By Sue Reisinger, From Corporate Counsel
A new study shows the total legal cost of misconduct at the world’s largest banks has surpassed $300 billion in the last five years. And contrary to the banks’ hope of putting it all behind them, the amount keeps rising year over year.
The study “challenges assumptions that banks are through the worst of post-crisis reparations,” according to a blog post Tuesday by the Financial Times.
The CCP Research Foundation’s “Conduct Costs Project” released the results of its latest research into the costs of bad bank conduct on Tuesday.
The $300 billion figure consists of actual litigation costs over misconduct from 2010 through 2014, plus corporate charges taken for conduct-related provisions, which are made for estimated losses or costs.
The report said the figure represents a nearly 18 percent increase over the 2009-13 period, indicating that compliance problems aren’t going away but just getting more costly.
As part of the release, an international chart details the total conduct costs incurred by 16 of the largest international banks for the 2010-14 period.
Bank of America Corp. ranked at the top of the chart, with nearly twice the costs of its closest competitor, JPMorgan Chase & Co.
But second-ranking Chase had nearly twice the costs of Lloyds Banking Group (No. 3) and Citigroup Inc. (No. 4), whose figures were very close. They were followed by Barclays, RBS, Deutsche Bank AG and nine others.
The Conduct Costs Project (CCP) was begun by the London School of Economics and Political Science, and was handed over to the CCP Research Foundation last September.
CCP spokesman Chris Stears told CorpCounsel.com that the analysis shows a predominance of U.S. and U.K. prosecuting authorities.
Stears also noted one bright spot for banks: While the year-over-year costs increased by one-fifth in 2014, the amount for provisions actually decreased last year. “Perhaps a glimmer of hope that we can expect to see a decline in conduct costs going forward?” Stears speculated.
The CCP is proposing that banks present a “conduct costs report” as part of their annual reports. And the foundation began last month trying to persuade the first bank to sign on to the idea “to restore trust among its investors and wider stakeholders.”
Such disclosure, it said, would be seen “as welcome evidence of a determination to control conduct risk.”
Photo by Peter Booth/iStock
For more on this story go to: http://www.corpcounsel.com/id=1202728832923/Costs-for-Banks-Bad-Behavior-Topped-36300-Billion#ixzz3cgNCANsp