Taymour Bouran's Blog

The Unethical Behaviour Being Done by the Investment Banks in the UK.

The article “UK-based banks accused of massive mis-selling in Italy” discusses the current economic issues Italy is facing due to the unethical practice of the investment banks based in the UK. Nomura, UBS and Deutsche Bank are three examples of the investment banks that have been conducting such unethical practices.

Basically any region or city in Italy, for example Milan, issued a bond to the UK investment banks. However when the investment banks would offer repayments to the city (which are called ‘swaps‘) from that bond, they would have hidden taxes that would have to be paid. The taxpayers have no choice but to pay these taxes (or “complex derivative bets”) because they were ‘hooked on the deal’ from the very start which was issuing the bond.

What I see here is the classic bait and switch, where the the business (UK investment banks) are enticing customers (Italy) and drawing them by using misleading advertisement; the amazing interest rate deals. A bait and switch is a highly unethical marketing method which has dropped Italy’s economy by 0.8% between April and June. And I believe it will continue to decrease even further.

Find the video of Joe Lynam’s full report: http://www.bbc.co.uk/news/business-19545849