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The Zacks Analyst Blog Highlights: Deutsche Bank, Barclays PLC, Lloyds Banking Group, Royal Bank of Scotland, Rabobank and UBS Group

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For Immediate Release

Chicago, IL – August 21, 2017 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includeDeutsche Bank AG (NYSE: (DB - Free Report)  – Free Report), Barclays PLC (NYSE: (BCS - Free Report)  – Free Report), Lloyds Banking Group plc (NYSE: (LYG - Free Report)  – Free Report), The Royal Bank of Scotland Group plc (NYSE: (RBS - Free Report)  – Free Report), Rabobank and UBS Group AG (NYSE: (UBS - Free Report)  – Free Report).

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Here are highlights from Friday’s Analyst Blog:

The Federal Deposit Insurance Corporation (FDIC) recently sued six major international banks and British Bankers’ Association, the trade group which supervises the Libor-setting process, accusing them of deceptive misrepresentation. The banks have been accused for ‘lowballing’ in the London court after a similar lawsuit was dismissed in the federal court of New York due to lack of jurisdiction last year.

Notably, lowballing means submission of artificially low estimates to the Libor rate-setting process, which misrepresents increased creditworthiness of these companies. FDIC accused banks for lowballing between 2007 and 2009, which showed them more creditworthy than they actually were.

The list of accused banks includes — Deutsche Bank AG (NYSE: DBFree Report), Barclays PLC (NYSE: BCSFree Report), Lloyds Banking Group plc (NYSE: LYGFree Report), The Royal Bank of Scotland Group plc (NYSE: RBSFree Report), Rabobank and UBS Group AG (NYSE: UBSFree Report). These banks have been charged with allegations on behalf of 39 failed U.S. banks which suffered due to such malpractices. Per the allegations, these U.S. banks considered manipulated LIBOR while carrying out derivative transactions and calculating interest for which they suffered huge losses.

Among above-mentioned banks, UBS Group AG and Lloyds carry a Zacks Rank #2 (Buy), while RBS and Deutsche Bank carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, the amount of losses is yet to be disclosed as the scale of lowballing has not been determined by the FDIC. Though the lawsuit in London has not quoted any value, the FDIC’s New York lawsuit has sought damages around $1 billion.

LIBOR is a widely accepted benchmark rate. Several financial institutions, mortgage lenders and credit card agencies lay down their own rates in relation to this. Derivatives and other financial products are connected to this rate.

Therefore, manipulation of benchmark interest rates by major financial institutions has triggered thorough investigations by regulatory bodies across Europe, Asia and America. Investigations revealed huge scams, with nearly $300 trillion of loans, mortgages, financial products and contracts being linked to the tampered interest rates.

Lloyds said in a statement, “We do not believe the claim has any merit and is being contested vigorously.”

Further, the other banks, the BBA and the FDIC refrained from comments.

Regulatory authorities are investigating the matter and plan to put forward a landmark judgment, in a bid to curb the occurrence of such shrewd practices in future, bring justice to the sufferers and punish the wrongdoers. While the settlements will put to rest a long-drawn investigation and banks can breathe relief, this comes as a huge blow to their financials. Further, such settlements could be called exemplary and trigger similar settlements by other banks depending on the charges against them.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit information about the performance numbers displayed in this press release.

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