The European Central Bank has begun stress tests on 100 European banks to determine how exposed they are to the sovereign debt crisis.

Tests on the top 25 European banks including Deutsche, BNP Paribas and HSBC are near completion.

Economists have expressed concerns in recent weeks that a number of Europe’s smaller banks are in danger of being hit by the sovereign debt crisis. Several second tier German banks said to have Greek and Spanish debt on their balance sheets.

Fears mounted yesterday when 151 banks requested cash when the ECB dished out €229 billion in its weekly tender. This represented the highest amount apportioned by the ECB since it launched its special 12-month funding operations in June 2009.

The ECB said that the tests will establish the position of the banks and help reassure the markets that the European banking sector is still in a healthy state.

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Public sector pensions likened to ‘Ponzi scheme’

2010-07-07T12:07:00+00:00

Public sector pensions will become a national 'Ponzi scheme' unless immediate action is taken, according to a report by the Public Sector Pensions Commission.

Headed up by Peter Tompkins of the Institute of Actuaries, the commission has examined the cost of unfunded public sector pension schemes. It has found that the total cost of unfunded schemes probably exceeds the £777 billion UK national debt of 2009/10.

The report also gives recommendations to easing the burden of public sector pensions, including:

• Increasing pension ages
• Reducing accrual rates
• Introducing career average schemes
• Imposing salary ceilings on executives
• Capping the degree of inflation linking
• Abolishing contracting-out unless members pay higher employee pension contributions
• Phasing in funded defined contribution (DC) schemes or notional, unfunded, DC schemes.

The authors of the report hope the government own inquiry into public sector pensions, led by former Labour pensions minister John Hutton, will take on board its conclusions and be transparent about its own recommendations.

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For further information on this article, please visit http://blogs.telegraph.co.uk/finance/ianmcowie/100006636/state-pension-ponzi-scheme-unravels-with-retirement-at-70/

In addition, find more information here: http://citywire.co.uk/new-model-adviser/ecb-to-conduct-stress-tests-on-100-banks/a412449

HSBC Clients With Asian Accounts May Face U.S. Tax Probe

2010-07-06T12:07:00+00:00

HSBC Clients With Asian Accounts May Face U.S. Tax Probe

The US Justice Department is conducting a criminal investigation of HSBC Holdings Plc clients who may have failed to disclose accounts in India or Singapore to the IRS.

“This is a global initiative by IRS and the Department of Justice,” said Robert McKenzie, an attorney at Arnstein & Lehr in Chicago.

The probes show how the U.S. is expanding its crackdown on offshore tax evasion beyond Switzerland and UBS AG, the largest Swiss bank, said Barbara Kaplan, a tax lawyer at Greenberg Traurig LLP in New York.

London-based HSBC is Europe’s biggest lender by market value.

“It’s clear that the IRS and the Department of Justice are intending to pursue other depositors outside of Switzerland,” Kaplan said. “They’ve announced it before, and they are moving forward in that regard.”

UBS avoided prosecution last year by admitting it aided tax evasion from 2000 to 2007, paying $780 million, and agreeing to disclose secret account data on more than 250 clients. It later agreed to disclose data on another 4,450 clients.

Seventeen UBS clients, two bankers and three alleged enablers of tax crimes have been prosecuted since the bank signed the deferred prosecution agreement. Another 15,000 U.S. residents sought to avoid prosecutions last year by disclosing offshore accounts.

IRS Commissioner Douglas Shulman said last October his agency was scouring those disclosures “to identify financial institutions, advisers and others” who helped taxpayers cheat on taxes. He said the IRS is hiring 800 people in the next year and increasing staff in eight overseas offices, including Hong Kong. It also will open offices in Beijing, Sydney and Panama .

Letter appear to have been sent to U.S. residents who have ties to India, including people who inherited money from relatives or maintained assets there after leaving the country, according to three lawyers who read them and asked not to be identified. Some letters referred to undisclosed bank accounts in Singapore, two of the lawyers said.

“We’ve been telling our clients that the non-disclosure of foreign accounts is not just a UBS problem,” said tax attorney Richard Sapinski of Sills Cummis & Gross in Newark, New Jersey, represents clients in the offshore investigation.

“We’ve spoken to the prosecutors and high-level people in the IRS, and our conclusion was they were going to pursue people with undisclosed foreign accounts anywhere for a very long time to come,” he said.

Several weeks ago, Downing toured Singapore, Hong Kong and Beijing, meeting with regulators and bankers about offshore tax prosecutions. He spoke to tax lawyers at a conference sponsored by New York University on June 18.

“We just took down the largest private wealth management bank in the world,” Downing said, referring to UBS. “Do you really think we’re going to have trouble doing the next one?”

He referred to his tour in Asia, saying: “Neither the banks nor the governments want to have a UBS-type situation. They want to do it nice and quiet. They don’t want to be the focus of attention. The Department of Justice and IRS are devoting a ton of resources to this issue.”

The Justice Department has charged three HSBC clients with tax crimes in the past year.

A Virginia surgeon, Andrew Silva, was sentenced to two years probation after admitting he hid assets at HSBC from U.S. tax authorities and smuggled more than $200,000 in cash to his home when the bank said it would close his Swiss bank account.

Two Miami Beach hotel developers, Mauricio Cohen Assor and his son Leon Cohen Assor, were indicted on charges of hiding more than $150 million in assets from the IRS, including accounts held at HSBC. They have pleaded not guilty and face a Sept. 7 trial in federal court in Fort Lauderdale, Florida.

BP seeking sales in Columbia, Venezuela and Vietnam

2010-07-06T12:07:00+00:00

BP seeking sales in Columbia, Venezuela and Vietnam

BP is said to be seeking sales of fields in South America and Asia to fund the cost of the worst oil spill in US history.
Fields in Columbia, Venezuela and Vietnam are thought to be in the process of being sold off while it is also thought the company may sell a 60% stake in Argentina’s second biggest oil company Pan American Energy.

The UK based oil producer said that it needed to raise at least $10 billion in order to compensate those affected by the oil spill in the Gulf of Mexico.

The company’s shares have dropped 50% since the sinking of the Deepwater Horizon rig which killed 11 workers, wiping about £60 billion off BP’s value. BP shares rose 3.5% in London yesterday to close at 333.3 pence.
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