GameStop saga puts order flow payment under scrutiny; KBC eyes more M&A

Sector Spotlight: Global Financials is a weekly summary of exclusive banking, financial services and insurance industry news and analysis from S&P Global Market Intelligence.

US and Canada

* Regulators zero in on payment for order flow in GameStop aftermath

Lawmakers and regulators have recently begun pressing for details about the intricate and controversial structure of payment for order flow, which has become a key revenue source for some retail brokerages, in the wake of the GameStop Corp. saga.

* States' progress on fintech rules poses challenge for new federal regulators

Financial technology companies may find it more difficult to obtain national bank charters as President Joe Biden's incoming appointees consider whether federal regulation should supplant the frameworks some states have put in place.

* BlackRock heading to net-zero but holds large fossil fuel investments for now

The world's largest asset manager is increasing pressure on companies to prepare for a net-zero emissions future, but critics say BlackRock Inc. still has a ways to go to improve its approach to climate change issues.

Latin America

* Probability of default falls to pre-pandemic levels in Brazil and Mexico

While risks remain on the horizon, listed companies in Latin America's two largest economies are expected to benefit this year from vaccine rollouts and less stringent lockdowns.

* LatAm banks set to begin normalizing dividends in 2021

Most lenders in Latin America's six largest economies that withheld dividend payouts in 2020 to shore up their capitalization will begin to normalize distribution in 2021.

Europe, Middle East and Africa

* ECB has acted over banks' highly leveraged loan exposures, says EnriaFed's tailored approach to European banks will level playing field in US

The European Central Bank has watched banks' search for yield in the leveraged loan market with increasing concern as more loans push boundaries while the coronavirus pandemic forces pace on transactions.

* KBC ready for more M&A deals after NN Bulgaria acquisition

Fresh from its acquisition of Dutch insurer NN Group NV's Bulgarian pension and life business, KBC Group NV is prepared to look at more M&A deals, according to KBC Group CEO Johan Thijs.

* Commerzbank's cost of risk could reach €1.2B in 2021

Commerzbank AG CFO Bettina Orlopp said "uncertainty" about the economy was behind the bank's cost of risk estimate as it projected a "tough" first quarter due to Germany's latest lockdown.

Asia-Pacific

* Vibrant tech hub in Southeast Asia seen as hot SPAC hunting ground in 2021India plans bad bank for state-run lenders, effectiveness remains to be seen

Southeast Asia, where the technology startup scene thrives on economic growth and a chronic need to boost financial inclusion, is fertile ground for acquisitions for listed blank-check companies in 2021, analysts say.

* Mandatory climate-risk disclosure to pose challenges for Hong Kong fund managers

Uneven proficiency in assessing climate-related risks and transparency of portfolio companies will pose challenges for many fund managers in Hong Kong as the city is about to make environmental disclosures mandatory, experts say.

* Singapore's DBS expects loans and deposit momentum to sustain in 2021

DBS Group Holdings Ltd. may be set for a stronger 2021 as it expects the recent business momentum to sustain with the economic recovery, after higher allowances and margin erosion caused a 33% year-over-year fall in its 2020 fourth-quarter net profit.

Global Insurance

* Allstate raises homeowners rates across US in 2020

Allstate Corp. could see homeowners premiums increase of $222.3 million in 43 states from insurance rate-hike approvals in 2020, while the approved rate cuts for State Farm Mutual Automobile Insurance Co. could lower its calculated premiums by $59.5 million.

* Progressive hikes, State Farm cuts commercial auto rates in Q4'20

A single 5.7% rate increase approved for a Progressive Corp. subsidiary in Texas could boost the group's written premiums by $33.9 million by itself.

* GuideOne latest specialty P&C insurer to pursue mutual conversion

A public hearing will be held on Feb. 17 to consider the latest reorganizations among P&C companies, which would have GuideOne Mutual Insurance Co. and GuideOne Specialty Mutual Insurance Co. become stock subsidiaries of an intermediate holding company formed under the newly established GuideOne Mutual Holding Co.