Romance scams — in which fraudsters latch on to people looking for love — rose by over a fifth in 2023, underlining the growing appeal of this highly manipulative form of fraud to criminals.

Fraudsters often used fake social media pictures and profiles over a long period of time to lure victims. They may make excuses for not being able to meet in person or show their face on camera, but will ask the victim for money under the pretence of needing it for family issues, bills or to travel to meet the victim.

According to trade body UK Finance, these scams can “cause psychological harm and lead to people losing their confidence, their trust, and their sense of security”.

Annual analysis of customer data by Lloyds Bank showed the number of overall cases jumped by 22 per cent on 2022.

Men were slightly more likely than women to fall victim to such scams, making up 52 per cent of cases. But women tend to lose more money: £9,083 on average, compared with £5,145 for men.

Those aged 55 to 64 are most likely to be hoodwinked by romance scammers, with the number of cases in this age group rising 49 per cent compared with 2022. People aged 65 to 74 tended to lose the most money, on average £13,123. However, the average amount stolen for all ages was £6,937, down 16 per cent from the 2022 average.

“Targeting those looking for love is a cruel, but sadly common, way for fraudsters to cash in,” said Liz Ziegler, fraud prevention director at Lloyds Bank. “Scammers can be incredibly convincing and leave their victims both emotionally and financially drained.”

The bank advises individuals to be wary of strangers reaching out over social media or displaying profile pictures that look professional or “model-like”. Seeking advice from friends and family is always a good idea and you should never send money to strangers online or give out personal or financial details.

Experts say this reflects a wider trend in authorised push payment (APP) fraud (which includes romance scams) where criminals are changing their tactics to focus on higher-volume, lower-value frauds after banks improved their ability to detect scams.

“With romance scams in particular, we often see victims making multiple smaller payments over the course of several months or even years,” said Kathryn Westmore, senior research fellow for financial crime at the Royal United Services Institute. “These smaller payments are less likely to be detected by banks than a bigger one-off payment would be.”

From October, victims of APP frauds will be able to claim a maximum of £415,000 from banks and other payment service providers.

Mounting losses from banks in the US, Asia and Europe have rekindled concerns about weakness in the US commercial property market, a sector that has been under pressure from lower occupancy levels and higher interest rates.

Regional US lender New York Community Bancorp on Wednesday revealed it had taken large losses on loans tied to commercial property, while Japan’s Aozora Bank and Deutsche Bank on Thursday warned about the risks from their exposure to US real estate.

The losses mark the latest fallout from the US commercial property market’s dual problems of fewer people working in offices since the pandemic and more expensive borrowing costs.

“We expect evidence of distress to ramp up this year as loan extensions end,” said Kiran Raichura, deputy chief property economist at Capital Economics. “Many borrowers will be forced to either inject new capital, return assets to lenders or sell into a soft market.”

NYCB, whose share price soared last year after it scooped up the collapsed Signature Bank at the height of the crisis among US regional lenders, on Wednesday said it had taken $185mn in losses on just two property loans and set aside more than $500mn to cover potential loan losses.

The revelations shocked investors, sending NYCB’s stock down almost 40 per cent to wipe out its gains since its takeover of Signature. The pressure continued on Thursday, with the stock closing down a further 11 per cent.

The fallout from NYCB weighed on other regional bank stocks, a sector that has not fully recovered from the collapse of Silicon Valley Bank and other mid-sized lenders last year.

Worries about regional banks also sparked a rally in Treasury bonds, a haven bet that typically benefits during moments of market turmoil. The yield on the 10-year note fell to 3.82 per cent, its lowest level in a month, as traders fretted about how possible constraints on lending may affect US growth. 

“The rally in bonds today certainly has to do with fears about regional banks,” said Thierry Wizman, financial market economist at Macquarie. 

Wizman also noted the bond rally may be related to expectations of a response from the Federal Reserve. “The Fed, when confronted with bank balance sheet problems, tends to create liquidity programmes. Those programmes tend to put a bid under bonds, because they favour the use of bonds as collateral against the Fed’s credit,” he said.

Banking analysts said NYCB’s poor results had resulted from factors particular to the lender — especially its move to a higher classification in regulatory oversight because of its larger scale following the Signature acquisition — but cautioned it still served as a reminder of the worries around real estate.

Bank of America analysts wrote in a note that higher losses tied to commercial real estate office exposure “are a reminder of ongoing credit normalisation that we are likely to witness across the industry”.

The ripple effects were felt in Tokyo, where shares in Aozora crashed by their maximum limit on Thursday after it forecast a full-year loss on overseas real estate loans and warned it would take as much as two years for the US office market to stabilise.

Aozora, a mid-sized lender, revised down its previous forecast for a profit of ¥24bn ($164mn) for the financial year ending in March to a net loss of ¥28bn. The profit warning triggered a drop of more than 21 per cent in the bank’s shares, which had been trading close to a five-year high ahead of the announcement.

Deutsche Bank, meanwhile, also lifted provisions for losses on loans linked to US commercial real estate to €123mn, from just €26mn a year before.

The worries around real estate are not limited to the US. Switzerland’s Julius Baer reported a more than 50 per cent drop in its profits on Thursday after it wrote off SFr606mn ($700mn) from its exposure to Signa, the crisis-hit Austrian property group. The losses were steep enough to result in the departure of chief executive Philipp Rickenbacher.

Additional reporting by Kate Duguid in New York

Signing a prenuptial agreement hardly screams romance. On one hand, it could provide engaged couples — and their families — with financial peace of mind. On the other hand, it could prematurely split them up.

The FT’s Money Clinic podcast wants to speak to couples who have signed, or plan to sign, a prenup. How did you broach the conversation with a potential spouse — and how did they react? Did you resent pressure from your family? Or maybe you cohabit with an unmarried partner and are both interested in protecting your personal assets.

Because we feature real-life money stories on the podcast, we only ever refer to our guests by their first names. If you would like to share your experience with listeners, please email money@ft.com.

Julius Baer was hit by a 52 per cent fall in annual profits as the Swiss wealth manager announced it was writing off its SFr606mn ($700mn) exposure to the crisis-hit Signa property group.

The Swiss lender also confirmed the departure of chief executive Philipp Rickenbacher, which was reported by the Financial Times and other media outlets on Wednesday. He will be replaced on an interim basis by his deputy and chief operating officer, Nic Dreckmann.

As a result of the biggest crisis to hit the bank in at least five years, Julius Baer reported SFr454mn of profit in 2023 — down from SFr950mn a year earlier — and earnings per share of SFr2.21, down 52 per cent.

“Speaking on behalf of the entire board of directors, I deeply regret that the full loss allowance for the largest exposure in our private debt business has significantly impacted our net profit for 2023,” said chair Romeo Lacher.

The wealth manager is one of the biggest lenders to Signa, a European luxury developer whose assets include a stake in KaDeWe, Germany’s most famous department store, and in the Chrysler Building in New York.

Julius Baer disclosed in November that the largest exposure in its private debt loan book was to one client — reported at the time to be Signa — and said it was taking a SFr70mn provision against potential losses.

It also said it was reviewing its private debt lending business. Since then its shares have dropped 15 per cent.

On Thursday it confirmed that it was exiting the specialist business, winding down its remaining private debt book of SFr800mn — which accounted for 2 per cent of its total loan book — and refocusing on its traditional areas of credit, such as Lombard lending and mortgages.

Despite the Signa loss, Julius Baer still increased its common equity tier one ratio — an indicator of its financial resilience — from 14 per cent to 14.6 per cent over the year and raised its liquidity coverage ratio from 233 per cent to 291 per cent.

Julius Baer said the five members of the executive board who were involved in credit decisions would be stripped of their 2023 bonuses and other members would have their variable pay “substantially reduced”.

Lacher and members of the board’s governance and risk committee will forgo their share-based fees, while Julius Baer also confirmed an FT report that David Nicol, chair of the committee, would not stand for re-election at the bank’s annual meeting in April.

“The board of directors will focus on reinforcing a strong risk culture, in line with our overarching objective to use our solid balance sheet with the utmost prudence for the benefit of our clients,” Lacher added.

Julius Baer’s chief executive and a board member responsible for risk are leaving the Swiss bank as it prepares to write off SFr606mn ($700mn) on loans to crisis-hit Austrian property group Signa, according to people familiar with the board’s decision.

Philipp Rickenbacher would be replaced as chief executive by Nic Dreckmann, his deputy, and the bank would exit its private debt business, which was the source of the lending to Signa, the people said. Staff who were connected to the business with Signa would receive no bonus for 2023, they added.

The bank’s board met on Wednesday to thrash out plans for emerging from the biggest crisis to hit the wealth manager for five years.

Julius Baer is one of the biggest lenders to Signa, a European luxury developer whose assets include a stake in KaDeWe, Germany’s most famous department store, and the Chrysler Building in New York.

The bank will publish its full-year results on Thursday morning, when the changes are set to be announced.

Julius Baer is also considering legal action to recoup money from Signa, the group run by René Benko that is facing insolvency proceedings. The bank has decided to write off its total SFr606mn exposure to Signa, rather than the SFr400mn that analysts had expected.

Evie Kostakis, the bank’s chief financial officer, and chief risk officer Oliver Bartholet are expected to stay on.

Rickenbacher’s departure was reported earlier by Bloomberg.

A former McKinsey consultant, Rickenbacher became CEO of Julius Baer in 2019 after the departure of Boris Collardi to rival Pictet. Collardi oversaw a rapid expansion of the bank but was later reprimanded by Switzerland’s regulator for a lack of focus on preventing money laundering.

Rickenbacher was drafted in to bring stability to the group, following regulatory probes into the bank’s dealings with Fifa, world football’s governing body, and a separate alleged case of corruption involving Petróleos de Venezuela, a state-owned oil and natural gas group.

But Julius Baer’s exposure to Signa raised questions about whether he could survive the fallout.

Shares in the Swiss bank have dropped 15 per cent since it first revealed its exposure in November, when it said it would review its private debt business.

At the time, Julius Baer said its total private debt loan book amounted to SFr1.5bn, including 21 other counterparties.

David Nicol, a Julius Baer board member who also led its governance and risk committee, is also set to leave, according to people briefed on the decisions. Richard Campbell-Breeden, another director, is expected to be named vice-chair of the board and support chair Romeo Lacher.

The board has brought in a third party to review the bank’s corporate governance, according to people with knowledge of the matter. Swiss financial regulator Finma, which has been investigating Julius Baer’s exposure to Signa, is also stepping up its probe.

Julius Baer declined to comment.

This story has been amended to clarify the circumstances of Boris Collardi’s departure from Julius Baer

A former Perella Weinberg banker received cash and other rewards for sharing confidential information about upcoming deals over a period of 15 years, Frankfurt prosecutors said on the opening day of one of Europe’s biggest insider trading trials.

The banker’s confidant — a 48-year-old German citizen who has been in police custody for the past year — is accused of having traded heavily on the confidential information, allegedly making more than €14mn in profit between 2017 and 2021.

“The defendant obtained special knowledge about potentially rising share prices which he used for transactions on the stock exchange, buying highly leveraged call options and shares of targeted companies,” prosecutors told a panel of five judges on Wednesday.

The case is the result of a sprawling cross-border probe involving searches of premises in Germany, Austria and the UK. Insider trading can be punished with up to five years in jail under German law.

The investigation into the Perella Weinberg partner was dropped when the banker died by suicide two days after his office and home in London were searched, prosecutors told the Frankfurt court. The banker had previously been put on leave by his employer. The former banker and the person on trial in Frankfurt cannot be named for legal reasons.  

The charges against the 48-year-old focus on several corporate finance transactions where Perella Weinberg was a key adviser. Those include Fortum’s acquisition of a majority stake in Uniper in 2017 and Covestro’s 2017 share buyback, the 2018 asset swap between RWE and E. ON, the 2019 bidding war over Osram and the takeover of Deutsche Wohnen by Vonovia in 2021.

On several occasions, the banker forwarded confidential internal documents from his Perella Weinberg email account to a personal Yahoo account, the court heard. Prosecutors said he received cash from his friend in return for the tips, and a stake in a Germany-based start-up worth €150,000 that was paid for by his friend.

The charges state that the defendant was frequently tipped off by the banker in advance of public deal announcements and then built big trading positions, subsequently cashing in substantial profits when the shares shot up.

“He possessed very authoritative information which was much more concrete than what was publicly known at the time, and were the basis for investments that yielded certain profits,” the prosecutors told the judges.

The court heard that the alleged insider trading started as early as 2006, when the investment banker was still working at Deutsche Bank. Under German law, cases that happened before 2017 are too old to be criminally prosecuted, but prosecutors may try to seize illicit proceeds linked to older trades.

The defendant — a former communications specialist — on Wednesday declined to comment on the charges against him. His lawyer Felix Rettenmaier told the court that his client would address the allegations in a “comprehensive statement” next week.

Deutsche Bank declined to comment. Perella Weinberg told the Financial Times that it was “assisting the authorities in their investigation” and stressed that neither the bank “nor any of its current employees” were the subject of the investigation or the German court case.

Santander expects its profitability to improve this year despite concerns about the health of the global economy, as the Spanish bank’s latest quarterly earnings were helped by a strong performance in Europe.

Ana Botín, Santander’s executive chair, said that “despite heightened geopolitical risks and a slowing global economy” the lender expected its return on tangible equity — a key measure of profitability — to rise to 16 per cent this year from 15.1 per cent in 2023.
 
The forecast came as Santander said net profit rose 28 per cent to €2.9bn in the final quarter of 2023 — €200mn ahead of analyst forecasts.

The UK, Spain and Portugal drove its performance in Europe — a region that contributed €1.3bn to net profit — thanks to strong net interest income, the difference between lending and deposit rates.

But the US, where Santander has a big car loan business, performed poorly. Profit dropped 77 per cent to €67mn as the bank was forced to increase loan loss provisions.

Analysts have downgraded forecasts for profits at European lenders in 2024 as expectations grow that central banks will begin to cut interest rates.

But at Santander, where the logic of its broad geographical spread has long been questioned by some investors, the bank’s presence in Latin America — most notably Brazil — is expected to support profits.

Botín championed the benefits of a change to Santander’s structure designed to address some market doubts: its activities will now be divided into five global businesses, including retail and commercial banking, consumer finance and investment banking.

“The countries, of course, will remain accountable, but they will all work towards a common business model,” she said.

The bank said it was targeting “mid-single digit” growth in revenue for 2024.

Russian banks reported record profits last year fuelled by a rush to take out government-subsidised mortgages, as well as a boom in financing to purchase assets being sold by western companies exiting the country.

Despite strict international sanctions intended to isolate the Russian financial system as punishment for its full-scale invasion of Ukraine, its banks generated Rbs3.3tn ($37bn) in 2023, up about 16 times from the previous year, the Russian Central Bank (CBR) said in a report published on Tuesday.

The performance came as “somewhat of a surprise”, said Alexander Danilov, the head of the CBR’s banking regulation department. In March the regulator had estimated profits would be more modest and only “exceed Rbs1tn ($11bn)”.

The record profits are another sign of the relative resilience of the Russian economy despite US and European efforts to hurt it via trade restrictions and other punitive measures. On Tuesday the IMF said it now forecast Russia’s economy to grow 2.6 per cent this year, twice as fast as expected in October.

A large part of the country’s banking sector has been cut off from the Swift international interbank payment system and has little or no access to western capital markets as a result of the war in Ukraine.

A 34.5 per cent surge in mortgages was the primary reason for the jump in bank earnings, driven by a generous government stimulus programme designed to galvanise consumer demand. Subsidised mortgages accounted for more than half of the new home loans.

The CBR’s critical interest rate stands at 16 per cent following five increases that began in July when the rate was 7.5 per cent. It is nearing the all-time high of 20 per cent reached in the direct aftermath of the invasion of Ukraine.

While general interest rates in the Russian mortgage market are about 14 per cent, subsidised home loans are issued at up to 8 per cent — and 6 per cent for young families — with the difference covered by the state budget.

Russian citizens were rushing to take out mortgages either due to the fear that the programme would not be extended beyond the summer, or to quickly invest devaluing roubles in real estate, the CBR report said.

Policymakers and regulators have expressed concerns that subsidised loans are having a counterproductive effect, overheating house prices instead of making housing more accessible and stimulating demand.

Another contributing factor to the domestic credit boom is lending to those purchasing assets from international companies, which have either been forced to sell due to sanctions or which have been expropriated by the state.

Banks’ aggregate corporate credits portfolio grew by more than 20 per cent in 2023, with Rbs500bn of new loans related to the deals with foreign companies leaving Russia, according to the CBR report.

Lenders’ capital and balance sheets were also flattered by a reduction in risk costs due to the relaxation of regulatory requirements and a significant currency revaluation, the report added.

“The banking sector looks stable and I do not see any red flags at the moment,” said Alexandra Prokopenko, a non-resident fellow at Carnegie Russia Eurasia who previously worked for the CBR. “The sector is accumulating money again. Should the Russian economy face another external shock, it will have buffers that can be deployed — and the government will not have to spend money to bail it out.”

Freshfields Bruckhaus Deringer’s former global head of tax Ulf Johannemann was found guilty of aiding and abetting a multiyear dividend tax fraud and sentenced to three years and six months in jail in a landmark ruling by a Frankfurt court.

Johannemann, who until 2019 was the “magic circle” firm’s most senior tax partner, had been on trial since September over advice given to Maple Bank, a defunct German subsidiary of Canada’s Maple Financial.

From 2006 to 2009, Maple reclaimed more than €388mn in dividend taxes it never paid. Johannemann had issued legal opinions stating that those so-called cum-ex deals, which exploited a design flaw in the German tax code, were lawful.

The trial was the highest-profile yet stemming from the long-running cum-ex scandal, which cost German taxpayers €10bn according to an estimate by Finanzwende, a consumer protection lobby group.

Announcing the verdict and sentence on Tuesday, Werner Gröschel, the presiding judge, told the court it was “perfectly obvious” and “beyond doubt” that Johannemann’s legal advice had been fundamentally flawed.

The fraud centred on share deals executed before and after a stock’s dividend payments that duped governments to reimburse taxes that were never paid in the first place.

Maple Bank’s cum-ex transactions were equivalent to “organised [financial] crime”, Gröschel said, adding that they were highly organised, took part over several years and led to “ludicrous” financial damage.

The aim of the transactions, said Gröschel, was not just to cut the amount of tax paid but to steal from the government. Johannemann’s legal advice was “a central contribution” to that crime, he added.

“Paying [a tax] once but reclaiming [it] twice just does not work,” he said, and that “a halfway talented elementary school pupil” was able to understand that concept.

The sentence was below the five-and-a-half years in jail that prosecutors had sought for Johannemann, who joined Freshfields as a junior lawyer in his thirties. His lawyer had called for a suspended jail term of fewer than two years.

During the trial, Johannemann acknowledged he had “glossed over the fact that my legal advice was used for illegal means”, and said he had “totally failed” as a lawyer. The judge took issue with that assessment, saying that he was certain Johannemann had been aware of all relevant details of the fraudulent transactions when giving his advice.

In his ruling Gröschel also took aim at Freshfields, accusing the tax practice of one of the world’s most prestigious law firms of having developed “its own business model” that specialised in giving affirmative advice on cum-ex transactions. The fees the law firm generated from such business were “almost ridiculously low”, he said.

Johannemann’s conduct had severely damaged the firm’s reputation, the judge said. He stressed that “many colleagues” at Freshfields were “doing a really good job” in other areas of law but were “measured by the same yardstick” as Johannemann in the court of public opinion.

Freshfields was not a defendant in the trial, having struck a €10mn deal in 2021 to settle criminal allegations, and paying €50mn to the administrator of Maple Bank to settle a civil lawsuit.

“We take our commitments to risk management, compliance, and ethical business seriously and we continuously seek to improve our systems,” Freshfields said in a statement on Tuesday. “We will of course consider today’s judgment carefully to understand what further lessons may be drawn.”

Gröschel said the wider message to be drawn from the verdict was that lawyers should become less obsessed with meeting every possible client demand. “The clients’ wishes must only be taken into account if they are really legally tenable,” said Gröschel.

A lawyer for Johannemann declined to comment on the verdict. Under German law, the court’s verdict is not yet legally binding and can be appealed by the defendant.

UK financial regulators have fined HSBC £57.4mn for “serious failings” in safeguarding the deposits of some customers over a period of seven years.

The BoE’s Prudential Regulation Authority said on Tuesday that it was imposing its second-biggest fine after HSBC failed to correctly identify customer deposits eligible for protection under the Financial Services Compensation Scheme between 2015 and 2022.

Under the scheme, banks are required to ensure they have systems and controls in place to help regulators identify those customers who would be eligible for up to £85,000 in protection in the event of a bank failing.

The regulator said the bank’s mis-steps were “so significant” that it had “materially undermined the firm’s readiness for resolution”. HSBC had also “failed to be duly open and co-operative” with the watchdog in not alerting it for about 15 months about problems it had identified in the incorrect marking of accounts as “eligible” for FSCS protection.

Sam Woods, chief executive of the PRA, said: “The serious failings in this case go to the heart of the PRA’s safety and soundness objective . . . [HSBC’s subsidiary] fell far short of its obligations in this area, and failed to disclose its failings to us in a timely manner.”

The fine was reduced by 45 per cent because of HSBC’s co-operation in the investigation. It was the PRA’s second-largest penalty after an £87mn fine imposed on Credit Suisse last July for “significant failures in risk management and governance” linked to its exposure to collapsed hedge fund Archegos Capital.

Among several failings laid out by the regulator, HSBC incorrectly marked 99 per cent of eligible beneficiary deposits at its non-ringfenced UK bank as “ineligible” for consumer protection.

The bank also provided an incorrect confirmation to the PRA that its systems met certain requirements of the scheme, the regulator said, adding that HSBC had failed to ensure that a senior manager was responsible for these processes.

HSBC also failed to produce finalised versions of annual reports required to be signed by its board of directors that confirmed compliance with the requirements of the deposit scheme.

In a statement, HSBC said it was pleased to resolve the matter: “The PRA’s final notice recognises the bank’s co-operation with the investigation, as well as our efforts to fully resolve these issues. We continue to remain focused on serving our customers.”