TOP NEWS IN EUROPEAN FINANCIALS
* U.S. banks Goldman Sachs Group Inc. and JPMorgan Chase & Co. are winding down their operations in Russia amid the ongoing invasion of Ukraine, Dow Jones Newswires reported. Goldman Sachs has said it only had roughly $1 billion of exposures to Russia at 2021-end, while JPMorgan's presence in Russia is relatively small as Russia has not been in the top 20 countries the bank operates in since 2015, the news wire noted.
* The ECB announced plans to conclude its asset purchase program in the third quarter and its pandemic emergency purchase program at the end of March. The regulator said it could still revise the schedule of the quantitative easing, or QE, program in terms of size and/or duration if the medium-term inflation outlook changes. The ECB also held the interest rate on the main refinancing operations at zero. President Christine Lagarde ruled out any rate hikes until the QE program ends and said that any increase will be gradual.
➤ Russia's foreign exchange constraints add to pressure on domestic banks
A large portion of the Russian central bank's reserves are being held in countries that have implemented sanctions following the invasion of Ukraine.
➤ Top investors in Russia's Sberbank, VTB Bank face billions in losses
Shares in Russia's two largest banks have plummeted following the country's invasion of Ukraine and subsequent economic sanctions, leaving institutional investors exposed to sizeable losses.
➤ Asset quality at most big European banks improves in Q4'21
Italian lender BPER Banca's asset quality improved the most among big European banks in the fourth quarter of 2021, while two of the region's five largest banks saw an increase in problem loans.
READ MORE about the market reaction and industry impact of the evolving situation in Russia and Ukraine in our new Issue in Focus.
BANKING
* Deutsche Bank AG outlined new financial targets, including a return on tangible equity by 2025 of more than 10% and capital returns totaling up to around €8 billion in respect of 2021 to 2025. The German bank also pledged to distribute half of its attributable net income in 2025 and beyond. The targets also include average annual revenue growth of between 3.5% and 4.5%, which translates to annual revenues of roughly €30 billion in 2025, CEO Christian Sewing said in a statement.
* Credit Suisse Group AG intends to cut by 49% its exposures to the oil, gas and coal sector by 2023, it said in its 2021 sustainability report. The Zurich-based bank has faced investor calls to outline how it plans to align its business with the goals of the Paris Agreement on climate change.
* Credit Suisse slashed by 27% the total 2021 compensation pool for its executive board to CHF38.6 million in the wake of costly scandals that marked the year. CEO Thomas Gottstein, in his first full year at the helm, received CHF3.8 million in total compensation, down 43% from CHF6.5 million in 2020.
* Greece-based Eurobank Ergasias Services and Holdings SA swung to a fourth-quarter 2021 net profit of €112.4 million from a year-ago loss of €133.7 million. It also unveiled a new strategy through 2025, whereby it targets average annual EPS growth of roughly 13%, a return on tangible book value of 10% per year and a roughly 20% payout ratio for dividends in respect to 2022, among others.
* Credito Emiliano SpA's fourth-quarter 2021 net profit rose year over year to €76.6 million from €62.4 million. The Italian bank noted that the figure included contributions from Cassa di Risparmio di Cento SpA, which was incorporated into the group in July 2021.
* Spanish online bank WiZink Bank SAU decided to cancel the planned sale of its flexible payment business Aplazame after initial interest by companies such as Banco Bilbao Vizcaya Argentaria SA and Banco Santander SA waned due to high sale price expectations by WiZink owner Värde Partners, Expansión wrote.
* Dutch bank ING Groep NV is facing a criminal investigation into its money laundering policy in Luxembourg, Het Financieele Dagblad reported.
* Russian banker Igor Kim agreed to sell Czech lender Expobank CZ a.s. to a consortium including Latvia-based Signet Bank AS and U.S. investors, with the transaction pending approval by the Czech central bank, Expobank CZ said. Financial details of the transaction were not disclosed. Signet Bank earlier purchased Latvia-based AS Expobank, also controlled by Kim.
FINANCIAL SERVICES
* Danish digital banking app Lunar A/S raised €70 million in the second part of a series D investment round, Børsen reported. The company, which already raised €1.56 billion in the first part of the funding round, said it will use the fresh capital to continue its expansion in the Nordics.
* U.K.-based Funding Circle Holdings PLC is permanently closing its retail platform to new investments. Funding Circle was the last of the big companies to exit peer-to-peer lending as the once-promising sector faced governance issues exacerbated by the COVID-19 pandemic, The Times of London noted.
POLICY AND REGULATION
* The European Securities and Markets Authority, or ESMA, recommended that the Cyprus Securities and Exchange Commission, or CySEC, pour in more resources into its supervision after it was found to have insufficient oversight of cross-border services. CySEC said it has taken steps in line with the recommendations, noting that the review covers the two years to August 2020 so does not reflect changes implemented since, according to Reuters.
* The ECB will extend its Eurosystem repo facility for central banks, or EUREP, until Jan. 15, 2023, citing the "highly uncertain environment" spurred by the Russia-Ukraine war. Created in June 2020, EUREP serves as a precautionary facility providing euros to central banks outside the eurozone, Bloomberg News noted, adding that the backstop is supposed to expire at March-end.
* Switzerland-headquartered Bank for International Settlements is removing the Russian central bank's access to its services, meetings and other activities after it was sanctioned amid the ongoing war in Ukraine, a spokesperson told The Times of London.
Deza Mones, Daniel Stephens, Meike Wijers, Esben Svendsen, Beata Fojcik, Yael Schrage, Brian McCulloch, Sophie Davies and Nelson Siqueira contributed to this report.
The Daily Dose is updated as of 7 a.m. London time. Some external links may require a subscription. Links are current as of publication time, and we are not responsible if those links are unavailable later.
