3 Major Banks Trading Lower Following $324 Million Settlement for ISDAfix


Seven major banks came to a $324 million settlement in a lawsuit that took place in Manhattan’s federal court. The banks were accused of fixing ISDAfix rates, a metric used to appraise interest rates for structured debt securities and commercial real estate mortgages.

Many banks, four to be exact, are trading higher on the news, but three banks are trading lower on the news.

Credit Suisse Group AG (CS)

Credit Suisse, Bank of Scotland and Deutsche Bank will be required to pay $50 million each in the settlement. Credit Suisse has been trying to calm investors over the last week. The bank’s CEO, Tidjane Thiam, asked investors to remain calm on April 30th, followed by the bank announcing that they will be cutting trading jobs on May 4.

Positivity for the bank came this week following the announcement that the company sold its private-equity firm for $1.3 billion.

The sale is expected to result in a $100 million loss, but it lowers the bank’s risks in the future. Thiam is working hard to lower the company’s risky assets, and putting the investigation against the major banks behind them should help the company going into the latter half of the year.

Deutsche Bank AG (DB)

Deutsche Bank has been falling all week and is down 2.2% on the day on Thursday. The bank lost nearly 6% of its value on Tuesday following the announcement that the company’s American CEO Jacques Brand was stepping down from his position.

Anytime a CEO leaves a company, it has an impact on stock prices and adds to investor fear because of future uncertainty.

The company is also struggling from the announcement that the ISS, a shareholder advisory group, suggested that investors that attend the company’s shareholder meeting vote on a special audit. The allegations against the company assert it did not comply with its legal obligations when dealing with certain regulatory and legal matters.

Bank of Scotland Group (RBS)

The Bank of Scotland is down 2.1% on the day. The bank has struggled to maintain positive momentum in the second-quarter of the year following the announcement that the company’s Q1 losses doubled.

The net loss for the company reached 968 million pounds, up from 439 million pounds a year ago.

The Bank of Scotland has been struggling for the past eight years following the financial crisis. News worsened when the bank announced that it would miss the deadline to spin off one of its sectors. As part of the company’s agreement following the financial crisis, the company needed to spin off the company, but the process is being slowed by technical difficulty.

A further announcement that the company will likely miss paying its dividends further caused investor sentiment to drop this week.

All three of these banks should benefit, even slightly, from the ISDAfix settlement, but other factors are causing the stocks to fall on Thursday.


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