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Danske selling Estonian unit; Covéa sues Credit Suisse; crypto vigilance sought


Banking Essentials Newsletter: 23rd August edition


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Danske selling Estonian unit; Covéa sues Credit Suisse; crypto vigilance sought

* Crypto-assets "do not pose material risks to global financial stability at present" but they raise policy issues beyond financial stability, according to the Financial Stability Board. The regulator said authorities should consider the differences in legal frameworks and the "fast-moving state" of the technology when determining their response, noting that "multilateral action" is necessary for a coherent response.

* The Euro Overnight Index Average, or Eonia, will be priced 8.5 basis points above the ECB's new reference rate €STR beginning Oct. 2. The Eonia is set to be discontinued due to low volumes, Reuters noted, adding that a private sector working group recommended that during the transition, the spread between the two rates should be fixed.

* The SWIFT interbank payment service is testing a new pan-European instant payment system and is expected to announce the results in September, Les Echos reported, noting that Natixis, Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, Deutsche Bank AG and UniCredit SpA are among participating banks. If successful, the system, based on the existing TIPS platform, will be extended across all European banks and then globally.

* The outgoing chief economist of the ECB, Peter Praet, told L'Echo that the regulator's monetary policy "cannot do everything," and it was up to politicians to find strong coalitions against a protectionist spiral that he said would be "a disaster."


* The Bank of England appointed Ben Broadbent deputy governor for monetary policy for a second term, effective July 1. Rohinton Kalifa, Frances O'Grady and Hanneke Smits had also been appointed nonexecutive directors.

* U.K.-based Metro Bank PLC has ceased lending to commercial property developers to focus on small businesses and residential mortgages in a bid to bolster its finances, unnamed sources told The Sunday Times. The embattled lender's recent accounting blunder centers on its commercial property loan book, which together with its business lending arms, makes up a third of its total loan book.

* Aberdeen Standard Investments Ltd., which controls 3.1% of subprime lender Provident Financial PLC, will not accept an all-share hostile takeover of the company by Non-Standard Finance PLC, echoing the stance of Schroders PLC, Coltrane Asset Management LP and M&G Investments, The Times wrote. Two other Provident shareholders, Legal & General Group PLC and BlackRock Inc., are believed to be also against NSF's offer.

* The U.K. Financial Services Compensation Scheme said there was sufficient grounds to explore possible compensation for clients of collapsed investment firm London Capital & Finance PLC, the Financial Times reported. The body is looking at how LCF products were sold, giving hope to 11,500 customers whose investment in so-called mini bonds could be wiped out due to the firm's failure.

* Gabriel Makhlouf, the incoming governor of the Irish central bank, could face action in New Zealand, where he is currently treasury secretary, over a leaked budget scandal, The Irish Times wrote. However, a spokeswoman for Irish Finance Minister Paschal Donohoe said the controversy will not affect Makhlouf's appointment at the regulator, which takes effect Sept. 1.

* AIB Group PLC has not yet taken provisions to cover possible fines, estimated to reach €60 million, over its involvement in a tracker mortgage scandal, The Sunday Times reported. Although the bank has set aside €230 million for customer redress and related costs, AIB reportedly said it was "impracticable" to estimate the fine, even though other banks had already earmarked funds over the matter.

* Lamp Insurance Co. Ltd., a unit of U.K.-based LAMP Group Ltd., has been placed under receivership by the order of the Supreme Court of Gibraltar. Grant Thornton Ltd. has been appointed to advise and assist in liquidating the company.


* Top officials at Deutsche Bank and UBS Group AG held preliminary talks earlier this year over a potential combination of the two banking giants but the discussions never went beyond an initial stage, insiders told Bloomberg News. The potential merger would have created a banking behemoth with assets of approximately $2.6 trillion.

* Around 10 banks, including Deutsche Bank and UniCredit, had transferred some of their swaps trades to Frankfurt from London last month as they prepare for a worst-case Brexit scenario, insiders told Bloomberg. JPMorgan Chase & Co., Commerzbank AG and Bayerische Landesbank AöR also made a similar move.

* Andrea Nahles resigned as leader of Germany's Social Democratic Party, Chancellor Angela Merkel's junior coalition partner, after losing "necessary support," news outlets including Reuters and Bloomberg covered.

* Wirecard AG's shares fell almost 9% on Friday after Handelsblatt reported that the company acted as a payment processing partner for dodgy investment firms.

* Hamburg Commercial Bank AG CFO Oliver Gatzke aims to transform the bank into a top earner and, to that end, will initiate a cost-reduction program that could include job cuts, Handelsblatt wrote.

* The sale of Wüstenrot Bank AG Pfandbriefbank to Oldenburgische Landesbank AG has been completed after securing regulatory approval, with the change of ownership becoming effective June 1.

* Zurich Insurance Group AG completed the acquisition of Australia & New Zealand Banking Group Ltd.'s life insurance business, OnePath Life Ltd. The terms of the transaction include a 20-year agreement that will allow Zurich's life insurance products to be distributed through ANZ's bank channels.

* Marko Wenthin, co-founder and most recently management board member of solarisBank AG, has been appointed CEO of SME banking startup Penta Fintech Ltd., succeeding Lav Odorović, Handelsblatt wrote.


* SGAM Covéa started legal proceedings in France against Credit Suisse Group AG, one of the banks it consulted about a potential takeover bid for Scor SE that was eventually rejected, saying the Swiss bank broke obligations of loyalty and the contract it had by not keeping details confidential, Le Monde reported. Credit Suisse handed over details of Covéa's bid to Scor after being ordered by a U.K. court to do so.

* French investment firm Ardian is said to be acquiring a $5 billion portfolio of private-equity fund investments from Tokyo-based Norinchukin Bank.


* Bankinter SA closed the purchase of EVO Banco SAU's banking business in Spain and its Avantcard consumer credit unit in Ireland from asset management firm Apollo for €65.8 million, Expansión reported. Bankinter said the deal will lead to an impact of 29 basis points on its common equity Tier 1 capital.

* All but one former administrators of Banco Espírito Santo SA who were held responsible for the bank's collapse have also been recognized as creditors of the institution, together with roughly 5,000 account holders and investors, Jornal de Negócios reported.


* Italy's debt-to-GDP ratio could exceed by nearly half a percentage point, more than the 132.6% that the government has forecast for 2019. Central bank Governor Ignazio Visco said the country's high public debt level remains a "severe constraint" and that "there must be no delay" in planning to reduce it in the medium term. Visco also said the country's banking sector could suffer from a new economic slump while completing its restructuring, Reuters noted.

* Italian Economy Minister Giovanni Tria said he is confident that the government can reach a compromise with the European Commission to avoid sanctions over its deteriorating public finances, Reuters wrote. The EC is expected to open an excessive debt procedure against Italy on Wednesday, La Repubblica said.

* The Italian Treasury decided to skip the spring offering of its BTP Italia bond for the first time since it started selling this type of inflation-linked debt to retail investors in 2012, an insider told Reuters. The decision comes after the autumn issue of the bond flopped.

* Banca Carige SpA's administrators are in talks with Apollo concerning its possible participation in the bank's bailout, which could also involve a settlement over an ongoing legal dispute on Apollo's acquisition of Carige's insurance activities in 2015, Il Sole 24 Ore reported.

* Italian lender Mediobanca - Banca di Credito Finanziario SpA named Antonio Guglielmi and Stefano Rangone executive vice chairmen for its corporate and investment banking division, according to a memo seen by Reuters.


* Danske Bank A/S agreed to sell its Estonian private loans unit to AS LHV Group unit AS LHV Pank for an estimated price of roughly €410 million. The deal, which will close in the autumn, includes the Danish lender's loan portfolio of private clients worth approximately €470 million as of February-end.

* Danske Bank's board will conduct a much stricter oversight of management operations, with recently elected Chairman Karsten Dybvad setting the restoration of the Danish lender's reputation in Denmark and internationally as the single biggest priority for the financial group in the next 12 months, Berlingske Tidende wrote.

* AP Pension has delayed a major capital plan to restructure its IT systems until it achieves the full integration of recently acquired Skandia-owned businesses in Denmark, FinansWatch reported.


* Poland-based Bank Millennium SA completed its acquisition of 99.79% of Euro Bank SA from Société Générale SA unit SG Financial Services Holding SAS for 1.83 billion zlotys. Bank Millennium intends to merge Euro Bank into its structure following regulatory approvals.

* The Serbian government is seeking bids until June 21 for as much as 83.23% of Komercijalna banka a.d. Beograd's ordinary shares as a part of a privatization deal with the IMF, Reuters wrote, citing an announcement in newspaper Politika. The bidders need to meet certain criteria such as having assets of over €1 billion or owning a minimum 20% stake in a big bank.

* Russia's central bank will increase the reserve requirement for banks' foreign-currency deposits by 1 percentage point beginning July 1 in a bid to discourage higher forex liabilities for lenders, Reuters noted.

* The Russian central bank revoked the banking license of JSC Kemsocinbank and placed the lender under provisional administration, citing multiple red flags.

* Türkiye İş Bankası AŞ decided to sell 130 million C shares it had repurchased last year, citing better economic climate, capital efficiency and market conditions.


Asia-Pacific: China explains Baoshang Bank takeover; Mitsubishi UFJ cuts London workforce

Middle East & Africa: Zimbabwe clinches IMF deal; Ghana kicks off microfinance sector cleanup


Eurobank management heartened by market interest in €9.5B of securitized debt: One of the portfolios the bank is marketing is the first securitization in the Greek market to be publicly rated.

Allianz UK exec defends rapid expansion in tough personal lines market: The acquisition of both Legal & General and LV's nonlife businesses represents a "big commitment" to the British market, said local CEO Jon Dye.

Sheryl Obejera, Arno Maierbrugger, Meike Wijers, Gerard O'Dwyer, Heather O'Brian, Brian McCulloch, Praxilla Trabattoni and Mariana Aldano contributed to this report.

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