Bloomberg reports that Credit Suisse will pay $10.6m to settle a probe undertaken by UK market regulator The Financial Services Authority (FSA) in connection with an alleged lack of controls which led to a small group of traders mispricing their asset book earlier this year. The mispricing caused the firm to take a $2.65bn writedown. The FSA's Director of Enforcement, Margaret Cole, said in an e-mail statement that 'the sudden and unexpected announcement of the writedown had the potential to undermine market confidence'. In the meantime, The Wall Street Journal reports that the firm has also agreed to pay a $350,000 fine, and was censured by the New York Stock Exchange's regulatory arm, for allegedly trading ahead of customer orders on four occasions between 2005 and 2007.
Reuters reports that Austria's state railway, OeBB, is suing Deutsche Bank for allegedly providing misleading advise when it arranged a $918m credit default swap a couple of years back. OeBB claims that Deutsche structured the swap in such a complex way that no-one understood it!
The Times reports that private equity firm Kohlberg Kravis Roberts paid its 500 staff a total of $1.53bn in 2007. That's an average of $2.6m each. Nice.
Reuters also reports that Deutsche Bank analyst Mike Mayo now feels that Lehman Brothers is likely to writedown an additional $3bn in the third-quarter, posting a loss for the period as a result. And Bank of America analyst Michael Hecht, who also expects Lehman to post a third-quarter loss, points out that the expected slow down in fixed-income sales and trading over the the next few quarters will make it difficult for the firm to post improved revenues and earnings.
Bloomberg reports that the smart money now expects Merrill Lynch to cut its dividend by at least 50% this year. As the news agency points out, a dividend cut would be the first time this has happened since 1971, the year Merrill went public.
Finally, The Independent reports that Royal Bank of Scotland has had to call off the sale of the Australian and New Zealand units it last year acquired following last year's ABN Amro deal as the last remaining bidder, Commonwealth Bank, has left the table. The units will now be integrated into RBS's existing Australian and New Zealand franchises.
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