* Executives from Japanese financial institutions warned the British government that they will begin transferring some roles out of London within six months unless they receive clarity on the U.K.'s relationship with the EU after the country leaves the bloc, the Financial Times reports. Standard Life Plc Chairman Gerry Grimstone said he expects more companies present in the U.K. to announce relocation plans in the coming weeks amid a lingering uncertainty on whether Britain will keep access to the European single market.
* Bank of Singapore Ltd. CEO Bahren Sha'ari tells the Financial Times that it is looking into establishing a private banking unit in the U.K. as the sharp drop in the pound sterling in the wake of the Brexit vote led to lower costs in the country.
* The devolved Scottish government will this week present proposals on how Scotland can remain in the EU's single market post-Brexit to prevent the loss of thousands of jobs, Reuters reports. The plans will include seeking substantial new powers to the devolved government. Scottish First Minister Nicola Sturgeon will also warn that Scotland will hold another referendum on leaving the U.K. unless it secures access to the single market, according to Bloomberg News.
UK AND IRELAND
* Royal Bank of Scotland Group Plc is working on contingency plans in case it fails to divest its Williams & Glyn business by the 2017-end deadline imposed by the European Commission, The Daily Telegraph writes. The bank is reportedly assessing other stakes that it can sell if it fails to reach an agreement with Banco Santander SA or CYBG Plc, both of which are interested in just parts of Williams & Glyn.
* RBS may also be forced to just tell some 1.7 million clients to switch bank accounts as technical issues hamper its attempt to sell Williams & Glyn, according to The Sunday Times. RBS is struggling to create a database of clients that can be easily transferred to the future new owner of the business, and could ultimately just have to ask affected clients to transfer their accounts to whoever snaps up Williams & Glyn, a factor that could cut the sale price due to uncertainty on whether the customers will follow through with switching.
* The U.K. Treasury could sell the final chunk of its stake in Lloyds Banking Group Plc through a share placement with institutional investors in the first quarter of 2017, insiders tell the Financial Times. Sources said the Treasury could be tempted to continue gradually reducing its share in Lloyds through a so-called trading plan until it reaches zero, but others say it could also opt to sell its shares in one sitting after it drops to about 5%.
* The Irish Department of Finance named Bank of America Merrill Lynch, Davy and Deutsche Bank as global coordinators to assist in a potential IPO of Allied Irish Banks Plc. Finance Minister Michael Noonan noted that there remains no fixed timetable for any sale of a stake in AIB.
* Barclays Plc is preparing to tell some 7,000 clients to find another bank unless they agree to boost trading with the company as it moves to focus on lucrative customers and remove those that contribute little to group profits, Bloomberg News reports.
* U.K. Treasury Select Committee Chairman Andrew Tyrie wrote to Ciaran Martin, head of the U.K. National Cyber Security Centre, to suggest a single point of responsibility for cyber risk in the British financial sector, The Guardian reports. A spokesman for the agency said there will be a government response in 2017.
* Separately, Tyrie will this week announce an inquiry into whether the latest regulations in the U.K. are sufficient to avoid the threat of another taxpayer bailout of banks, City A.M. writes.
* Brewin Dolphin Holdings Plc unit Brewin Dolphin Ltd. will acquire the U.K. private client investment management business of Duncan Lawrie through the purchase of Duncan Lawrie Asset Management Ltd., subject to certain regulatory approvals. The consideration will comprise a cash payment on completion, expected in the first half of 2017, of £25.5 million and a payment to reflect the value of net assets in the business at that date.
* Separately, Arbuthnot Banking Group Plc subsidiary Arbuthnot Latham & Co. Ltd. completed the purchase of a private banking loan portfolio from Duncan Lawrie Ltd. for £42.7 million.
* Lloyd's of London included Dublin, Frankfurt, Paris and Malta in the short list of five locations where it is considering establishing the headquarters of a potential European subsidiary, the Mail on Sunday writes.
* The Alternative Investment Management Association, Managed Funds Association and the Alternative Credit Council will this week publish a document urging the British government to ensure hedge funds will retain their ability to offer services to investors in the EU, according to the Financial Times. The associations will also call for the U.K. to try to align its industry regulations more closely with those of the U.S. and Asia.
* Active U.K. equity managers are on course to suffer their worst year since 2007 after data from Morningstar showed that just 21% of equity managers beat the market in the first 11 months of 2016, compared to 72% for the entire 2015, the Financial Times reports. Jupiter Fund Management Plc's U.K. Growth Fund registered the worst performance so far this year, more than 22% below the benchmark.
* Former UBS Group AG traders Panagiotis Koutsogiannis and Arif Hussein lodged complaints with the U.K. Complaints Commissioner against the Financial Conduct Authority, accusing the lender of "systemic failures" in its investigations into the two traders relating to LIBOR rigging, the Financial Times writes.
GERMANY, SWITZERLAND AND AUSTRIA
* Deutsche Bank Securities Inc. settled investigations by the state of New York and the U.S. Securities and Exchange Commission into how its electronic equities order routing services were marketed, admitting that it misled investors on that front. The Deutsche Bank AG unit agreed to pay $37 million, to be split equally among the New York state and the U.S. Securities and Exchange Commission. Separately, the U.S. Financial Industry Regulatory Authority fined Deutsche Bank Securities about $3.3 million for deficient disclosures regarding its alternative trading system.
* S&P Global Ratings placed on CreditWatch with positive implications the long-term issuer credit ratings of Deutsche Bank AG, Commerzbank AG, UniCredit Bank AG and Deutsche Pfandbriefbank AG and several of their foreign subsidiaries.
* The management boards of Raiffeisen Zentralbank Österreich AG and subsidiary Raiffeisen Bank International AG passed a resolution on the exchange ratio for their merger. The merged entity, to be known as Raiffeisen Bank International, will reduce its free float percentage to 34.9% from 39.2% while the number of shares issued will increase by 35,960,583 to 328,939,621. An extraordinary general meeting planned for Jan. 24, 2017, will vote on the merger.
* ERGO Group AG Belgian subsidiary ERGO Belgium plans to stop writing new life insurance business and to close down its sales organization in Belgium and Luxembourg. The Munich Re company said the difficult situation on the capital markets had significantly deteriorated profitability in the Belgian market. ERGO will also cut its workforce by 200 employees while continuing to serve existing customers.
* Landesbank Hessen-Thüringen Girozentrale and Hessisch-Thüringische Sparkassen-Beteiligungsgesellschaft, a unit of Sparkassen- und Giroverband Hessen-Thüringen, agreed to sell their 94.9% stake in Hannover Leasing Group to Luxembourg-based real estate investment manager CORESTATE Capital Holding SA for an undisclosed sum. The transaction remains subject to approval by German financial watchdog Bafin, which is expected to complete its review by mid-2017.
* The Federation of German Consumer Organisations denounced Volksbank Raiffeisenbank Nürnberg eG for cancelling long-running, high-interest savings plan agreements, Handelsblatt reports. The cooperative bank intends to terminate the 25-year contracts as of Dec. 31.The consumer watchdog called the move "illegal." VR Bank Nürnberg cited the current low and negative interest rates for the move.
* Delta Lloyd NV said the Dutch central bank gave Delta Lloyd Algemeen Pensioenfonds a license to operate a general pension fund. Delta Lloyd said the license allows the group to progress in its pension strategy.
FRANCE AND BENELUX
* Generali dismissed rumors that it was willing to exit the French market with a sale to German rival Allianz Group and reiterated that France is still strategic for the group, Corriere della Sera writes. Insiders tell Bloomberg News that Allianz is considering a bid for Generali's French operations.
* Orange Bank will be launching next spring by offering a complete mobile banking offer encompassing current accounts, savings products, consumer credit and insurance, according to Les Echos. The bank will also launch mortgages in a second phase.
* As part of its strategy of simplification, insurance group Groupama SA will become a national mutual agricultural reinsurance group with the status of a mutual insurer within 18 months after the implementation of the draft law Sapin II, Les Echos writes. As part of the transformation, the regional entities will become members of the future national body and all the French and foreign subsidiaries of Groupama will be transferred into an intermediate holding.
* AXA CEO Thomas Buberl warned that technology companies could steal significant market share in the health insurance business from big insurance firms and not in the motor insurance business as is widely thought, the Financial Times reports. "Technology companies may attack us on motor insurance but they will mostly attack us in health. If we do nothing then in five years they'll run us over," Buberl said.
* Mutual insurer Maif, which owns 38% of the capital of fintech company Morning, is considering helping the new online bank solve its difficulties, according to Les Echos. Morning will submit tomorrow a short-term refinancing plan to French regulator ACPR. The regulator suspended early this month the activity of the fintech firm.
SPAIN AND PORTUGAL
* Banco Bilbao Vizcaya Argentaria SA plans to shut down 132 branches in Spain in February, Europa Press reports.
* U.S. private equity fund Lone Star will withdraw its €750 million offer for Novo Banco SA on Jan. 4, 2017, Jornal de Negócios reports, noting that a final decision on the bank's buyer could be delayed beyond year-end as Chinese group Minsheng seeks financial guarantees for its proposal to acquire the Portuguese lender. Meanwhile, the head of the country's banking association, Faria de Oliveira, said the bank's sale would be "convenient" this year.
* Novo Banco will make another early repayment of senior state-guaranteed debt as part of efforts to make savings on hefty commissions on the loans, Jornal de Negócios and Jornal Económico report. The bank will repay a further €700 million following an early repayment of €1 billion in November.
* Millennium BCP's shareholders are expected to vote today to raise the cap on voting rights from 20% to 30% as demanded by China's Fosun group, which recently purchased a 16.7% stake in the lender and plans to bolster its participation to up to 30%, Jornal de Negócios writes.
* Portuguese Prime Minister António Costa is expected to announce today a solution to the demands of retail bondholders hit by the collapse of Banco Espírito Santo SA, Diario de Notícias reports. A representative of the roughly 2,000 investors said the solution involves creating a fund to pay up to 75% of the lost capital, with the remaining 25% to come through court judgements.
* Portugal is set to recover from the Cayman Islands operations of failed investment bank Banco Privado Português €67 million in compensation for state loan guarantees, Jornal de Negócios and Jornal Económico report, citing Expresso. The proceeds would be used to reduce a state-backed loan of €450 million made in 2008 by a group of six Portuguese banks to BPP.
ITALY AND GREECE
* Banca Monte dei Paschi di Siena SpA between Sept. 30 and Dec. 13 had an outflow in deposits of some €6 billion, in addition to the €13.8 billion lost in the first nine months of the year, Corriere della Sera writes.
* Monte dei Paschi's capital increase is due to start today, Il Messaggero writes. Some 65% of the new shares will be offered to institutional investors who have until Thursday to subscribe, while 30% will be offered to current shareholders. The remaining 5% will be offered to the public.
* Fergus McCormick, chief economist and co-head of sovereign ratings at DBRS, said a successful capital raising at Monte dei Paschi could help financial stability in Italy and strengthen the durability of the country's new government, Reuters reports.
* Italy's State Council referred to the Constitutional Court a law on the transformation of cooperative banks into joint stock companies and suspended the transformation that still have to be completed, Il Sole 24 Ore writes.
* A Milan Court prevented from taking place at the weekend a shareholders' meeting of Banca Popolare di Sondrio SCpA to approve the bank's transformation, Corriere della Sera writes. Il Sole 24 Ore, however, notes that the lender is ready to call a new meeting to approve the transformation in January 2017, adding that the bank is considering creating a holding company with a cooperative structure.
* Banca Popolare di Vicenza SpA is expected to announce a project to merge with Veneto Banca SpA by the 2017 first quarter, Corriere Economia writes. The ECB ordered the two banks to submit a new strategy plan and measures to decrease their stack of bad loans, Reuters reports.
* Nonperforming loans are slowly falling in Cyprus, according to central bank data, StockWatch notes. In the month of September, nonperforming loans fell from €24.6 billion to €24.1 billion.
* The next-stage Basel rules may require banks in Sweden to find an additional 245 billion Swedish kronor to strengthen their capital bases, Dagens Industri writes.
* A Danish court has imposed a 200,000 Danish kroner fine on the former BDO Denmark accountant Carsten Petersen, FinansWatch reports. The court ruled that Petersen breached good accountancy practices when he delivered an uncritical audit of Tønder Bank before the local bank filed for bankruptcy in 2012.
* The Ukrainian central bank decided to nationalize PAO KB Privatbank, Vedomosti and Reuters report. The Ukrainian Finance Ministry will become the new owner of Privatbank shares, with the transition period starting Dec. 19.
* Rosgosstrakh Group, including insurer PAO Rosgosstrakh and PJSC Rosgosstrakh Bank, could be merged into Otkritie Holding JSC, Vedomosti reports. Under a deal negotiated by the shareholders of both groups, Otkritie Holding's owners would have control of the merged entity, while Rosgosstrakh Group's beneficiary owner Danil Khachaturov would obtain a minority stake in the company.
* Russian group Safmar's shareholders are interested in acquiring a 25% stake in Commercial bank Renaissance Credit (LLC), Kommersant reports.
* The Russian central bank agreed to move the deadline for banks to set aside 100% provisions on loans provided to companies that do not carry out actual economic activities to April 1 from Jan. 1, 2017, Kommersant says.
* Getin Holding SA sold 1.15 million shares of Idea Bank SA, equivalent to a 1.46% stake in the lender, Parkiet reports. The shares were acquired by LC Corp. BV, a company controlled by Polish businessman Leszek Czarnecki, who is also the main shareholder of Getin Holding.
* J&T Banka a.s. was fined 5 million Czech koruny by the Czech central bank for conducting trading transactions that were disadvantageous for the lender, Hospodarske Noviny reports. J&T Banka reportedly argued that the transactions were aimed to compensate one of its clients, who blamed the lender for his previous losses.
IN OTHER PARTS OF THE WORLD
Asia-Pacific: Bank of Singapore mulls opening UK bank; National Australia Bank sues Google
Middle East & Asfrica: Oman bucks the Fed trend; bitcoin piques Nigeria's interest
NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE
Lloyd's faces unprecedented move to create new EU fund in the wake of Brexit: Setting up a smaller, separately capitalized version of itself in another EU country would be a big step for the insurance marketplace which has had its business in the heart of the City of London for 328 years.
European insurers well-prepared for economic turmoil, trade bodies say: The European insurance regulator, EIOPA, has highlighted the dangers of a prolonged low interest rate environment for the industry. But industry bodies say insurers are already well-prepared to handle macroeconomic headwinds.
Caixa Geral recapitalization shadowed by bad loans, weak economy: Portugual's Caixa Geral de Depósitos recapitalization may help the bank get back on its feet in the short term, but its long-term success will depend on reducing its volume of nonperforming loans and returning to profitable lending.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
Sheryl Obejera, Ed Meza, 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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