Shares in Barclays have fallen heavily on news that New York's top securities regulator has sued Barclays over ''dark pool'' trading. As David Pollard reports, it's not the only European bank suffering at the hands of US authorities.
The aftershocks of the banking crisis keep coming. Barclays shaken again - this time by allegations of fraud. The bank told clients it would get the best price possible for their trades. Instead directing many to its own so-called 'dark pool' - a secretive trading forum where participants are anonymous. That's according to the New York state attorney general. He says Barclays gave false assurances over their dark pool. Telling clients they were protected from high-frequency traders - using sophisticated technology to deprive other investors of small profits on their trades - when they weren't. The reports drove Barclays shares down around five per cent. And raise questions over efforts to shrink its investment bank whilst retaining core businesses. Christopher Wheeler is a banks analyst with Mediobanca. SOUNDBITE (English) Christopher Wheeler, banking analyst, Mediobanca, saying: ''One of the core business is equities, and the dark pool operates within that business and so this will raise question marks over how much this will disrupt this very important strategic initiative that's in place at the moment.'' BNP Paribas is also in the crosshairs of the New York authorities. The latest twist in its saga: it could face a ban on processing some dollar payments. It's all part of an investigation into allegations it evaded US sanctions on Sudan, Iraq and Cuba. It's expected to face a fine of nine billion dollars as early as next week. It's thought a ban would be a condition for not revoking its licence in New York, where it's estimated to clear hundreds of billions of dollars every day. One option for BNP could be to ask other banks to facilitate payments on its behalf - if those banks are willing. SOUNDBITE (English) Christopher Wheeler, banking analyst, Mediobanca, saying: ''Hopefully, that would mean that would have only a minor impact. The only question is reputationally whether certain banks would feel they couldn't operate or be a counterparty to BNP given obviously the fact that they have been involved in this whole issue around breaking sanctions.'' And a profit warning from Standard Chartered won't be boosting sentiment towards the sector, either. It says earnings will be down by about a fifth in the first half this year compared to a year ago. It blames a slump in income from its financial markets business, hurt by low volatility - and tougher regulations. As for Barclays, it says it's taking the allegations ''very seriously''.