Regulators sue JPMorgan, RBS to recover $840 million

Federal regulators have sued JPMorgan Chase & Co. and Royal Bank of Scotland PLC in a bid to recover about $840 million in losses on securities tied to high-risk mortgages that were purchased by five wholesale credit unions that failed in the financial crisis.

The National Credit Union Administration, a federal regulatory agency, on Monday accused the two banks’ securities divisions of misrepresenting how risky the mortgage securities were.

When the value of the securities plunged, that led five corporate credit unions to fail in 2009 and 2010, according to the lawsuit. The credit unions were seized by the agency, which put them into conservatorship and then liquidated them.

The NCUA said it could sue five to 10 other banks in the coming weeks.

 

Prepaid debit card users could soon face higher fees

Millions of poor Americans who use prepaid debit cards could soon face a fee increase.

Under a rule to take effect in July, companies that issue debit cards must reduce the fees they charge retailers. To recoup their lost revenue, banks that offer the cards are raising fees for people who use them.

People who use prepaid debit cards, typically low-income consumers and those collecting government benefits, are supposed to be shielded from the fee hikes. To protect them, the rule provided an exemption: It let companies that issue prepaid cards keep charging retailers higher rates.

But that exemption could take up to a year to enact. In the meantime, card companies will likely charge users of prepaid cards higher fees to recoup the lost revenue.

 

PNC acquiring U.S. assets of Royal Bank of Canada

PNC Financial Services Group Inc. said Monday that it is buying the U.S. retail operations of Royal Bank of Canada and related credit-card assets for $3.62 billion.

PNC said that the transaction will bring its total to 2,870 branches and make it the fifth-biggest among U.S. banks. RBC Bank (USA), based in Raleigh, N.C., has 424 branches and about $25 billion of assets.

It is the second big banking transaction in recent days following the announcement that U.S. bank Capital One Financial Corp. struck a $9 billion deal to buy the online bank of the Dutch financial services company ING.

 

Borders plans July auction, pursues $30 million loan

Borders Group Inc., the bankrupt U.S. bookstore chain, has asked a judge to approve a $30 million loan and plans to hold an auction on July 19.

Borders wants to complete a sale by July 29, according to a filing in U.S. Bankruptcy Court in Manhattan. The company is “encouraged that one of the parties presently negotiating with the debtors will emerge as the successful buyer,” Andrew Glenn, a Borders lawyer, wrote in the June 17 filing.

The Ann Arbor, Mich.-based company has 405 stores after shutting 237.

Najafi Cos., a Phoenix-based private-equity firm, is considering buying Borders and is performing due diligence, a person familiar with the matter said earlier this month.

 

Starbucks CEO to undergo elective surgery on neck

Starbucks Corp. CEO Howard Schultz is undergoing elective surgery later this month for neck pain.

The Seattle-based company did not disclose the type of surgery or exact nature of his condition but said that he injured his neck several years ago and began to experience further discomfort during his book tour this spring.

The procedure will take him out of the office and he will work from home into July as he recuperates.