Investment banks could face paying out up to $100bn

A Billion Dollars

Bang goes the bonus pot.

Global investment banks could face almost $100bn in civil settlements from investigations into interest-rate and foreign-exchange manipulations, analysts at Stifel Financial's KBW unit said.

Bloomberg reports that probes of the London interbank offered rate, or Libor, could cost $46bn and currency trading inquiries could trigger another $26bn, analysts led by Andrew Stimpson said today in a note.

That’s in addition to settling claims over faulty mortgages with the Federal Housing Finance Agency, which could be $24bn, the analysts wrote.

While mounting litigation costs at firms including Deutsche Bank and Barclays may not require capital raises, financial firms might delay boosting dividends or buying back stock, especially in the U.S., the analysts wrote. Lenders have spent $44bn on legal matters since last year’s first quarter, the analysts said.

'Litigation costs are here to stay and are part of the fabric of investment banking costs', the analysts wrote in the note, adding that the total could be driven even higher by other claims tied to the U.S. mortgage market and Bernard Madoff’s Ponzi scheme. 'Banks have so far been keen to reach a settlement with regulators or governments quickly, but the more numerous civil cases are potentially more financially damaging', they wrote.

To access the complete Bloomberg article hit the link below:

Global Banks Could Face $100 Billion in Accords, KBW Says:

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