Lira devaluation reduces cost of BBVA's Garanti bid; EC fines banks' FX cartel

S&P Global Market Intelligence offers our top picks of banking news stories and more published throughout the week.

BBVA's Garanti bid benefits from lira devaluation

Spain-based Banco Bilbao Vizcaya Argentaria SA CEO Onur Genç said Nov. 29 that the devaluation of the Turkish lira had reduced its price to acquire the remaining 50.15% stake in Turkiye Garanti Bankasi AS by more than €400 million, Reuters reported.

The Spanish lender had offered to buy out the remaining stake of the Turkish bank that it does not already own for up to 25.70 billion lira. However, the lira has seen further devaluation since the offer announcement after Turkish President Recep Tayyip Erdoğan defended his low-rates policy.

The Turkish operations contributed 14% to BBVA's group net profit in the first nine months of 2021. Pro forma including the whole of Garanti, this would rise to 24.6%.

Law & regulators

* The European Commission fined HSBC Holdings PLC, Credit Suisse Group AG, Barclays PLC and Royal Bank of Scotland Group PLC a combined €261 million for participating in a foreign exchange spot trading cartel. Swiss bank UBS Group AG, which revealed the existence of the cartel, received full immunity and avoided a roughly €94 million fine, while U.K.-based peers HSBC, Barclays and NatWest Group received reduced fines for cooperating with the investigation. HSBC was hit with the largest fine at €174.3 million.

* The U.S. Department of Justice ended a sanctions violations criminal case against Société Générale SA after it complied with the terms of a three-year deferred prosecution agreement, Reuters reported. The French bank in 2018 agreed to pay $1.34 billion to resolve claims related to the case, marking the second-largest sanctions violations payout made by a bank, the news wire noted.

* Sareb, Spain's so-called bad bank, has taken legal action against CaixaBank SA and Banco de Sabadell SA to recover negative interest payments on a €34.5 billion senior debt portfolio, Reuters reported. Sareb is seeking to remove a 0% floor on debt issues and charge negative interest payments from the banks.

* The Italian Treasury is in talks with EU officials about potentially extending by more than two years the 2021 deadline for the state to cut its 64% stake in Banca Monte dei Paschi di Siena SpA, insiders told Reuters. An extension will help to plug the bailed-out bank's €2.5 billion capital hole, and sources said the Treasury will implement some other measures such as shifting a large number of bad loans to the state debt manager.

* Russia's central bank will consider raising its key rate from 7.5% by as much as 100 basis points at its Dec. 17 policy meeting as inflation continues to run at the high end of its forecast, Bloomberg News reported, citing Governor Elvira Nabiullina. The country's inflation rate is hovering at 8%, its highest level since January 2016, and is double the central bank's target.

Earnings

* Greek lender Alpha Services and Holdings SA reported a third-quarter net loss attributable to equity owners of €171.3 million, compared to a net profit of €95.7 million in the previous quarter. Impairment losses on loans widened over the period to €437.0 million from €127.9 million, mainly due to transactions of bad loan portfolios Cosmos and Orbit.

* Bank of Cyprus Holdings PLC posted a statutory posttax profit attributable to owners of the company of €19.6 million in the nine months to Sept. 30, swinging from a year-ago loss of €121.6 million. Credit losses for credit risk on loans and advances to customers declined year over year to €30.4 million from €211.3 million.

Branch and job cuts

* UniCredit SpA is planning to cut about 3,000 staff globally, mostly at its corporate center, sources told Bloomberg. The fresh round of cuts will be on top of the 3,900 set to be implemented under the Italian lender's previous strategic plan.

* U.K.-based TSB Banking Group PLC plans to shut 70 more branches by the end of June next year, a move that will leave the unit of Spain's Banco de Sabadell with just 220 branches compared to 475 more than a year ago, BBC News reported.

In other news

* The Bank of London, a clearing bank, launched in the U.K. with a valuation of $1.1 billion. The company raised $90 million from its recent funding round and plans to hire more than 3,000 staff across the U.K., the EU and North America over the next five years.

* UBS Group is launching its private client offering My Way in Italy and Germany after rolling out the product in Switzerland early last year, finews.com reported.

Featured during the week on S&P Global Market Intelligence:

European banks' Q3 profits rebound as provisions decline: The biggest banks in Europe booked significantly lower loan loss provisions in the third quarter, largely due to reduced downside risks as economies rebound from a coronavirus-prompted downturn, S&P Global Market Intelligence data shows.

German, Swiss banks among least efficient in Europe during Q3: Deutsche Bank, Credit Suisse, Commerzbank and UBS had the highest cost-to-income ratios in the European banking industry in the third quarter, S&P Global Market Intelligence data shows.