Potential US bank M&A wave on horizon; major Australian banks face tougher year

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.

U.S. and Canada

* Wave of US bank M&A set to follow sluggish 2020

After U.S. bank deal volume was down more than 50% in 2020, experts anticipate U.S. bank M&A to skyrocket in the near future. One deal adviser expects five years' worth of deals in a two- to three-year span.

* Seidman v. Spencer Savings Bank: The 16-year proxy fight over a mutual's mission

Larry Seidman's battle with Spencer Savings Bank SLA may be the longest-ever proxy fight. The dispute over a small lender in a dying industry has moved to the state Legislature, raising concerns that other investors could target mutual savings banks.

* In ESG era, 'hunker down, hope it will pass' no longer a viable CEO strategy

Last week's riots in Washington, D.C., were further evidence that expectations of business leaders in times of social unrest are rapidly changing and inaction is less of an option as the ESG movement gains traction.

* US banks use excess liquidity to shrink CDs, borrowings

Banks have taken advantage of the excess liquidity on their balance sheets to decrease their reliance on higher-cost deposits and borrowings, a trend likely to continue as deposits remain plentiful.

Latin America

* Disruptors could dominate Brazil's credit market within 5 years, Inter CEO says

Digital banks are currently more competitive in their cost of funding and have a higher expansion of loan portfolios than most legacy banks, Banco Inter SA CEO João Vitor Menin told S&P Global Market Intelligence.

* Incoming Itaú CEO expected to push forward efficiency efforts

Milton Maluhy Filho, incoming chief executive of Itaú Unibanco Holding SA, will lead the heavyweight lender's inside-out transformation while adjusting the business for a prolonged low-rate environment.

Europe, Middle East and Africa

* Skepticism around EU financial services deal, as UK says no to rule-taker role

Following Brexit, British banks have lost their unfettered access to the EU, and hopes of a new deal based on so-called equivalence might be misplaced.

* After Brexit, freedom to set own rules in fintech, crypto could benefit UK

The U.K.'s departure from the EU has created disruption and uncertainty for the country's financial technology sector, but industry insiders say that there is a silver lining.

* Nigeria's financial services law ushers in tighter controls of banks, fintechs

A new financial services law in Nigeria will increase regulatory demands on fintech companies, place greater scrutiny on bank executives and deter unsecured lending to small businesses. Experts are divided over how well it will work.

Asia-Pacific

* Bad loans, capital may be key challenges for India's state-owned banks in 2021

An expected surge in bad loans in India's banking sector this year could hit state-owned lenders harder than their more-nimble private-sector rivals, and they may need to lean on the government for more capital to support credit demand as the economy emerges from a pandemic-induced contraction.

* Major Australian banks face tougher 2021 as sharper focus cuts growth avenues

Major Australian banks face a tougher year in 2021, as their scaled-down operations following a spate of misconduct cases has left them with less cushion against high compliance costs, record low interest rates, elevated loan loss provisions and competition from nonbanks, analysts say.

* India central bank's latest stress tests ring alarm bells for some lenders

Investor aversion and strained government finances could complicate the capital plans for some Indian banks, particularly state-owned ones, after the central bank's latest stress tests indicate that some lenders' capital could fall below minimum regulatory requirements this year in the aftermath of the coronavirus pandemic.

Global Insurance

* Latest Tesla insurance offering more evolutionary than 'revolutionary'

The next step in Tesla Inc. CEO Elon Musk's pledge to build a "major" insurance company comes in the form of market entry to a second state with a product that builds upon an existing California offering through the introduction of a safety tier framework.

* Jan. 1 renewals yield mixed results for reinsurers, buyers

While rate increases may have been below reinsurers' expectations, prices did improve. But coverage remains relatively affordable for buyers. The question now is how long this harder market will last.