Europe Slaps U.S. Banks With Fines and the Market Winces

With 2013 quickly winding down, investors in big banks can only hope that next year will see regulators ease some pressure on the sector. For now, though, the penalties continue to rain down hard. Not content with letting American watchdogs like the Justice Department grab all the fine-levying headlines, the European Union is also getting into the act. It's penalized a host of financial multinationals a total of 1.71 billion euros ($2.32 billion) for scheming together to fix the LIBOR, a key benchmark interest rate.

The big names in Continental finance are all on the bad guy list, but since certain American majors are well established in that market they're getting slapped, too. Both JPMorgan Chase (NYSE: JPM  ) and Citigroup (NYSE: C  ) will have to shell out some cash for their role in the drama, with the former paying $108.4 million and the latter $95.0 million. These amounts are tiny compared to the overall fine, not to mention the massive settlements that have come from probes of impropriety in the U.S. (yes, we're looking at you, Mr. Morgan). But investors are shaking the angry stick nonetheless -- stocks in both banks are trailing well behind the Dow in trading today.

Unlucky Morgan just can't seem to catch a break. Fueling the roar of the bears is news that the company has warned 465,000 or so holders of prepaid cash cards issued by the bank that their personal information might have been compromised by hackers. Apparently, the cyberattack happened in July and was detected by Morgan in September. The company said it is investigating which accounts were affected and what information could have passed into the wrong hands. Scary stuff, and not a happy piece of news for investors or those cardholders.

Perhaps for banks a more trouble-free future lies in markets outside of the U.S. and Europe. There's plenty of finance work to be done in Asia, where a white-hot IPO just hit the market. This is for bad debt absorber China Cinda Asset Management, which apparently raised around $2.5 billion in a flotation on the Hong Kong Stock Exchange. It is far and away the biggest IPO so far this year on that bourse, and three of the issue's four lead underwriters were Yankees -- namely Bank of America's (NYSE: BAC  ) Merrill Lynch, Goldman Sachs (NYSE: GS  ) , and Morgan Stanley.

As far as Wells Fargo (NYSE: WFC  ) goes, no news today is probably good news, as the bank has managed to keep out of the most recent legal trouble rocking the sector. This might be why it's lagging the Dow the least of all four big banks on the day. Since the company is the largest player on the mortgage market by far, though, investors should keep an eye on developments in rates. Freddie Mac's latest weekly survey of same released this morning saw a noticeable rise in the average 30-year fixed, to 4.46% from last week's 4.29%, and an advance in its 15-year little brother to 3.47% from the week-ago 3.30%.  

Today hasn't been a banner day for banking investors. Here's hoping the remainder of the year is going to be better for them, or at least not as much of a struggle on the legal front.


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