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Credit Suisse breakup bid; May dines with Juncker; Spanish banks suffer anew

Banking Essentials Newsletter - November Edition

Online Brokerage Space Should Remain Rich Source Of M&A

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery


Credit Suisse breakup bid; May dines with Juncker; Spanish banks suffer anew

* British Prime Minister Theresa May met European Commission President Jean-Claude Juncker and EU chief Brexit negotiator Michel Barnier for dinner in Brussels on Monday night, with May and Juncker saying they agreed that efforts on negotiating Britain's departure from the EU "should accelerate over the months to come," BBC News reported. The Financial Times said German Chancellor Angela Merkel had told May that she would have to increase Britain's financial settlement offer before talks could progress. And The Guardian said a leaked draft statement from EU leaders to be published Friday contained stronger language than an earlier version, insisting that progress be made on all key areas before parallel trade talks can commence.

* U.K. Chancellor Philip Hammond told CNBC he was confident that London would remain a global financial center post-Brexit and that the majority of international banks intend to retain large numbers of their London-based employees, Reuters reported.

* The ECB's plan requiring banks to set aside more cash to cover newly classified bad loans could boost the credibility of the bloc's regulatory regimes and improve investor confidence, according to S&P Global Ratings. The agency said, however, that the impact will be felt more by lenders operating in Italy, Portugal, and Greece, which rely heavily on future collateral values in provisioning for nonperforming loans.

* Meanwhile, Moody's said additional regulatory expenses, restructuring costs and interest margin pressures mean that European banks are set to face continued revenue erosion despite efforts to cut costs via large-scale branch closures and staff reductions.

UK AND IRELAND

* Lloyds Banking Group Plc rejected an offer from the Lloyds Shareholder Action Group to settle a legal dispute over the bank's takeover of HBOS Plc in 2008, insiders told Sky News. The group reportedly informed Lloyds last week that it would abandon its claims for a payment of about £500 million. A 14-week trial is expected to begin tomorrow at the High Court of London.

* The U.K. Financial Conduct Authority is extending its investigation into Barclays Plc CEO Jes Staley's attempts to identify a whistleblower, insiders told Bloomberg News. The regulator expects to conclude the probe by December, two months later than its initial October target.

* Provident Financial Plc shares rose 18.5% after Woodford Investment Management purchased a further 1% stake in the firm on Friday, City A.M. wrote.

* OakNorth Bank Ltd. sold a 16% stake to three investors for $203 million. The new investment will enable the challenger bank to lend around $20 billion next year.

* The Bank of England will start setting the SONIA interest rate benchmark, an alternative to the discredited London Interbank Offered Rate, in April 2018.

* Shares in Ireland's only listed indigenous insurer, FBD Holdings Plc, were off 4.4% Monday as the country was battered by ex-Hurricane Ophelia, The Irish Times noted. Three people were killed, BBC News reported.

GERMANY, SWITZERLAND AND AUSTRIA

* Swiss hedge fund RBR Capital Advisors AG, which holds a roughly 0.2% stake in Credit Suisse Group AG, is planning an activist push to urge the bank’s management to split the lender into an investment bank (under the former First Boston brand), a wealth management business incorporating retail and business banking and an asset management unit, sources told the Financial Times. The plan is backed by the former co-head of Credit Suisse's investment bank, Gaël de Boissard. An RBR spokesman confirmed the company's stake, and talks with management, in a statement cited by Reuters.

* Commerzbank AG booked extraordinary second-half revenue of €132 million from the disbanding of installment loan joint venture Commerz Finanz GmbH with BNP Paribas SA, Handelsblatt noted.

* Volksbank Wien AG will continue in savings and merger mode, CEO Gerald Fleischmann told Kurier. The group will cut its branch network further to 300 from 360, save at least another €100 million through 2020 and continue a job cutting program that saw 600 of 4,600 staff made redundant in the past 18 months.

* UBS Group AG lost an appeal in a London court over a compensation claim for damages of almost €500 million it sought from German water utility Kommunale Wasserwerke Leipzig GmbH, to which it sold complex derivatives contracts in 2006, Leipziger Volkszeitung noted.

FRANCE AND BENELUX

* Belgian insurer Ageas SA/NV said it requested an extension of the deadline to reach an amended settlement with former Fortis shareholders to resolve concerns that led the Amsterdam Court of Appeal to block a previous agreement in June. Ageas said it is willing to pay an extra €100 million in compensation, on top of the €1.2 billion already agreed. De Tijd and L'Echo carried reports.

* The successor to Caisse des Dépôts et Consignations CEO Pierre-René Lemas should be announced at the end of this week or next, government sources told Les Echos. Former Generali France CEO Eric Lombard and former Humanis CEO Jean-Pierre Menanteau are among the possible candidates.

SPAIN AND PORTUGAL

* Shares in Spanish lenders were down yesterday amid uncertainty surrounding Catalonia's independence vote, with CaixaBank SA down 1.73%, Banco de Sabadell SA off 2.8% and Banco Bilbao Vizcaya Argentaria SA falling 1.75%. Catalan President Carlos Puigdemont declined to meet a Spanish deadline to clarify whether he had declared independence, raising the prospect of the imposition of direct rule of the region from Madrid. The Financial Times had a report.

* Novo Banco SA approved a €750 million capital injection by Lone Star — one of the last stages before the conclusion of the sales process, Economia Online reported. The payment is expected to be made in the coming days, with a second tranche of €250 million due by year-end, when the American private equity fund will control 75% of Novo Banco.

* Deutsche Bank AG canceled its plans to sell Deutsche Bank SAE after bids for the Spanish unit failed to meet its expectations, Expansión reported.

ITALY AND GREECE

* ECB Supervisory Board Chair Danièle Nouy urged Cypriot lenders to implement "additional and persistent" measures to tackle their high level of nonperforming loans, Reuters reported. Toxic loans account for more than 40% of the Cypriot banking sector's total loan book, the newswire noted.

* Barclays joined the consortium of lenders headed by Deutsche Bank and Credit Suisse guaranteeing the €1 billion recapitalization of Banca Carige SpA, Il Sole 24 Ore reported. Carige’s capital increase of up to €560 million will kick off Nov. 21, Il Messaggero noted.

* The transfer of a €17.7 billion nonperforming loan portfolio of Banca Popolare di Vicenza SpA and Veneto Banca SpA to Società Gestioni Attività (SGA) has been delayed to November while the Italian treasury ministry considers seeking an alliance for SGA with two or three lenders, MF reported.

* The market is betting that Società Cattolica di Assicurazione SC will be chosen today by Banco BPM SpA over SGAM Covéa to become its insurance partner, Il Sole 24 Ore and MF wrote.

* The mixed cash and equity offer by Banca Popolare di Sondrio SCpA for an initial 51% of Cassa di Risparmio di Cento SpA values the Emilia Romagna-based lender at €100 million, or 0.54x its tangible equity, MF wrote.

* Milan magistrates have asked that Salvatore Ligresti, 85, former head of Premafin Finanziaria, be sentenced to five years in jail and fined €100,000 in his trial for market rigging, while for the other co-defendants, Giancarlo De Filippo and Niccolò Lucchini magistrates have asked for a €63,000 fine each and the seizing of all their UnipolSai Assicurazioni SpA shares, Il Sole 24 Ore reported, adding that sentencing is scheduled for Nov. 27.

NORDIC COUNTRIES

* Danske Bank A/S refused to comment on a report in The Sunday Times of London that it agreed to sell a €2 billion Irish loan portfolio to Pimco and Goldman Sachs, Finanswatch reported. Bank of Ireland was reported to be among the unsuccessful bidders.

* The Swedish FSA said it could be willing to make adjustments to its proposal for tighter amortization requirements for mortgages, Dagens Industri reported. The requirements, scheduled for the end of the year, have been strongly criticized, with both real estate investors and banks worried about the effects on the market.

* Swedbank AB (publ)'s Swedbank Robur reduced its holdings in Nordax to 1.7% from 5.8%, Realtid reported. At the beginning of 2017, the fund manager held a 9.5% stake in Nordax. Private equity firm Nordic Capital and Nordea recently acquired large stakes in the bank.

EASTERN EUROPE

* Corporate clients withdrew around 60 billion Russian rubles from Otkritie Financial Corp. Bank in September, following the Russian central bank's takeover of the struggling lender, Vedomosti reported. However, the September outflow of corporate funds was smaller than in August, and retail outflows stopped.

* The Russian central bank wants to extend the period under which troubled lenders can operate under provisional administration and creditor claims moratorium to 18 months, Vedomosti reported, adding that legislative proposals were sent to the finance ministry at the beginning of October.

* PAO Sberbank of Russia won its first court case for the repayment of debt by troubled Croatian food and retail group Agrokor after a court in Bosnia approved the sale of its stake in a Bosnian company, Reuters reported. It is estimated that Agrokor owes Sberbank around €1.1 billion.

* Russian Finance Minister Anton Siluanov has been in discussions with Vnesheconombank head Sergey Gorkov to provide the state-owned bank with long-term liquidity after the finance ministry decided to reduce annual support for VEB by one-third to 100 billion rubles in September, Reuters reported.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: HK drops suit against UBS, StanChart; Australia to conduct banking stress test

Middle East & Africa: Mashreqbank, UBA 9-month profits rise YOY; Fitch acts on Kuwaiti lenders

Latin America: Banco Agrário recovers Navelena debt; Diviso Grupo to up Edpyme stake

NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE

Macron's EU financial transaction tax proposal regarded as a 'flop': A proposal by French President Emmanuel Macron to establish a EU-wide financial transaction tax to finance a development budget is unlikely to ever be implemented as it will come up against resistance from European financial centers, analysts said.

Financial investors can buy German life insurance policies, but only indirectly: A Bafin spokesman rejected a suggestion made in a press report that the regulator believes large insurers would be better placed to provide emergency capital to their subsidiaries, if needed, than financial investors.

UK commercial property lending volumes down 24% in H1'17: Survey: Volumes of lending to U.K. commercial slumped by 24% in the first six months of 2017, according to research from De Mortfort University.

Rich Lovie, Arno Maierbrugger, Danielle Rossingh, Esben Svendsen, Beata Fojcik, Heather O'Brian, Stephanie Salti, Praxilla Trabattoni, and Mariana Aldano contributed to this report.

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