Fines & Penalties Monitor: February 2016

March 11, 2016 at 3:00 PM


Source: BCG analysis for the years 2009 to 2014. CPG analysis for the year 2015 and YTD 2016.

  1. Peer group of the 18 largest U.S. & E.U. banks includes the following 6 U.S. banks: Bank of America, JPMorgan Chase, Citigroup, Morgan Stanley, Wells Fargo, and Goldman Sachs, and the following 12 E.U. banks: BNP Paribas, Credit Suisse, Deutsche Bank, UBS, HSBC, Barclays, The Royal Bank of Scotland, Rabobank, Lloyds Bank, Standard Chartered, ING, and Banco Santander. Data only includes fines, penalties, and settlements of $50 million or greater.

We are only two months into 2016 and already the total fines, penalties, and settlements assessed against large institutions have reached nearly half of the level for all of 2015. Our large bank group – the 18 largest institutions headquartered in the U.S. and E.U. – announced a total of roughly $2.6 billion in penalties in February, bringing the year-to-date total to $12.5 billion.

Three events accounted for nearly all of February’s activity. Wells Fargo reached an agreement in principle with the Department of Justice, HUD, and other government offices to pay $1.2 billion to resolve civil claims related to activities under Wells Fargo’s FHA lending program between 2001 and 2010 (as well as other potential claims related to its FHA program). As this agreement is not yet final, the total settlement is subject to change. We will update our totals as necessary once a final settlement is reached.

The other two events were also related to financial crisis clean-up efforts. HSBC Holdings agreed to pay $470 million in order to settle charges that its servicing group engaged in “mortgage, servicing, and foreclosure abuses.”  Separately, the Federal Reserve imposed a penalty of $131 million for the same activities.  Finally, Morgan Stanley reached a final settlement with the DOJ to resolve civil charges that the company misled investors about the quality of mortgage bonds sold in the years leading up to the financial crisis. Morgan Stanley originally reported last year that the company had reached an agreement in principle to pay a $2.6 billion settlement; after final negotiations, that settlement increased by $600 million to $3.2 billion. The original $2.6 billion was included in our fines, penalties, and settlements total for 2015. The additional $600 million has been added to the 2016 total.


Please add a comment
Leave a Reply

(Your email will not be publicly displayed.)