Banks review advisers as legal costs hit profits

Money is being knocked out of banks like a papier-mâché piñata. A piñata that’s been walloped by a proverbial bat labelled Legal Costs, over and over again.

But we’re not talking chocolate money in this game. Not long after US banking giant JP Morgan reported a quarterly loss after taking a $9.2bn (£5.8bn) hit in legal fees, Deutsche Bank reported a significant drop in its third-quarter profits after setting aside €1.2bn (£1bn) to cover legal costs. For the latter that brings Deutsche’s total reserves for litigation to €4.1bn, so a piñata might be needed for the person opening that bill.

Elsewhere, banks are looking to save the coins by reviewing their use of external firms. Japan’s largest bank, the Bank of Tokyo-Mitsubishi UFJ, is in the closing stages of establishing its first ever UK legal panel, while Citigroup will announce details of its eagerly-awaited revamped panel early next month. The banking giant is expected to show some existing advisers the door.

Back to that piñata.

 

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