign-exchange market, particularly a U.S. probe into electronic trading not covered by the recent settlements, JPMorgan said in a note Thursday. RBS’s biggest potential cost is for mishandling U.S. retail mortgage-backed securities, which could be an extra 3.1 billion pounds. While “uncertainty around litigation costs and hence capital at Barclays has been materially reduced,” the bank’s “conduct issues still warrant caution,” Raul Sinha, an analyst at JPMorgan in London wrote in the report. “For RBS, our principal concern remains U.S. RMBS litigation which is unlikely to be resolved until early 2016.”

Barclays, RBS Seen Facing $11 Billion More in Misconduct Costs [Bloomberg]