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Bank of China could bid for Goodbody; RBS boosts Brexit fund; Basel progress


Banking Essentials Newsletter: 23rd August edition


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Bank of China could bid for Goodbody; RBS boosts Brexit fund; Basel progress

* Banks have made significant progress in adopting the Basel III rules aimed at making them safer, the Bank for International Settlements said. Its report assessed progress up to the end of September in adopting the Basel standards agreed to date, and will be phased in over five years.

* An easing cycle from central banks has the potential to encourage further risk-taking from investors, which may threaten the stability of the global financial system, the International Monetary Fund has warned. Lower interest rates, including some $15 trillion in negative-yielding bonds, are encouraging corporations to take on more debt.


* Bank of China Ltd. could be the leading bidder for Goodbody Stockbrokers, The Irish Times reported. The Ireland-based firm and its majority owner FEXCO Holdings Ltd. were in early-stage discussions with several potential buyers for a partial or full takeover of Goodbody.

* Royal Bank of Scotland Group PLC has put more money into its fund to support small businesses who may be affected by Brexit, Reuters reported. The fund has increased by £2.2 billion to £8.2 billion.

* Investors in Woodford Investment Management Ltd.'s flagship LF Woodford Equity Income Fund may not receive their money for more than one year due to the complexity of closing down the fund, City A.M. reported, citing industry professionals.

* The World Bank has ruled in favor of Standard Chartered PLC in its legal battle with the Tanzanian government concerning an energy contract, ordering the latter to pay $185 million to the Hong Kong unit of the U.K.-based bank, Reuters reported. The Tanzanian government, however, said it was not planning to pay the damages.


* German payments firm Wirecard AG released a detailed follow-up statement reacting to a Financial Times report that cast doubt on its accounting practices, calling the allegations "false" and responding to various accusations. Meanwhile, analysts called for an official view of Wirecard's auditor EY on the issue, and for Wirecard to provide more information on its accounting practices to allay investor skepticism, the Financial Times wrote.

* A move toward alternative discount rates for liabilities could impact the solvency rates of German and Dutch insurance companies, Het Financieele Dagblad reported.

* A survey commissioned by Commerzbank AG with a sample of 500 companies found that 29% of medium-sized businesses in Germany now pay negative interest on their corporate accounts.

* Czech Republic-domiziled Air Bank a.s., through its German subsidiary AB-X Projekt GmbH, applied for a banking license in Germany and plans to launch an online and smartphone banking offering under the brand Velvon in the second quarter of 2020, Handelsblatt reported.

* Former Credit Suisse Group AG executive Andrew Pearse, who pleaded guilty to U.S. charges of fraud and money laundering related to $2 billion in loans to three state-owned Mozambican companies in 2013 and 2014, said that he had pocketed at least $45 million in illicit payments for his role in the case, Bloomberg News reported.


* Antwerp-based savings bank Argenta Spaarbank NV has postponed a €500 million bond issue due to lack of investor interest, De Tijd reported. A spokeswoman said the move will not impact the bank's finances.

* Merger talks between French mutual insurance company SGAM AG2R La Mondiale and La Mutuelle Générale are likely to be relaunched, L'Agefi wrote. The two groups suspended their negotiations initiated in 2016 following the merger between AG2R La Mondiale and Matmut.


* The former CEO of failed Portuguese bank Banco Português de Negócios, José Oliveira e Costa, has been sentenced to another three years in prison for a previous conviction for tax fraud, the official Lusa news agency reported, citing a ruling by the Lisbon Court of Appeal. The former banker has already been sentenced to a total of 15 years in prison for offences including fraud and abuse of trust, and the new three-year jail term will be served simultaneously.

* Four banks have initiated legal action against road-builder Infraestructures de Portugal and its directors over the defunct Algarve Litoral sub-concession that they provided financing for, Jornal de Negócios reported. Banco BPI SA, Caixa Geral de Depósitos SA, Banco Santander Totta SA and Société Générale SA are the banks seeking compensation.

* Spanish bank Bankia SA has launched a new fund called "Bankia Fintech Venture" through which it will invest nearly €20 million in financial technology projects over five years, wrote Europa Press. Bankia recently opened an office devoted to fintech in Madrid.

* Spain-based Banco Santander SA's financial technology venture capital fund Santander InnoVentures is leading a ‎35 million funding round by Germany-based CrossLend GmbH. The Series B funding round also includes funding from existing investors Lakestar, ABN AMRO Ventures, and Earlybird.


* Italy finalized a draft 2020 budget, which will be reviewed by the EU amid the country's near-record debt level. The draft budget excluded a planned sales tax hike and proposed two investment funds and pension reforms.

* Banca Popolare di Sondrio SCpA and Unione di Banche Italiane SpA are in the early phase of selling nonperforming loan portfolios with the state GACS guarantee, MF reported. A move by Iccrea Holding SpA to offload NPLs is further advanced, the paper said.

* Italy's Supreme Court of Cassation annulled an appeals court verdict condemning Giovanni Berneschi, former chairman of Banca Carige SpA, for fraud related to the bank's insurance business, saying the trial must be re-done in Milan, Il Messaggero wrote. The newspaper added that the former banker could be saved by the statute of limitations.

* Banca Intermobiliare submitted a proposal for a €100 million capital raise after posting a loss of €22.7 million as of Aug. 31, Reuters wrote.

* Italian insurer Generali will acquire Izvor osiguranje dd's business through a part-of-enterprise transaction for undisclosed financial terms. The target is a privately owned non-life insurance provider in Croatia, offering motor, property, travel, liability and accident insurance, and other types of insurance services.

* BNP Paribas SA wants to generate double-digit growth in its private banking activities in Italy over the coming few years, according to L'Agefi.


* Vestjysk Bank A/S has been ordered by the Danish financial regulator to make write-downs and increase its solvency requirement to 10.4% from 10.2%, Finanswatch reported.

* Totalbanken A/S has joined other Danish mortgage lenders in upgrading its profit expectations for 2019, Finanswatch reported. The bank expects a pre-tax profit of between 65 million Danish kroner and 75 million kroner, up from 52 million to 57 million kroner. The upgrading is due to strong activity in housing and positive development in net interest and fee income, the bank said.

Danish financial regulator Finanstilsynet has approved the merger of Sparekassen Vendsyssel and Dronninglund Sparekasse, Børsen reported. The merged bank will operate under the Sparekassen Vendsyssel brand.


* Türkiye Halk Bankası AŞ, or Halkbank, dismissed U.S. charges of fraud, money laundering, and other sanctions offences against it, calling it an escalation of Washington's sanctions on Ankara and an unprecedented legal overreach, Reuters reported. Turkey's stock exchange temporarily prohibited short selling in Halkbank following the charges, Bloomberg News reported.

* Polish media reported that BNP Paribas unit BNP Paribas Bank Polska SA is analyzing a potential purchase of Commerzbank AG's Polish subsidiary mBank SA. However, BNP Paribas Bank Polska CEO Przemysław Gdański told news agency PAP that the bank is focused on organic growth, and that the main candidates to buy mBank are likely to be banks controlled by Polish authorities. Foreign banking groups that are not present in Poland or have a small share on the local market are also eyeing the unit. Other potential buyers include PKO Bank Polski SA and the Polish subsidiaries of ING Groep NV and Banco Santander.

* Interregional Bank for Settlements of the Telecommunications & Postal Services, after the transfer of ownership to PAO Promsvyazbank, will be merged with the latter and cease to exist as a separate legal entity, Kommersant reported. The transaction is expected to be completed by the end of 2019. Promsvyazbank, which specializes in providing services to Russian defense sector companies, may also receive a 10 billion ruble capital boost from Russia's budget at the time of the merger, the newspaper noted.

* Meanwhile, Kommersant also reported that Promsvyazbank is looking for a buyer for its unit PSB-Forex. The potential deal could attract many investors despite stringent regulation of the Russian forex market, the newspaper noted.

* The Slovenian central bank asked the country's government and parliament to change a draft law that would require it to cover all possible repayments to those who lost their investments in Slovenia's €3 billion bank rescue in 2013, Reuters reported. The central bank also said it would file an appeal with the Constitutional Court if the parliament passed the draft law, which is expected take place next week.


Asia-Pacific: China loosens interbank bond rules; Macquarie faces lawsuit in Germany

Middle East & Africa: Afreximbank confirms $250M London IPO; Qatar Islamic Bank's Q3 profit up YOY

Latin America: IMF cuts LatAm growth forecast; Argentina key rate falls to 68%

North America: BofA Q3 EPS down; Kansas banks merging; Citi calling for stability in Africa


Danish banks enjoy short-term profit hikes but face gloomy 2020: A boom in remortgaging activity is expected to drive up 2019 earnings at the expense of future mortgage income for banks, according to industry players.

Typhoon Hagibis claims bill could be comparable to 2018's Jebi: Insured losses from the storm that hit Japan on Oct. 12 could eclipse those of Faxai in September, and flood claims will dominate, according to loss adjusters and risk modelers. Comparisons are being drawn to the $16 billion estimated tally for Jebi.

Diversity and inclusion seen as key to cultural change in asset management: As the U.K. asset management sector prepares for the imposition of new rules on conduct and corporate governance later this year, regulators are urging firms to focus on diversity and inclusion to help shift the culture in their organizations.

Ben Meggeson, Arno Maierbrugger, Danielle Rossingh, Gerard O'Dwyer, Beata Fojcik, Yael Schrage, Stephanie Salti, Sophie Davies and Helen Popper contributed to this report.

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