Bulgaria ranks second in the EU in terms of emigrant remittances

Bulgaria ranks second in the EU in terms of emigrant remittances, just after the leader Romania, according to Eurostat data. Despite the economic meltdown, monetary remittances made by Bulgarian emigrants did not decreased significantly in 2009. Money transfers from Bulgarians working abroad amounted to €1.2 billion, which indicated a drop of 15% on the previous year’s volume.

Though some experts predicted a wave of Bulgarians returning to their homelands under the pressure of the economic crisis, their expectations proved wrong, as salaries in Bulgaria remain 14 times lower than the EU average.

FSA poised to set tougher capital rules

Big British banks are likely to be forced to hold more capital than required under rules announced this month by the Basel Committee on Banking Supervision, the head of the City regulator told the Financial Times.

“We want to preserve the freedom to go beyond the absolute minimums, in particular in relation to our approach to systemically important banks,” Lord Turner, chairman of the Financial Services Authority, said. He also said that he would push forward with plans for UK liquidity requirements.

In a speech at the Mansion House, the Chairman of the Financial Services Authority, Lord Turner, said that to design an effective regulatory response to the financial crisis, we need to move beyond the demonization of over-paid financial traders and recognize the fundamental mistakes made by policy makers.

"In finance and economics", he said, "ill-designed policy is a more powerful force for harm than individual greed and error".

He argued that the crisis had many causes, including "absurd bonuses for excessive risk taking" and "an explosion of exotic socially useless product development", but that underlying these problems were prudential rules and an entire philosophy of market regulation which failed to identify and address the dangers of excessive leverage, and which too confidently relied on supposedly efficient and rational markets always to produce good results.

Addressing that failure requires the implementation of three major sets of reform: significant increases in bank capital and liquidity requirements; clear strategies to ensure that banks will not be bailed out by tax-payers; and macro-prudential tools which can slow down excessive credit growth. But applying these tools will sometimes have unpopular consequences for the supply of credit which society needs to be willing to accept.

Given these priorities, Lord Turner welcomed the decisions reached on the Basel III package of capital and liquidity reforms. Responding to suggestions that the package was weaker than ideal, he pointed out that the total impact derives from changes to the definition of capital and the definition of risk weights, as well as to the ratio itself, with the combined effect being considerably larger than the headline increase from 2% to 7% suggests.

He accepted that if philosopher kings were designing a banking system entirely anew for a greenfield economy, they would choose still higher ratios, but argue that starting where the world economy is today, the Basel III reforms will significantly improve the resilience of the global banking system without harming prospects for economic recovery.

But while Basel III is vital, Lord Turner stressed that it is not the end of global regulatory reform. In future, he said, tax-payers should not have to bail out those systemically important financial institutions which in the past have been judged ‘Too Big to Fail’. Options to achieve this while ensuring that systemic shocks to confidence and lending capacity are minimized, include capital surcharges for systemically important banks, or debt instruments smoothly convertible to equity as firms approach failure.

No set of permanent rules can, however, guard against all financial risks, which evolve in form and change through the cycle. For this reason, Lord Turner said the he regards the creation of the new Financial Policy Committee as the most important element in the Government’s reform package. The FPC will fill the “macro-prudential underlap” which existed between the FSA and the Bank of England, and move beyond a rule driven approach to financial policy to recognize the importance of judgment and discretionary powers to constrain excessive credit growth. Doing that, however, will not always be popular. To be effective, the FPC will therefore require robust independence, and to be supported by public recognition that constraints on easy credit are sometimes in everybody’s interest.

€345 million in fines as French Banks caught in cheque fee price fix

France's competition watchdog has fined 11 banks a total of €344.9 million for colluding to charge customers "unjustified" interbank fees during the switch-over to a new digital cheque processing system.

The Autorité de la concurrence says that in 2002 when a digital system for processing and clearing interbank cheques was set up, the guilty parties colluded to raise several fees.

These included a 4.3 cent levy on 80% of cheques exchanged in the country until July 2007. According to the banks, the fee's aim was to offset losses in interest payments caused by the acceleration of interbank clearing thanks to digitalization.

In a statement, the watchdog says: "The Autorité considers that there is no evidence to prove that the transition to ECI (exchanges check-image) has provoked net losses to any of the banks involved. Therefore, the justification presented by the banks of the necessity of a compensation mechanism, could not, in any event, justify the fee".

The banks were fined a total of €381.1 million for imposing the fee and a further €3.8 million for two additional fees for 'related services'. However, six other related fees charged were deemed justified.

The guilty banks are Banque de France, BPCE1 , Banque postale, BNP-Paribas, Confédération Nationale du Crédit Mutuel, Crédit Agricole, Crédit du Nord, Crédit Industriel et Commercial, LCL, HSBC and Société Générale.

Financial Stability Board seeks feedback on residential mortgage underwriting practices

Problems arising from poorly underwritten residential mortgages contributed significantly to the global financial crisis that began in 2007. Now the Financial Stability Board (FSB) has launched a review of residential mortgage underwriting and origination practices.

The review will survey existing practices across the FSB membership, including recent actions taken by national authorities to promote sound practices, and draw internationally applicable lessons.

The review will be based on the recommendations made by the Joint Forum in its January 2010 “Review of the Differentiated Nature and Scope of Financial Regulation”. In its review the Joint Forum focused on two fundamental areas of concern in the residential mortgage market:

1. poor underwriting practices and,
2. the lack of consistent supervisory and regulatory regimes for similar activities and products.

A questionnaire to collect information from national authorities has been distributed to FSB members, and the responses will be analyzed and discussed by the FSB later this year. The review is intended to be completed and published in early 2011.

As part of this review, the FSB has indicated that it will welcome feedback from financial institutions, industry associations, consumer groups and other stakeholders on their experiences regarding residential mortgage underwriting practices, either in a particular country or across several countries. This feedback could include comments on:

• gaps in regulatory and supervisory oversight,
• areas where regulations or guidance from different agencies might overlap,
• current or best practices for measuring a borrower’s ability and willingness to repay,
• how market practices have evolved in recent years, and
• challenges faced by underwriters or originators that operate in several countries.

The FSB is seeking feedback by 25 October 2010. For those interested the relative questionnaire is available at http://www.financialstabilityboard.org/press/pr_100920.pdf

The FSB has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies. It brings together national authorities responsible for financial stability in significant international financial centers, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts.

Want to track your interest rate? Use your mobile.

If customers are keen to keep an eye on what is happening to their bank balance, they could try mobile banking, according to Barclays bank.

Sean Gilchrist, digital banking director at the bank, suggested it can be easier for individuals to keep track of what is happening to their finances by being able to access the information on the move.

He accepted that mobile banking is a "relatively new" process, but claimed its popularity is growing at a "phenomenal" rate.

"Being in control of your money starts with knowing how much you've got and where it is being spent," said Mr Gilchrist.

His comments followed the publication of research by Barclays, which showed that nearly three-quarters of adults overestimate their bank balance, with Londoners believing they have an extra £91.62 on average.

This month, the same firm claimed many small enterprises in the UK are using smartphones to carry out a variety of business procedures, such as creating invoices and dealing with correspondence.

Six years jail for cyber-crooks money laundering scam

A 38-year-old California man has been sentenced to six years in prison for laundering money for cyber-thieves through an online payment system called e-Gold.

Cesar Carranza, also known by the handle "uBuyWeRush," participated in the money laundering scheme "between April 2004 and November 2006," the Department of Justice said in a recent news release.

According to the indictment Carranza received cash deposits from cyber-criminals who use stolen credit card information—and laundered the money by, among other things, "acting as a money exchanger for an online payment system known as e-Gold."

Three directors of e-Gold had been "convicted of operating an unlicensed money transmitting business," the DOJ said.

Carranza pleaded guilty to one count of conspiring to launder proceeds of unlawful activity. All told, Carranza was accused of helping to launder $2.5 million in illegal proceeds.

Phishing scam using the US tax system as bait - McAfee

Security researchers at McAfee have reported a new phishing scam targeting users of the US Department of Treasury's Electronic Federal Tax Payment System (EFTPS).

According to McAfee, phishers were seen using the free tax payment service as bait this week in a new round of e-mails.

The e-mails have the subject line "Your EFTPS Tax Payment ID has been rejected," and claim that the recipient's tax payment did not go through due to an invalid ID number. Victims are then directed to a phony Web site for more information.

"If you receive one of these messages claiming to be from the EFTPS or IRS, don't open it or click any link," blogged McAfee's Felix Martinez. "It's safer to manually type the URL (web address) instead of clicking a link. To verify whether a government or financial institution is trying to contact you, call that agency."