Fines & Penalties Monitor: June 2016

July 28, 2016 at 12:15 PM



As we reach the halfway point of 2016, the total fines, penalties, and settlements incurred by our large bank group – the 18 largest institutions headquartered in the U.S. and E.U. – have coincidentally reached $16 billion, or exactly half of the total assessed in all of 2015.

June saw HSBC settle a shareholder class action lawsuit, originally filed in 2003 against Household International at the time of HSBC’s acquisition of that company. The settlement of $1.6 billion relates to events that took place before the purchase of the company and was the largest assessed in June.

Also last month, the FDIC agreed to a settlement of a total of $190.0 million from a group of institutions including Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, Goldman Sachs, RBS, and UBS to resolve claims in lawsuits filed by five failed banks for which the FDIC was acting as receiver. The failed banks all filed suits for violations of federal and state securities laws in connection with RMBS that were purchased by the banks between 2008 and 2009.

Ongoing penalties related to the sale of residential mortgage-backed securities in the years leading up to the financial crisis accounted for $9.8 billion, or over half of the fines, penalties, and settlements assessed during the first six months of 2016. Several one-off settlements accounted for another $4.2 billion. No other category accounted for over $1.0 billion in penalties; however, fines associated with improper credit marketing, billing, and collections practices amounted to $601.0 million and could pass the $1.0 billion mark by the end of the year.

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