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French banks sue ECB over capital rules; global banks fined over rate cartels


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Commercial Banking Newsletter June Edition - 2022


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Insight Weekly: US recession outlook; mortgage activity slowdown; climate disclosure push

French banks sue ECB over capital rules; global banks fined over rate cartels

* The Swiss Competition Commission fined several banks approximately CHF99 million for participating in four interest rate cartels. Among those fined were Royal Bank of Scotland Group Plc, JPMorgan Chase & Co., Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG and Société Générale SA.

* ECB Chief Economist Peter Praet told De Telegraaf that problems in the European banking sector are limited to a few lenders, but noted that the broader issue is weak profitability and too many banks, according to Reuters. Praet called for a consolidation in the sector and the creation of "pan-European banks."

* Investment funds have raised $7 billion in Europe so far this year and are gearing up for a spending spree on toxic debt as Italian banks move to rid of their stock of bad loans, Reuters writes. Data from industry tracker Preqin showed that four new funds focusing on European distressed debt raised the amount in 2016, compared to $6.4 billion a year ago and $3.9 billion in 2014.

* Fitch Ratings said the weighted average cover pool encumbrance of 109 banking groups rated by the agency has dropped to about 8.1% of adjusted assets at the end of June from 9.4% at 2012-end. The decline reflects, among other things, the deleveraging at the historically large German issuers and at Spanish banks.

* A new survey of 700 business leaders by accountancy firm RSM found that 29% of EU businesses with operations in the U.K. view access to the European single market as the highest priority in upcoming Brexit talks, City A.M. reports. About 58% of the companies think Brexit threatens their companies and 41% believe Britain has become a less attractive destination for investment.


* British Prime Minister Theresa May said the government will discuss the need for "an implementation phase" in its Brexit negotiations with the EU, signaling her support for transitional arrangements that could smooth the U.K.'s departure from the bloc, Bloomberg News writes. May said she intends to stick to her timetable of triggering Article 50 of the Lisbon treaty and commencing official talks with the EU by the end of March 2017, and suggested that the talks could be finished after just 18 months.

* As expected, Scottish First Minister Nicola Sturgeon laid out proposals that would ensure Scotland retains its access to the EU single market after the U.K. leaves the bloc, Reuters writes. Sturgeon insisted that the best option would be for Scotland to secede from Britain and join the EU as an independent country, BBC News reports.

* Technical problems hit RBS and unit National Westminster Bank Plc yesterday, preventing customers from accessing the banks' mobile banking services, City A.M. reports.

* Arbuthnot Banking Group Plc unit Arbuthnot Latham & Co. Ltd. agreed to acquire 100% of Renaissance Asset Finance Ltd. from its founders. Completion of the acquisition is expected early in the second quarter of 2017.

* Central Bank of Ireland Governor Philip Lane said the regulator's investigation into tracker mortgages could identify nearly 15,000 customers who may have been overcharged by banks, Reuters reports. The central bank this week initially identified 8,200 accounts that were denied tracker rates by banks.

* The U.K. Competition and Markets Authority provisionally found that U.S.-based Diebold Inc.'s acquisition of Germany-based Wincor Nixdorf to form Diebold Nixdorf Inc. risks a substantial lessening of competition in the market for the supply of customer-operated ATMs in Britain.

* Underwriting confidence in the London insurance market continues to decline, with premium rate reductions in 2017 expected to be lower than the actual rate reductions in 2016, which were already lower than the year before, according to PricewaterhouseCoopers.

* The Irish National Treasury Management Agency purchased €500 million in Irish floating-rate Treasury bonds from the central bank and subsequently canceled them. The bonds, which were due to mature in June 2043, were issued in connection with the liquidation of the former Anglo Irish Bank.


* Deutsche Bank AG Chief Risk Officer Stuart Lewis tells Die Zeit that the bank intends to minimize the volume of its derivatives business, currently at €46 billion, by quitting certain trades and merging transactions in order to "reduce complexity." In Asia-Pacific, however, Deutsche Bank is expanding its equity derivatives unit in anticipation of growing demand from local investors, Bloomberg News reports.

* Credit Suisse, which has been asked by the U.S. Department of Justice to pay between $5 billion and $7 billion to settle a probe over its sale of mortgage-backed securities in the run-up to the 2008 financial crisis, insists on a smaller penalty and could end up with paying half the amount, Tages-Anzeiger cites industry insiders.

* UBS Group AG is being accused by French prosecutors of orchestrating a cross-border system of "illicit financial and banking sales practices" and "aggravated money laundering and tax fraud" between France and Switzerland, Le Temps reports.

* Bâloise Holding AG CEO Gert De Winter tells AWP that the company's return on equity target of between 8% and 12% was "on track."

* Reyl & Cie Holding SA and CEO François Reyl will appeal a French court ruling finding France's former budget minister, Jérôme Cahuzac, guilty of money laundering, Le Temps writes. The court in early December handed Cahuzac a prison sentence and fined Reyl & Cie and its CEO, who also received a suspended jail sentence.

* Raiffeisen Bank International AG needs to list at least 15% of Polish unit Polbank EFG SA at the Warsaw stock exchange until June 2017, Die Presse notes. According to Der Standard, Polbank will also face job cuts "on a greater scale."

* Swiss wealth management firms BFI Wealth Management (International) AG and Swiss Infinity Global Investments GmbH merged into BFI Infinity AG, a new company targeting U.S. and Canadian investors, effective Jan. 1, 2017.

* CBH Compagnie Bancaire Helvétique SA took over the private banking business of FIBI Bank (Switzerland) Ltd., a Zurich-based subsidiary of the First International Bank of Israel Ltd.


* BNP Paribas SA, Crédit Agricole SA, Groupe BPCE and Crédit Mutuel Group were among a number of French banks that filed complaints against the ECB before the European Court of Justice to get an exemption from rules requiring banks to hold capital against deposits parked with government-backed fund, Reuters reports.

* BNP Paribas intends to hire two senior banks to cover British M&A and another to cover equity capital markets in London as part of a plan to improve its banking market share outside France, insiders tell Reuters. Sophie Javary, head of EMEA corporate finance at the bank's investment banking arm, said BNP Paribas would also keep investing in the U.S., Scandinavia and Germany.

* Belgium's anti-money laundering unit asked the government to favor the exchange of names of suspicious people with banks, according to L'Echo. The Belgian banking federation Febelfin is said to be ready to collaborate further in the fight against terrorism.


* The EU Court of Justice in Luxembourg is expected to issue any moment now its definitive judgment on the retroactivity of financing contract interest floor clauses declared null, El Confidencial writes. In the unlikely event that the sentence provides for the retroactivity to date back to the execution of the loans, the banking groups that will have to pay out the most in relation to their size will be Unicaja Banco SA, Liberbank SA, Banco de Sabadell SA and Banco Bilbao Vizcaya Argentaria SA.

* Meanwhile, Bankinter SA limited the impact of a likely decision on the retroactivity of financing contracts floor clauses by the EU court on the Spanish banking sector to between €5 billion and €7.5 billion overall, a sum considered "not to pose problems" to the country's financial institutions, Europa Press reports.

* The ECB gave Angolan state oil company Sonangol the go-ahead to raise its stake in Portugal's Millennium BCP to more than 20%, Jornal de Negócios reports.

* A year after Santander Totta SGPS SA bought the healthy assets of failed Portuguese lender Banif-Banco Internacional do Funchal SA, the two organizations have been fully integrated, Expresso reports, citing state news agency Lusa.

* Portugal's Court of Auditors warned about the sustainability of the country's banking resolution fund, noting that regular revenues represent just 4% of its total debt, Jornal de Negócios reports. In its annual report on public accounts for 2015, the court said state aid to the financial sector was €14.3 billion between 2008 and 2015, representing about 8% of the country's gross domestic products, Expresso and Dinheiro Vivo note.

* Caixa Económica Montepio Geral is interested in setting up an investment fund for former customers of failed lender Banco Espírito Santo SA who will be compensated with up to €286 million as part of a plan outlined by the government earlier this week, state news agency Lusa reports.


* Banca D'Italia Governor Ignazio Visco said yesterday that national and European authorities are committed to finding solutions to the problems of the Italian banking sector, Reuters reports. Visco's statement comes as insiders tell Bloomberg News that Banca Monte dei Paschi di Siena SpA will probably fail to raise the €5 billion it is seeking in a capital increase.

* Meanwhile, Monte dei Paschi should delay to Friday from today the deadline for investors to convert subordinated bonds into shares, Corriere della Sera writes, noting that the objective of raising €5 billion is still far away despite intensifying talks of a possible purchase of shares by the Qatar Investment Authority. The bank's board will meet today to sum up the outcome of the liability management exercise noting that yesterday, retail investors converted €350 million in addition to the €150 million converted on Monday, bringing the total to €500 million, way off the €1.5 billion objective, Il Messaggero says, noting that a state intervention is now more likely. According to Il Sole 24 Ore a further €300 million are expected to be converted today.

* The €20 billion precautionary fund that the Italian government is seeking parliamentary approval for in order to rescue troubled lenders will boost Italy's debt to GDP ratio to 134%, overshooting the country's target, Bloomberg News writes.

* Intesa Sanpaolo SpA reorganized its Banca dei Territori division with the creation of a new regional department and the nomination of four new directors, Corriere della Sera writes.


* DNB ASA is advancing toward possible partnership deals with Microsoft and Amazon over the future development of Vipps, the Norwegian bank's mobile payments app, reports.

* Norwegian financial regulator Finanstilsynet recommended approval for an application by Nordea Bank AB (publ) to merge Nordea Bank Norway A/S with the Swedish parent company, FinansWatch reports. The application forms part of a process by Nordea to convert its subsidiary banks in Finland, Denmark and Norway to branches.


* Russia's central bank accused a chief trader at Deutsche Bank's Russian branch of allegedly manipulating markets by conducting stock trades worth 300 billion rubles through accounts of his relatives between January 2013 and July 2015, Reuters reports. The trades purportedly generated illicit profits of 255 million rubles. The Russian regulator suspects that similar transactions had been carried out since 2009, and Yuri Khilov could have earned up to 500 million rubles on the trades, Kommersant and Vedomosti say.

* PAO Sberbank of Russia's non-state pension fund NPF Sberbank is negotiating the purchase of non-state pension fund NPF VNIIEF-Garant from entities linked to Rosatom, Vedomosti reports.

* OJSC Financial Corp. URALSIB acquired an insurance company from Russia's Svyaznoy Group and changed its name to Uralsib Strakhovanie, Vedomosti says. Uralsib has no plans to merge its insurance units following the deal, and the companies will continue to operate as separate legal entities.

* ING Netherlands COO Bart Schlatmann could join Sberbank in February as the head of a new division formed to oversee the transformation of Russia's largest lender, Kommersant reports.

* The U.S. added more Russian businessmen and companies to the list of entities sanctioned over Russia's annexation of Crimea and its involvement in the conflict in Ukraine, Reuters says. The affected businessmen include executives at BANK ROSSIYA or its affiliates ABR Management and Joint Stock Bank Sobinbank. Sanctions were also imposed on 26 subsidiaries of JSC Russian Agricultural Bank.

* The European Commission approved Poland's scheme for the restructuring of small commercial and cooperative banks, saying that the proposal does not infringe EU state aid rules, Puls Biznesu and Rzeczpospolita report.

* PKO Bank Polski SA plans to lay off up to 950 people in 2017, although the actual number of job cuts could be smaller, Reuters says.

* Belarus would like to sell a minority holding in OAO Belarusbank to a strategic investor from among Western banks, Reuters reports. Several potential investors, including a "well-known Hungarian bank," have shown interest in acquiring the stake, but no decision has been taken as yet. Belarus said earlier in 2016 it wanted to sell a stake of up to a 25% stake in the state-owned lender.


Asia-Pacific: Macquarie to get nod for Green Bank buy; Cognizant to acquire Australian insurer

Middle East & Africa: Fraud prevention in South Africa; currency black market curb in Nigeria

Latin America: Itaú names CEO for US unit; new testimony threatens Temer's presidency

North America: Wells preparing to launch its first ETF; Lloyds buying BofA's MBNA

North America Insurance: Canada's Fairfax grows bullish on US; Greenlight Capital Re CEO to leave


Monte dei Paschi equity raise may trigger wider Italian bank bailout: Italy may be about to begin to catch up with Spain, which bailed out its banks in 2012.

Cornering Markets: Nigeria faces battle to attract 'bad bank' investment: With nonperforming loans stacking up at its banks, Nigeria is looking to create a second bad loan vehicle. But the country faces a tough battle to convince private investors to fund it.

Sheryl Obejera, Arno Maierbrugger, Meike Wijers, Gerard O'Dwyer, Beata Fojcik, Mike Hatzidakis, Ali Kayalar, Yael Schrage, Stephanie Salti, Praxilla Trabattoni and Helen Popper contributed to this report.

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