NEW YORK (TheStreet) -- The Libor-fixing scandal has yet to significantly impact shares of Bank of America (BAC), JPMorgan Chase (JPM)or Citigroup (C), though the threat is likely to hang over the companies for several months at the very least.
"We're not sure this potentially large problem is 'fully priced in' just because it's received a bunch of press so far," wrote analysts at Nomura in a 21-page research report published Thursday, which attempts to assess the potential impact of the scandal.
Since Barclays (BCS) settled with U.S. and U.K. regulators June 27, its shares are down some 16%, while shares of the remaining 22 Libor-setting banks as a group are roughly flat. JPMorgan, Citigroup and Bank of America have underperformed the Financial Select Sector SPDR (XLF)by about 4% during that same time period, according to Nomura research.
Richard Staite, London-based U.S. banking analyst at Atlantic Equities, attributes the plunge in Barclays shares largely to the fact that the scandal forced out company CEO Bob Diamond, Chairman Marcus Agius and chief operating officer Jerry del Missier."I would be fairly surprised if a CEO of a U.S. bank were to be forced to resign," Staite says, arguing anti-bank sentiment is stronger in the U.K. "In the U.K. you've got both main political parties and even senior regulators who all are taking quite a harsh line against the banks in terms of the proposals to separate retail and investment banking, whereas in the U.S., at least, I think the Republican party is if anything pushing back against more regulation so I think you've got a more balanced approach over there," he says. Barclays may also suffer from what Reuters' Felix Salmon calls "first-mover disadvantage ."Salmon and Wayne State law professor Peter Henning in The New York Times simultaneously argued in October 2011 that Citigroup behaved at least as badly as Goldman Sachs (GS)in selling complex securities to investors without disclosing that it was betting against them. Still, Citi settled its case for a lesser amount than Goldman and avoided the months of public outrage endured by its rival. However, one can't be sure the Libor-fixing scandal will play out in the same way.
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