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Santander, Deutsche Q2 profit down; UBS settles $850M RMBS case


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Banking Essentials Newsletter: 17th April Edition

Santander, Deutsche Q2 profit down; UBS settles $850M RMBS case

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

M&A notification

* Banco de Sabadell SA agreed to sell a portfolio of loans with an aggregate outstanding balance of about €2.30 billion to Deutsche Bank AG and CarVal Investors LLC. The portfolio is composed of three sub-portfolios, mostly secured by mortgages, according to Sabadell.

* Georgia-based JSC TBC Bank signed a conditional, nonbinding strategic partnership agreement with Nikoil OJSC Investment Commercial Bank, which will merge with TBC Bank's Azeri subsidiary, TBC Kredit LLC. Following the merger, TBC Bank will own a stake of up to 10% in the merged entity.

* Andrey Shlyakhovoy, a Russia-based investor and banker, purchased 100% of VTB Bank (PJSC) unit VTB Banka a.d. Beograd in a transaction that has received Serbian central bank approval.

* U.K.-based private equity investor Cabot Square Capital is selling Portuguese consumer finance lender 321 Crédito – Instituição Financeira de Crédito SA to another Portuguese bank Banco CTT SA. The elements of consideration payable at completion are a share capital purchase price of €100 million, an estimated rise in regulatory capital of €10 million, and the acquisition of shareholder loans with a €30.6 million outstanding principal.

* Hellenic Bank Public Co. Ltd. received the go-ahead from Cypriot regulators to acquire certain assets and liabilities of peer Cyprus Cooperative Bank Ltd. The rest of Cyprus Cooperative Bank will be wound down after the assets and liabilities are transferred to Hellenic Bank.

Completed transactions

* Russian payment provider Qiwi PLC took complete control of lender RocketBank LLC. The transfer of RocketBank's infrastructure, business processes and client base will be completed Oct. 1.

* SKALIS Asset Management AG's sale did not significantly impact equity of parent Baader Bank AG Reporting first-half results, the German lender said it had equity of €94.9 million, compared to €97.5 million at the end of 2017.

Financial results

* Deutsche Bank AG's second-quarter net income fell to €401 million, in line with expectations, from €466 million in the same period in 2017.

* Banco Santander SA plans to delist its shares or the instruments that represent them from four stock exchanges: Argentina's Bolsas y Mercados Argentinos, Brazil's B3, Portugal's Euronext Lisbon and Italy's Borsa Italiana. At the same time, the Spanish bank reported a 3% year-over-year decline in second-quarter profit due to charges related to Banco Popular Español SA's integration into the group.

* Bankia SA's second-quarter profit attributable to the group was €285 million, up from €210 million a year ago.

* Bankinter SA's second-quarter net profit increased 1.3% to €118.2 million from €116.6 million in the same period in 2017.

* Banco Bilbao Vizcaya Argentaria SA reported a year-over-year increase in profit in the second quarter, with its second-quarter net attributable profit standing at €1.31 billion under the IFRS 9 accounting standards, up from €1.11 billion based on IAS 39 a year earlier.

* Banco de Sabadell SA reported second-quarter group attributable net loss of €138.7 million, compared to a profit of €234.5 million a year ago. The loss driven by costs related to the botched IT upgrade of British unit TSB Banking Group PLC.

* CaixaBank SA reported second-quarter profit attributable to the group of €594 million, up 36.1% from €436 million a year ago.

* AIB Group PLC, the new holding company for Allied Irish Banks PLC, reported unaudited profit attributable to owners of the parent of €650 million for the first half, down from €652 million a year ago.

Banking crimes

* Matthias Krull, former vice chairman of Julius Bär Gruppe AG's Panama branch and most recently managing director for Gonet Bank & Trust Ltd. in Nassau, Bahamas, was arrested by U.S. authorities on Tuesday night at Miami airport and charged with allegedly being part of a scheme to launder $1.2 billion in corrupt funds linked to Venezuelan state oil firm PDVSA.

* UBS Group AG settled a U.S. residential mortgage-backed securities case brought by certain RMBS trusts in 2012 for $850 million after a proposed settlement of $543 million was dismissed by the trustees in 2017.

Industry news

* A July 24 study shows that the number of employees at German banks dropped to 586,250 in 2017 from 609,100 in the previous year.

* The National Bank of Georgia's monetary policy committee cut the refinancing rate by 25 basis points to 7.0% as a stronger-than-expected currency has reduced upward pressure on inflation that remains below target.

In other news

* Bank of Ireland Group PLC, as part of its cost-cutting plan, may cut some 2,180 jobs or about 20% of its workforce by the end of 2021.

* The National Bank of Georgia canceled the license of JSC International Bank of Azerbaijan - Georgia at the request of the lender's shareholders who plan to convert it into a nonbanking financial institution. The liquidation procedure for the lender has been launched.

* The Central Bank of the Russian Federation revised a financial recovery plan for JSCB Investment Trade Bank (PJSC), noting that no additional funding will be provided under the new plan. PJSC Transkapitalbank will continue to oversee the financial recovery of Investtradebank. The bank, which was bailed out by the regulator in 2015, is expected to become profitable in 2020.

* French insurer Crédit Agricole Assurances SA agreed to buy a 5% stake in Italian lender Credito Valtellinese SpA as part of a long-term life insurance business partnership. Crédit Agricole Assurances, part of the Crédit Agricole Group, will gain access to Creval's distribution network through Italian subsidiary Crédit Agricole Vita SpA, using it to promote its savings and protection products.

Featured during the week on S&P Global Market Intelligence

Brexit uncertainty helps Deutsche Börse, says CFO: The ongoing uncertainty about the outcome of Britain's negotiations with the EU helps Deutsche Börse as its Eurex clearing service is "the only safe alternative" left in the market, CFO Gregor Pottmeyer said.

Bank of England official: QE sales could substitute rate rises: Ben Broadbent, a deputy governor at the supervisor who sits on the rate-setting committee, said "rate rises and any tightening effect of shrinking the balance sheet should be seen as substitutes. More of the latter would mean less of the former."

Spanish bank BBVA watches for post-election signals in crucial Mexico market: The outcome of the recent elections in Mexico will relieve some worries about lending conditions at the Mexican operations of Spanish bank Banco Bilbao Vizcaya Argentaria SA, but some concerns remain.

Turkish central bank's refusal to raise rates hammers investor confidence: The lira slid by 3% after Turkey's central bank ignored investor expectations of a rate rise, raising concerns over its independence.