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Lloyds to buy MBNA; Credit Suisse could face up to $7B US penalty

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Episode 43 - More Change, M&A On Horizon For Equity Research Industry

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Lloyds to buy MBNA; Credit Suisse could face up to $7B US penalty

* Global systemically important banks will have to ensure they have enough local debt to bail out key operations around the world even if they are not organized into separate subsidiaries, under proposed guidelines released by the Financial Stability Board. The FSB laid out rules for the use of so-called internal total loss-absorbing capacity, or TLAC, which must be provided for a bank's subsidiaries when they can be wound down without affecting the parent company.

* Meanwhile, the FSB said stronger supervision of financial institutions in places that have seen a decline in correspondent banks may encourage existing lenders to retain correspondent banking relationships. Such jurisdictions, which the FSB said are usually those with actual or perceived weaknesses in supervisory and regulatory frameworks, should also strengthen efforts against money laundering and financing of terrorism, including through "training of law enforcement on how to investigate money laundering or large-scale corruption."

* IMF Managing Director Christine Lagarde has been convicted in a French court of negligence over a state payout to French businessman Bernard Tapie during her time as French finance minister, but will not face a fine or a jail sentence. Reuters writes that Lagarde will not appeal the conviction, saying "I am not satisfied with it, but there's a point in time when one has to just stop, turn the page and move on."

* The Joint Committee of the European Supervisory Authorities launched a public consultation about the potential benefits and risks of big data for consumers and financial firms to determine whether any further regulatory or supervisory actions may be necessary. The consultation closes March 17, 2017.

* ICAP Plc's venture arm, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are among several financial institutions finalizing an investment in blockchain startup Axoni, according to Reuters. The investment will amount to between $15 million and $20 million.

* U.K. Prime Minister Theresa May signaled that her government is looking into seeking a transitional Brexit deal with the EU and that Britain could keep paying into the EU budget, Bloomberg News reports. May declined to pledge before lawmakers that she will not do so.

* Meanwhile, a document drawn up by several top British law firms suggests that banks operating in the U.K. may be able to sue the EU if the bloc denies them transitional Brexit arrangements, Reuters writes. The document cites a number of laws that give financial institutions rights for a transitional deal.

UK AND IRELAND

* Lloyds Banking Group Plc agreed to acquire British credit card issuer MBNA Ltd. from Bank of America Corp. unit FIA Jersey Holdings Ltd. for a cash consideration of £1.9 billion. The purchase price includes approximately £800 million of acquired equity and assumes £240 million for future claims related to the payment protection insurance mis-selling scandal, with the group's exposure to PPI liability capped at this amount. The transaction is expected to complete by the end of the first half of 2017.

* London Stock Exchange Group Plc entered into exclusive discussions with Euronext NV for the potential sale of LCH SA to proactively address antitrust concerns raised by the European Commission in connection with the planned merger of LSE and Deutsche Börse AG. LSE noted that there can be no certainty that the talks will lead to any transaction.

* Some 27,000 shareholders in Royal Bank of Scotland Group Plc are heading to court today to finalize arrangements for a hearing in 2017 as they seek more than £1 billion in compensation from the bank over its controversial rights issue in 2008, City A.M. writes.

* HSBC Holdings Plc said it has completed a share buyback program announced Aug. 4, repurchasing a total of 325,273,407 ordinary shares at a volume weighted average price of £6.0567 per ordinary share, for a total consideration of approximately $2.50 billion.

* Old Mutual Plc unit OM Asset Management plc today closed an underwritten public offering of 14.95 million ordinary shares at $14.25 per share. Old Mutual will earn gross proceeds less the underwriting discount from the offering of $291 million and now owns 51.1% of OM Asset Management following the transaction.

* The Bank of England named James Talbot international director, Bloomberg News reports. He replaces Phil Evans, who will be in charge of coordinating the central bank's work on Brexit.

* The Association of British Insurers launched a legal challenge to Lord Chancellor Elizabeth Truss' decision to review the discount rate for personal injury damages, saying the review will take a "flawed approach" unless the government completes its consultation and changes its methodology. Truss said in early December that a review would be complete by the end of January 2017 and could result in "profound financial consequences."

* The U.K. Alternative Investment Management Association said the British hedge fund industry should continue to be able to access investors and provide investment management services to clients in the EU following Brexit, Reuters writes. The group also demanded that the industry retains its access to "skilled workers from the EU and beyond" even after the U.K. leaves the EU, noting that about 20% of workers in the industry came from the other countries in the European Economic Area.

* Jardine Lloyd Thompson Group Plc reinsurance subsidiary JLT Re acquired Minnesota-based StoneHill Reinsurance Partners LLC.

* Willie McAteer, former finance director at Anglo Irish Bank, pleaded guilty to fraudulently getting an €8.4 million loan from the lender ahead of his trial that was due to start next month, The Irish Times reports.

GERMANY, SWITZERLAND AND AUSTRIA

* The U.S. Department of Justice asked Credit Suisse Group AG to pay between $5 billion and $7 billion to settle a case over its sale of MBS ahead of the 2008 financial crisis, an insider tells Reuters. The lender reportedly refused to pay such an amount, which is higher than expected by analysts. A potential resolution could be reached as early as this week.

* Meanwhile, Deutsche Bank AG could this week reach an agreement with the U.S. DOJ to settle allegations relating to MBS misselling, an insider tells Reuters. The German bank could announce an agreement as early as tomorrow and is set to pay far below the $14 billion penalty initially sought by U.S. authorities.

* Commerzbank AG has no plans to reduce the number of its branches in Germany even though fewer customers are using them, Handelsblatt cites Michael Mandel, managing director for the business segment private and business customers, as saying. The bank will maintain around 1,000 branches but will redesign them.

* Swiss fintech company Leonteq Securities AG said its pretax 2016 profit is estimated to decline to CHF17 million from CHF69 million in the previous year.

* Helvetia Holding AG took over 70% of Swiss online mortgage and investment broker MoneyPark AG for CHF107 million.

* ProCredit Holding AG & Co. KGaA will list at the Frankfurt stock exchange tomorrow, pending approval by German financial market regulator Bafin, Börsen-Zeitung reports.

* Oberbank AG is set to continue its expansion drive in 2017 with a focus on Hungary and the German state of Hesse, CEO Franz Gasselsberger tells Die Presse.

FRANCE AND BENELUX

* The merger between mutual insurers Harmonie Mutuelle and MGEN and other entities close to these two companies will take longer than expected, according to Les Echos. Originally scheduled to happen in the autumn, the merger is now likely to happen "over the course of 2017," according to Harmonie Mutuelle Chairman Stéphane Junique.

* Dominique Carrel-Billiard has been named at the post of deputy director at Amundi SA, according to L'Agefi. He will join the company's executive committee and will oversee the merger between Amundi and Pioneer Investments, Le Figaro notes.

SPAIN AND PORTUGAL

* Data from the Spanish central bank showed that banks' stock of doubtful loans stood at €117.77 billion in October, compared to €117.72 billion a month earlier. Total loans reached €1.270 trillion in October, down from €1.278 trillion in September.

* Banco Popular Español SA appointed Carmen Riveras as its new risk director general to replace José María Sagardoy, who will be leaving the banking group. Riveras was also called to form part of the institution's steering committee, together with Isabel Moreno, previously head of the corporate information and analysis department. Riveras and Moreno were also appointed as vice directors general of the entity, Cinco Dias reports.

* Portugal's government unveiled a plan to compensate some 4,000 former customers of failed lender Banco Espírito Santo SA that should see them recoup about 60% of lost savings, Reuters and Jornal de Negócios report. The country's banking resolution fund will provide the money for the compensation and Prime Minister António Costa stressed that taxpayers would not foot the bill. Dinheiro Vivo says the claimants would receive 30% of their lost savings as soon as the second quarter of 2017.

* Meanwhile, a lawyer representing the former BES clients rejected the reported opposition of the Portuguese Banking Association to tapping the resolution fund for compensation, Expresso and Jornal Económico report.

* Caixa Geral de Depósitos SA CEO Paulo Macedo submitted the names of his proposed management team to Portugal's central bank, which will subsequently send the list to the ECB for approval, Jornal de Negócios, Dinheiro Vivo and Público all report. The list includes José João Guilherme, previously a director at Millennium BCP and Novo Banco SA, Maria João Carioca, who served in Caixa alongside former CEO José de Matos, Francisco Cary from Novo Banco, Nuno Martins, who has worked for Barclays and Citigroup, and José Brito, a central bank director.

* Millennium BCP's shareholders voted to raise the cap on voting rights to 30% from 20%, Reuters, Jornal de Negócios and Diario de Notícias all report. CEO Nuno Amado said the vote had created the conditions for "a stronger shareholder base."

ITALY AND GREECE

* Intesa Sanpaolo SpA drew at least seven nonbinding offers for a €2.5 billion bad loan portfolio that it is expected to sell in early 2017, insiders tell Reuters. Bidders for the portfolio included KKR & Co. LP and Fortress Investment Group LLC.

* Italy's parliament could vote as soon as tomorrow on a proposal to increase public debt by up to €20 billion to help the government rescue troubled banks, including Banca Monte dei Paschi di Siena SpA, if needed, all dailies including Corriere della Sera write. Bloomberg and Reuters also cover.

* A Thursday meeting of the Italian government could be called to approve a decree to bail out Monte dei Paschi if its €5 billion capital increase fails, Il Messaggero says. The state will participate in the bank's share sale, raising its 4% holding, an insider tells Bloomberg.

* Quaestio, the manager of Italian bank rescue fund Atlante, said it will push through with a planned purchase of bad loans from Monte dei Paschi, following reports that the fund was reconsidering the purchase of €1.5 billion in bad loans, Reuters reports. Trading in the bank's shares were suspended yesterday after they fell 8.5% on the first day of the bank's crucial capital increase.

* National Bank of Greece SA CEO Leonidas Fragkiadakis does not want a fourth recapitalization of the bank, Imerisia notes.

NORDIC COUNTRIES

* Preliminary results of CapMan Oyj's tender offer to acquire all shares in Norvestia Oyj showed that CapMan is set to own a stake of at least 90.3% in Norvestia. The Norvestia shares tendered in the exchange offer, which ended Dec. 16, represent a stake of approximately 61.7% in the company.

* Sweden's central bank could decide to cut its key interest rate when its monetary policy committee meets tomorrow, Dagens Industri reports, citing a Danske Bank forecast.

* Resurs Bank AB (publ) finalized plans to close down its loss-making U.K.-based travel insurance business, Dagens Industri reports. The operating unit had effectively ceased trading at the end of October. Exit costs incurred by Resurs Bank will amount to an estimated 30 million kronor, which is expected to impact its fourth-quarter results.

* Danske Bank plans to establish a special new unit within the bank dedicated to supporting digital technology entrepreneurs, FinansWatch reports. The unit will operate under the name Danske Bank Growth.

EASTERN EUROPE

* The Russian central bank revoked the banking license of Vologda Bank, JSC Fora – Opportunity Russian Bank, PJSC IDEYA Bank and JSCB Mir Bank, Vedomosti reports. The regulator said the banks had problems with asset quality and pursued high-risk lending policy, failing to set aside adequate loan loss provisions.

* JSC VTB Bank put up for sale Ukrainian unit PJSC BM BANK after Ukrainian authorities reviewed sanctions imposed on the lender, Kommersant reports. If the bank is not sold by March 1, it will be merged into VTB Bank PJSC (Ukraine) in order to optimize costs.

* Idea Bank signed an agreement to purchase a 10.93% stake in Poland's Credit Information Bureau from Getin Noble Bank SA, Rzeczpospolita reports.

* A district court in the Polish city of Lódz allowed over 500 clients of mBank SA to launch group proceedings against the lender over mortgage contracts indexed to the Swiss franc, Puls Biznesu reports. The court decision is not final, and the lender intends to file an appeal.

* Turkish Islamic banking sector offers "reasonable medium-term growth prospects" despite the tough operating conditions in recent months, according to Fitch Ratings. The agency noted that the Turkish government aims to increase Islamic banks' market share in total sector assets to 15% by 2025 from 4.7% at the end of September.

* Turkey's Anadolu Endustri Holding completed the sale of 25% stake in Alternatifbank AS to Commercial Bank of Qatar, Milliyet reports.

* The Turkish competition authority approved the sale of 100% of Asya Emeklilik ve Hayat AS, the insurance subsidiary of Asya Katilim Bankasi AS, to the Turkish Agricultural Credit Cooperatives, Sigorta Gündem reports.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: Doha Bank eyes Indian branch network; Google delays NAB proceedings

Middle East & Africa: 3 Qatari banks mull a merger; Nigeria buckles up for sukuk drive

Latin America: Banco Invex to buy Mexican card portfolio; BM&FBOVESPA sets 2017 budgets

North America: Goldman Sachs to pay $56.5M to settle rate rigging suit

North America Insurance: WellCare expects to grow earnings in 2017; Fairfax to buy Allied World

NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE

PrivatBank nationalized to protect Ukrainian economy: finance minister: The nationalization of the bank was necessary to protect the wider economy after a private recapitalization plan failed, the Ukrainian Finance Minister said, adding that the move is the most important step in reforming the banking sector.

EU restrictions on euro clearing could cause big disruption globally: EU plans to restrict euro-clearing in the U.K. have raised concerns in London and New York about the potential "Balkanization" of the global derivatives market, according to industry observers.

Sheryl Obejera, Arno Maierbrugger, 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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