Macquarie Sees $176 Billion In Lieborgate Losses, $88 Billion Hit To Libor Panel Banks

Tyler Durden's picture


When we discussed the next steps from the Lieborgate fallout, we made it explicitly clear that one after another experts will come to the fore with their predictions on the monetary fallout of Lieborgate, and how much various banks will be on the hook for: basically an exercise in futility as there is no way to even remotely extrapolate what the liability is to manipulating $500 trillion worth of IR-derivative notional. The bulk of these analyses have been of the lowballing variety, designed to create a "framing" limit for the Libor liability within a given mental range, when in reality the number could and likely will be orders of magnitude greater, but what bank wants ambulance chasing to go off the charts and be sued by anyone who was exposed to debt instruments in the past decade - read mortgage or credit card? One firm which dares to break away from the framing mold is Australian bank Macquarie which has thrown out the simply stunning number of $176 billion. If true: prepare for the banks' Tobacco moment as well over half of the market cap of global financial institutions who just so happens have exactly $0.00 in litigation reserves for just this contingency, is slashed.

From Macquarie:

Libor: a $176bn risk. We lower our target prices by an average of 12%

Our analysis highlights clear evidence that Libor was “low-balled” during the financial crisis. We estimate that investors in Libor-linked assets potentially incurred losses of $176bn. Including both regulatory fines and possible civil class action liabilities, we think the eventual bill for Libor panel banks could total $88bn.

We think it will be hard for claimants to show that individual banks were more culpable than others in “low-balling” Libor submissions, and instead we focus on panel membership as the likely key determinant of future liabilities. Based on this methodology, we assess the following potential claim exposures:

  • $8.3bn pre-tax for BARC, DBK and UBS
  • $7.7bn pre-tax for CS
  • $1.8bn pre-tax for SG
  • $0.6bn pre-tax for BNP

We adjust our target prices as follows, allowing for existing litigation deductions as well as potential additional regulatory fines:

  • DBK lowered by 22% from €30 to €23.5 (also incorporating changes related to today’s 2Q results; 16% lower for Libor-only)
  • BARC lowered by 17% from £2.00 to £1.66
  • CS lowered by 13% from CHF19 to CHF16.5
  • UBS lowered by 11% from CHF14 to CHF12.5
  • SG lowered by 8% from €18 to €16.5
  • BNP lowered by 2% from €30 to €29.5

We retain our existing recommendation stance, with UBS maintained Outperform, CS, BNP and SG maintained Neutral, and DBK and BARC maintained Underperform.

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Wed, 08/01/2012 - 15:37 | 2669975 Its the Vatican...
Its the Vatican Stupid's picture

Class action bitchez.

Wed, 08/01/2012 - 15:52 | 2670003 Dr Benway
Dr Benway's picture

Macquarie are pretty much clowns though.


They completely missed this, for example:


Bailed out bankster losers, in a game without cheating they are gone.

Wed, 08/01/2012 - 16:58 | 2670116 hedgeless_horseman
hedgeless_horseman's picture



  • DBK lowered by 22% from €30 to €23.5 (also incorporating changes related to today’s 2Q results; 16% lower for Libor-only)


"You've got this klein LIBOR problem handled for us, ja, Angela?  If you need to reach me, I'll be on my Greek island, Krautikos."

The outgoing chief executive insisted Deutsche Bank was "even stronger and more stable than it already was," and he said he was pleased to be able to, "hand over this bank in such outstanding shape to my successors."







There's almost never* been a better time

to finance, or lease, a new

Mercedes Benz or Porsche!


*Rate based on 1 yr LIBOR of 1.06%

Wed, 08/01/2012 - 17:08 | 2670272 Overflow-admin
Overflow-admin's picture

I'd prefer to have your rate based on 3-month LIBOR CHF (*)



(*) 0.06%

Wed, 08/01/2012 - 15:40 | 2669987 ziggy59
ziggy59's picture

Perry Mason reruns!

Wed, 08/01/2012 - 15:46 | 2669991 hedgeless_horseman
hedgeless_horseman's picture



I'd like to go on record, here, with my prediction that exactly zero LIBOR cases will ever go to trial in a courtroom, and any settlement proceeds or fines "paid" will go to governments.

Wed, 08/01/2012 - 15:47 | 2670018 Dr Benway
Dr Benway's picture

Yeah of course.


Noone will ask where the $176 billion came from in the first place, and noone will attempt to return it to the people who would have owned it sans manipulation and Liebor.


Instead, everyone goes "aw shuck", sweep the problem under the rug, pretend nothing is wrong, and continue as before. Ridiculous.

Wed, 08/01/2012 - 18:13 | 2670467 sessinpo
sessinpo's picture

"Noone will ask where the $176 billion came from in the first place"


How about this. In this TBTF world, no one will ask for $176B because the banks can't cover it and it would collapse the financial sector, thus they won't and can't ask for it. Politicians and banks have put themselves in a situation of being sybiotic parasites to the rest of society

Wed, 08/01/2012 - 15:48 | 2670026 ParkAveFlasher
ParkAveFlasher's picture

To be contrarian - there are real non-banker people with real non-fictitious wealth that will not take 10+ years of losses well. 

Wed, 08/01/2012 - 15:55 | 2670044 hedgeless_horseman
hedgeless_horseman's picture



To be contrarian - there are real non-banker people with real non-fictitious wealth that will not take 10+ years of losses well.

We will see...  

"The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests."


-The Rothschild brothers of London writing to associates in New York, 1863.

Wed, 08/01/2012 - 15:51 | 2670046 malikai
malikai's picture

Definitely RICO. But the racket includes the government.

Therefore, it goes nowhere.

Wed, 08/01/2012 - 15:52 | 2670054 JohnKozac
JohnKozac's picture

Shareholders, Muppets and Taxpayers grab you KY Lube......

Wed, 08/01/2012 - 15:54 | 2670058 12ToothAssassin
12ToothAssassin's picture

Way to take a risk and go out on a limb for Libor...

Wed, 08/01/2012 - 16:18 | 2670132 3x2
3x2's picture

I'd like to go on record, here, with my prediction that exactly zero LIBOR cases will ever go to trial in a courtroom, and any settlement proceeds or fines "paid" will go to governments

Yup - too many TBTF's, Central Banks and Governments involved - good luck finding a Court large enough or brave enough to hear the case. I think we are just about to see exactly how much you can get away with when you have a docile population and corrupt emperors managing policemen with rubber bullets. That is assuming that anyone outside the wacky world of finance even cares that they have been robbed. Which I very much doubt.





Wed, 08/01/2012 - 15:41 | 2669992 Linus2011
Linus2011's picture


national banker hanging holidays

Wed, 08/01/2012 - 15:43 | 2669993 swissaustrian
swissaustrian's picture

UBS maintained outperform



The good thing about the upcoming lawsuits is that while those who suffered damages due artificially low libor rates (mainly interest rate swap counterparties) can sue the banks, but those who gained (like mortgage debtors) can NOT be sued by the banks because they KNEW that the rates were rigged (they rigged them themselves) and offered them anyway.

Wed, 08/01/2012 - 15:50 | 2669994 Rainman
Rainman's picture

This will all end up becoming well managed outrage, contrition, wristslaps and a couple hundred million in fines. The road they will take could be driven blindfolded.

Crime pays....again !

Wed, 08/01/2012 - 16:34 | 2670180 pods
pods's picture

Something tells me Sandy Weill's desktop is abuzz with a new OP-ED for the NYT where he skewers the bankers.  

Eventually, the Sandy Weill redemption law will make everything right as rain.

Hear that sound Rainman?

That is the sound of inevitability.  


Wed, 08/01/2012 - 15:42 | 2669995 azzhatter
azzhatter's picture

Can I sue someone?

Wed, 08/01/2012 - 18:15 | 2670474 sessinpo
sessinpo's picture

YOu can sue anyone. Prepare to pay for court costs.

Wed, 08/01/2012 - 15:44 | 2670002 Meesohaawnee
Meesohaawnee's picture



Wed, 08/01/2012 - 15:44 | 2670006 MachoMan
MachoMan's picture

So...  taxpayers pay for this too?  Shouldn't these idiots be able to claim sovereign immunity?  I mean, at least be consistent.

Wed, 08/01/2012 - 15:46 | 2670009 El Oregonian
El Oregonian's picture

Bring in Columbo, he'll figure it out...oh yea, he's dead.

Wed, 08/01/2012 - 15:47 | 2670015 Dr. Engali
Dr. Engali's picture

So does Liebor fall under RICO? Can we prosecute one for a felony and get them all?  Nahh....wake up silly. What was I thinking?

Wed, 08/01/2012 - 16:19 | 2670136 madcows
madcows's picture

Liebor manipulation was known by and approved by the FED and the BOE.  They're not going to jail.  They'll get a promotion and a beach house in the Med.  There are no crimes for those who own the system.

Wed, 08/01/2012 - 16:41 | 2670195 g speed
g speed's picture

but there are lots and lots of cops out there that are losing pensions (and low interest rates are largely the cause for underfunding)--- when they finally get it-- there may be a few accidents befalling the perps.  --just sayin-

Wed, 08/01/2012 - 16:57 | 2670223 3x2
3x2's picture

So does Liebor fall under RICO?

It certainly does. Again, good luck finding anyone willing to bring a case.

Racketeer Influenced and Corrupt Organizations - Hmm... says it all really. Trouble is that defendant (A) makes the law and defendant (B) has its hand up defendant A's arse making (A) say whatever (B) wants. You, as defendant B, simply get (A (who decides what is law and what isn't) to repeal RICO with retroactive immunity before the charges are filed.

Lying, cheating, bastard scammers - (Link) Forget Gold I'm going long on knitting needles - now there's a future you can believe in.

Wed, 08/01/2012 - 15:48 | 2670028 Linus2011
Linus2011's picture

funny to assume they can get justice with these minimal penalties which are paid by giving away a 1-10% of the gains from fraud. all the mentioned mafia banks and bankers are figuring out new ways to do fraud while sitting in court.

it really won't stop until capital punishment is introduced for capital crime: decapitation


Wed, 08/01/2012 - 15:50 | 2670040 JohnKozac
JohnKozac's picture

Dear John Smith, Esq, Chief, Corporate Governance, BBC (Big Bank Corporation)

Will this alter my $23 Million bonus?


Mark Ponzi, CEO, BBC

Wed, 08/01/2012 - 15:50 | 2670045 HAhyperion
HAhyperion's picture

RICO was actually created by the paranoid Tricky Dick to go after his enemies - and a few assorted Mob families - now off spring host/star on reality tv series.  

How low can we go?  

If it were only so true from the boys in Aussieland - but again, will amount to much ado about nothing 

Wed, 08/01/2012 - 15:54 | 2670061 bubbleburster
bubbleburster's picture

I am completely stunned and speechless.

Wed, 08/01/2012 - 15:58 | 2670074 pashley1411
pashley1411's picture

Come'on, get real.   Government employees suing their future employer for fraud.    Rule of law is soooo 20th century, its all about the narrative now.  

Wed, 08/01/2012 - 15:59 | 2670081 edzorino
edzorino's picture

Let me let you in on a little secret - If the losses incurred by banks were as piffling as 176 billion they'd be dancing in the streets. It won't be under 1 trillion dollars all told.

Wed, 08/01/2012 - 16:00 | 2670082 darteaus
darteaus's picture

No need to worry:

After the election and before the new admin gets sworn in, a bill or a clause in continuing funding resolution will limit liability for the banksters.

Wed, 08/01/2012 - 16:05 | 2670102 Bay of Pigs
Bay of Pigs's picture

Something smells....who forgot to take the garbage out?

Wed, 08/01/2012 - 16:05 | 2670103 The trend is yo...
The trend is your friend's picture

That great but what i want to know is where will that 176 billion shakedown from regulators end up?  Foriegn bank accounts? or individuals who suffered from the rigging?  Anyone want to place odds on this one?

Wed, 08/01/2012 - 16:09 | 2670113 Haager
Haager's picture

Is it just me missing some banks named and calculated in this Liebor-issue?

Wed, 08/01/2012 - 16:09 | 2670114 aerojet
aerojet's picture

For some reason, I picture the Joker sliding down a giant pile of cash.  It's all just a big game for sociopaths at this point.  It's not like I can get back all the difference between what I payed in mortgage interest and what I should have paid were the game not rigged.

Wed, 08/01/2012 - 16:52 | 2670219 g speed
g speed's picture

Its not that your interest was high, it is that you (and countless others) paid 5 times to much for that pile of sticks----and did it with low interest as a reason-- I bet --  something very different from the libor fixing benefits that some banks engineered. 

Wed, 08/01/2012 - 16:18 | 2670133 j8h9
j8h9's picture

huh?! I don't understand. Kudlow said Libor rigged rates didn't hurt anybody?

Wed, 08/01/2012 - 17:35 | 2670382 GERxit
GERxit's picture

What's this fuzz about Libor?

Who sues the fucking central bankers who manipulate on a grand scale day in day out???
(Ok, forget the suing, PUT THEM IN JAIL OUTRIGHT!!!)

Wed, 08/01/2012 - 21:11 | 2670808 logicalman
logicalman's picture

Here's an idea.

ANYONE who has had any loan/credit dealings over the past few years could stop paying off everything, as they don't (can't) know what they really owe.

Ask the institutions who 'own' the debt to give an accurate accounting of your debt. If the institution cannot give an honest answer (what are the chances??!!) then how do you know if the debt is valid.

Why would anyone pay off a debt that they don't know is valid?

No legal fees required - better than trying to sue - make the other side do the work.

Thu, 08/02/2012 - 02:47 | 2671256 bigwavedave
bigwavedave's picture

Yeah, lots of people who stopped paying mortgages now live in their cars. LOL

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