TOP NEWS IN EUROPEAN FINANCIALS
* In a state of the nation speech July 12, Spanish Prime Minister Pedro Sanchez unveiled plans to impose a temporary tax on large banks and energy companies from 2023 to 2024 to help the country cope with surging inflation, Bloomberg News and Reuters reported. The levies on banks are expected to rake in about €1.5 billion per year. Shares in the country's biggest banks including Banco Bilbao Vizcaya Argentaria SA and Banco Santander SA declined following the announcement. Expansión also covered this.
* Iqbal Khan will become sole president of UBS Group AG's global wealth management division, effective Oct. 3, following Tom Naratil's decision to step down as co-head of the business and president of UBS Americas. In addition, Naureen Hassan will become president of UBS Americas and CEO of UBS Americas Holding LLC, joining the Swiss group from the Federal Reserve Bank of New York, where she served as first vice-president and chief operating officer. UBS said Hassan will "lead the firm's strategic growth and digital initiatives in the Americas region."
➤ Hungarian banks to suffer major profit blow from new windfall tax
Hungary has followed Poland in increasing financial pressure on local lenders amid the ongoing monetary tightening cycle, and spillover effects on other central and Eastern European countries cannot be ruled out, according to analysts.
➤ Dutch bank ING could exceed revenue target amid rising rates
The Dutch banking group's net interest income would reach about €15.8 billion in 2025, according to consensus analyst estimates compiled by S&P Global Market Intelligence, implying more than 16% growth from 2021.
READ MORE about the market reaction and industry impact of the evolving situation in Russia and Ukraine in our new Issue in Focus.
BANKING
* Credit Suisse Group AG has postponed the initial public offering of its 1a Immo PK real estate fund, which was scheduled for the fourth quarter, citing current market conditions and high volatility in the real estate market. The Swiss bank said there will be a reassessment of the situation and further plans will be given in due course.
* Banca Monte dei Paschi di Siena SpA CEO Luigi Lovaglio said initial feedback from investors on the Italian lender's new strategic plan and planned €2.5 billion capital increase has been generally positive, Reuters wrote.
* Germany's cooperative banks expect worse results this year compared to 2021, when they made a cumulative pretax profit of €10.5 billion, mainly due to the rise in interest rates and the weakening economy, Handelsblatt wrote, citing Andreas Martin, board member of the Association of German Volksbanken and Raiffeisenbanken. Börsen-Zeitung also covered this.
* The U.S. Office of Foreign Assets Control issued a license extending the term for completing transactions with Sberbank of Russia's Kazakh unit for an additional three months ending Oct. 11, according to Kazakhstan's Agency for Regulation and Development of Financial Market. The previous license was issued by the OFAC in April, after the U.S. imposed full blocking sanctions on Sberbank and its units over Russia's invasion of Ukraine.
FINANCIAL SERVICES
* France's Groupe BPCE and startup Swile are in exclusive negotiations over a potential merger between the latter and Bimpli, a subsidiary of Groupe BPCE, according to Les Echos and L'Agefi. Under the proposed deal, Swile would own 100% of Bimpli, while Groupe BPCE would become Swile's largest shareholder with a 22% stake.
POLICY AND REGULATION
* The European Union's Single Resolution Board, the authority that deals with failing banks, will ramp up pressure on lenders to boost their capital levels so that none will remain "too big to fail" by January 2024, Reuters reported. SRB Chair Elke König said all banks have made good progress in meeting their minimum requirement for own funds and eligible liabilities, or MREL, targets, with the shortfall in the special debt issuance by banks declining to €32.6 billion, or 0.45% of total risk exposure.
* The circulation of the proposed digital euro could be capped to mitigate the possible risks of banks' deposit conversions, European Central Bank policymaker and French central bank Governor François Villeroy de Galhau said in a speech. De Galhau said the digital euro should be kept as a means of payment rather than a saving or investment asset. The French central bank will carry out the second testing phase of the central bank digital currency this second half, with use as a settlement asset expected as early as 2023.
* Russia is looking to regulate Islamic banking, with relevant bills expected to be submitted to the country's State Duma in the next few days for discussions during the fall session, Kommersant reported. Islamic banking services would be provided by a new type of non-credit financial institution that would be overseen by the Russian central bank, the newspaper said, citing one of the bills.
INDUSTRY NEWS
* David Roberts, former chairman of Nationwide Building Society and current chairman of insurer Beazley PLC, is the frontrunner for the chairmanship of the Bank of England's Court of Directors, which plays a central role in holding the U.K. central bank more broadly to account, according to Sky News. Bradley Fried, who has chaired the court since 2018, is stepping down shortly.
* The EU has formally approved Croatia to become the 20th member of the euro area from January 2023. Croatia will join the single currency at a conversion rate of 7.53450 kuna per euro, which corresponds to the current central rate of the kuna in the exchange rate mechanism ERM II. The EU's final decision makes Croatia the first new member of the Eurozone since Lithuania joined in 2015, Bloomberg News noted.
* The EU has to date frozen €13.8 billion worth of assets owned by Russian oligarchs, other individuals and entities sanctioned over Russia's incursion into Ukraine, Reuters reported, citing EU Justice Commissioner Didier Reynders. More than €12 billion of the total has been blocked by five member states, with more action needed from other EU members, the official said.
Deza Mones, Arno Maierbrugger, Meike Wijers, Gerard O'Dwyer, Beata Fojcik, Heather O'Brian, Stéphanie Salti, Praxilla Trabattoni and Mariana Aldano contributed to this report.
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