RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Categorized | Banks

Santander US unit says accounts are wrong

Posted on September 23, 2016

A former Sovereign Bank branch is rebranded as Santander's first retail bank branch in the United States in New York, U.S., on Thursday, Oct. 17, 2013. Photographer: Ron Antonelli/Bloomberg *** Local Caption ***©Bloomberg

Santander Consumer USA, the Dallas-based car loans arm of Spain’s biggest lender, has admitted to errors in more than three years of its accounts, in the latest setback for a unit already under fire from regulators.

In a statement on Friday, the subprime lender said its financial statements for 2013, 2014 and 2015 could no longer be relied upon. It explained that it had changed its method of accounting for loans bought at a discount from dealers, and for allowances for credit losses. Figures for the first quarter of 2016 were also wrong for the same reasons, the company said. 

    Scusa, as the business is known, added that the disclosure — delayed twice — was not expected to have any material impact on its net cash position, and shareholder equity was now about 1 per cent higher than it was at the end of March.

    But the unit said it was taking new steps to improve its governance — including the appointment of Scott Powell, chairman of Santander’s US holding company, to the Scusa board — and would update investors soon on “previously unreported material weaknesses” in its internal controls. 

    Once that process is completed, Scusa said, it will report its financial performance for the second quarter. These figures had been scheduled for release on July 27, when the company first shocked investors by saying it needed more time to sit down with current and former auditors. 

    “We are entirely committed to achieving the highest standards of integrity within our financial reporting and control environment and believe that the actions we are announcing today are a further important step toward achieving that goal,” said Jason Kulas, president and chief executive. 

    Failures of governance at Scusa have long been a headache for Ana Botín, executive chairman of Santander, who vowed to get a better grip on the entire US business after taking over the top job at Spain’s biggest bank from her late father in 2014. 

    Earlier this year, Scusa’s parent, Santander Holdings USA, set an unenviable record by becoming the first bank to fail the annual stress test carried out by the Federal Reserve for a third year in a row. 

    Although the bank cleared quantitative hurdles, the Fed censured it — along with a US unit of Deutsche Bank — for “broad and substantial weaknesses” in its capital-planning processes and “insufficient progress . . . made toward correcting those weaknesses and meeting supervisory expectations”. 

    Santander and Deutsche Bank fail Fed stress test again

    A woman leaves a Deutsche Bank AG branch in Hamburg, Germany, on Saturday, Feb. 13, 2016. Doubts about the coupon shattered confidence in Deutsche Bank cocos in February Photographer: Krisztian Bocsi/Bloomberg

    Morgan Stanley ordered to resubmit capital plan by end of 2016

    Last summer, Scusa agreed to pay almost $1bn to its former chairman and chief executive, Thomas Dundon, to terminate his employment and buy out his stake in the company, which he founded in 1995. Mr Dundon was replaced as chief executive by Mr Kulas, previously Scusa’s chief financial officer, and Mr Dundon’s former college roommate. 

    Shortly afterwards, Blythe Masters stood down as chairwoman of Scusa, saying that she wanted to focus on her blockchain interests. 

    Ms Masters, an ex-head of commodities at JPMorgan, had held the position for less than a year. She was replaced by Bill Rainer, a non-executive director who had chaired Scusa’s regulatory and compliance committees. 

    News of further turnover in Scusa’s executive ranks “is not helping win points with the regulators,” said Kathleen Shanley, an analyst at Gimme Credit in New York, on Friday. 

    Shares in Scusa opened strongly on Friday, up about 11 per cent in the first hour of trading, as investors breathed a sigh of relief that the restatement was smaller than they had feared. John Hecht, an analyst at Jefferies, described the impact of the tweaks in the numbers — and the further delay in confirming second quarter figures — as “not meaningful”.

    Still, the shares are down about a quarter this year, much worse than the financials sector as a whole, which is flat.