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Basel Committee sets output floor; EU allows derivatives trading on US platforms

S&P Global Market Intelligence offers our top picks of banking news stories and more published throughout the week.

Big week for big deals

* The U.K. and the EU announced a breakthrough in negotiations on Britain's exit from the bloc, saying "sufficient progress" has been made in the key areas of citizens' rights, the financial divorce bill and the status of a post-Brexit border between the Republic of Ireland and Northern Ireland, paving the way for talks on terms of trade.

* The Basel Committee on Banking Supervision set the so-called output floor, which effectively limits the way banks use their internal models to calculate risk weightings on assets, at at least 72.5% of the calculation achieved by the standardized approach set by regulators. In light of the changes, the European Banking Authority said European banks will have to increase their total capital by €39.7 billion compared to their levels as of December 2015.

* The European Commission recognized certain trading venues authorized by the U.S. Commodity Futures Trading Commission as eligible for compliance with the EU trading obligation for derivatives, allowing European financial institutions to continue trading derivatives on those U.S. platforms once the revised Markets in Financial Instruments Directive, or MiFID II, comes into force Jan. 3, 2018.

The Chinese connection

* Ping An Insurance (Group) Co. of China Ltd., through unit Ping An Asset Management Co. Ltd., raised its stake in HSBC Holdings Plc to 5.01% from 4.96%, making it the second-largest shareholder in the British bank.

* German financial regulator Bafin is investigating Chinese conglomerate HNA Group Co. Ltd., the largest shareholder in Deutsche Bank AG, over whether it correctly disclosed its holdings when building its stake in the German lender.

US troubles

* A lawyer for U.S. President Donald Trump denied reports that U.S. special prosecutor Robert Mueller had subpoenaed Deutsche Bank to submit documents on its client relationship with the U.S. president and his family. German paper Handelsblatt stood by its report that Deutsche Bank had received a subpoena from Mueller, clarifying that it never claimed that Trumps' records at the bank were requested.

* Royal Bank of Scotland Group Plc CEO Ross McEwan said the bank sees "diminishing" chances of reaching a settlement with the U.S. Department of Justice over its mortgage bond investigation before the end of 2017.

On the deal front

* Banco Bilbao Vizcaya Argentaria SA accepted Bank of Nova Scotia's offer to acquire the Spanish lender's 68.19% ownership in Banco Bilbao Vizcaya Argentaria Chile SA, as well as its interests in certain subsidiaries, for approximately US$2.2 billion.

* PKO Bank Polski SA and Bank Pekao SA denied media reports about a potential merger between the two lenders in 2018.

* Banca Carige SpA agreed to sell an 80.1% shareholding in Creditis Servizi Finanziari SpA to Chenavari Investment Managers for a consideration of €80.1 million. Separately, the bank's €500 million cash call was 66% subscribed by shareholders, leaving the bank to rely on agreements with other investors to make up the difference.

* Austria-based BAWAG PSK closed the acquisition of German regional private bank Südwestbank AG.

In other news

* The ECB updated its list of significant credit institutions and banking groups over which it has direct supervisory responsibility, adding Barclays Bank Plc's Frankfurt branch and removing Banco BPI SA, Banco Popular Español SA and five other banks, reducing the list from 125 banks at the beginning of 2017 to 119.

* Minutes of the Bank of England's financial policy committee meetings of Nov. 22 and Nov. 27 showed that the central bank had considered raising the countercyclical buffer even higher than the 1% it announced Nov. 28, but decided not to because the likelihood of a combination of a severe global recession plus a disorderly Brexit was remote.

* Portuguese Finance Minister Mário Centeno will succeed Jeroen Dijsselbloem as the new president of the Eurogroup of eurozone finance ministers.

* The Polish and Serbian central banks maintained their key rates.

Featured during the week on S&P Global Market Intelligence

Update: Basel IV deal sets capital floor for risk models, European banks protest: European banks argue final rules give U.S. banks an unfair advantage.

Local regulation, phase-in key to success of Basel deal: European banking sector: "The output floor may do significant harm to our European economy and to the global competitiveness of European banks," said European Banking Federation CEO Wim Mijs.

MiFID II impact on EMEA i-banks 'manageable,' says Coalition: The impact of the new MiFID II rules coming into force in 2018 is 'manageable,' while other external factors could prove a far greater obstacle to CIB performance over the next two years, Coalition said.

Open banking, PSD 2 could help banks' foray into robo advice: HSBC, Blackrock: New regulations are an opportunity for banks to grab market share in the DIY investment segment, said HSBC retail wealth head Dean Butler.

BNP Paribas seeks greater market share in mergers and acquisitions: BNP Paribas wants to increase its market share in European M&A and is looking for growth in countries such as Germany, the U.K. and Scandinavian nations, according to bank executives.