Will Trump halt the hounding of UK and European banks? Don’t bet on it

President Donald Trump is demolishing his predecessor’s legacy as fast as he can sign executive orders, but one thing for which the Obama administration will be remembered is its zest for imposing fines on UK and European banks. In a flurry of Department of Justice activity ahead of the transfer of power, Deutsche Bank agreed to pay $7.2 billion and Credit Suisse $5.3 billion for misleading investors in mortgage-backed securities before 2008, while Deutsche also copped a $630 million penalty (from UK as well as US regulators) for alleged money-laundering on behalf of Russian clients.

Meanwhile, Royal Bank of Scotland set aside another $3.8 billion, making a total provision of $8.3 billion towards an eventual settlement for mis-selling which many observers expect to exceed that figure by a distance and eat a big chunk of the crippled lender’s shrunken net worth. And Barclays, having refused to settle on the DoJ’s terms, awaits its day in court.

This was never entirely about scape-goating foreigners. There have been giant penalties on US banks too: $17 billion for Bank of America, $5 billion for Goldman Sachs. But this column reported in 2014 a conspiracy theory that ‘the hounding of non-US banks by the DoJ… has a more sinister foreign-policy impetus behind it’: namely, an attempt at that time to bring Europe into line on sanctions against Russia.

The case in point was a $9 billion fine on BNP which — so Vladimir Putin claimed — might have been negotiable if France had agreed to cancel a contract to build two assault ships for the Russian navy. More recently, French presidential candidate François Fillon has urged Angela Merkel to join him in confronting Trump over the ‘unilateralism’ of US fines on European banks.