* The U.K. and the EU have made "sufficient progress" in the first phase of Brexit negotiations, paving the way for talks to proceed to a future trade deal. The European Commission said the U.K. has pledged to avoid a hard border between the Republic of Ireland and Northern Ireland, honor its financial commitments to the EU and retain the rights of EU citizens living in the U.K. after the country leaves the bloc. It is now up to the European Council to decide Dec. 15 whether to allow talks to move on to the second phase.
* The Basel Committee on Banking Supervision yesterday agreed to set the so-called output floor, which effectively limits the way banks use their internal models to calculate risk weightings on assets, at no less than 72.5% of the calculation achieved by the standardized approach set by regulators. Banks will have until 2027 to comply, with the output floor being phased in incrementally starting at 50% in 2022.
* In light of the changes, the European Banking Authority said European banks will have to increase their total capital by €39.7 billion compared to their levels as of December 2015. "The reform has a limited aggregate impact on regulatory capital ratios and capital shortfalls," the EBA said.
* Outgoing Eurogroup President Jeroen Dijsselbloem said eurozone finance ministers will likely reject a proposal by the European Commission to create a new EU finance minister role that will serve as a commissioner and Eurogroup head, Reuters reported. Dijsselbloem described the commission's proposal for the new role as "very broad and also still quite vague."
* ECB Supervisory Board Chair Danièle Nouy said the regulator will consider pushing back the start date from which banks' nonperforming loans will be subjected to proposed new rules that force banks across the eurozone to set aside more cash to cover for potential losses, Reuters reported.
UK AND IRELAND
* U.K. general insurers should improve how they tackle shortfalls in the catastrophe risk models they use, the Prudential Regulation Authority said following its biennial stress test of the sector. The regulator also noted that a number of firms "struggled" to forecast how the stress-test scenarios would affect their Solvency II basic own funds.
* HSBC Holdings Plc CEO Stuart Gulliver said the bank has a three-year head start on its foreign investment banking peers in China's fast-growing market, due to its management control of Hong Kong unit HSBC Qianhai Securities, Reuters wrote. Gulliver's statement comes after the Chinese government recently decided to allow foreign firms to control their operations in the East Asian country.
* Separately, several HSBC bankers are at risk of being made redundant as part of a reshuffle of the firm's capital markets business, following the recent departure of Matthew Westerman, HSBC's co-head of global banking, Thomson Reuters' IFR wrote.
* Santander UK Plc named Michael Harte as COO to help lead its digital transformation, Reuters noted. Harte joins the Banco Santander SA unit from Barclays Plc, where he was group head of innovation.
* Old Mutual Wealth hired Goldman Sachs, JPMorgan and Bank of America Merrill Lynch to lead its IPO next year, insiders told Reuters.
GERMANY, SWITZERLAND AND AUSTRIA
* John Dacey, Swiss Re AG's group chief strategy officer, was appointed group CFO, effective April 1, 2018. He will replace David Cole, who will step down to pursue a nonexecutive career but will remain a board member of several of the group's units.
* Börse Stuttgart GmbH is set to acquire a majority stake in Swiss exchange BX Swiss AG. The move will allow the two trading venues in Stuttgart and Zurich to lay the groundwork for a long-term strategic partnership.
* Swiss insurer Helvetia Holding AG acquired a stake in Estonian insurance technology company INZMO via its Helvetia Venture Fund, which invested a single-digit million amount in the startup.
* Raiffeisen Bank International AG appointed Andrii Stepanenko as management board member in charge of retail banking.
* Vontobel Holding AG agreed to sell its Liechtenstein operation, including the local booking platform, to wealth manager Kaiser Partner Privatbank for an undisclosed amount.
* BAWAG PSK closed its acquisition of German regional private bank Südwestbank AG.
FRANCE AND BENELUX
* Dexia SA shareholders approved a proposal to convert preference shares issued in 2012 and held by the Belgian and French states into ordinary shares at a conversion rate of 14.446 ordinary shares for every 1 preference share.
* Banque Populaire Atlantique, Banque Populaire de l'Ouest, Caisse Régionale de Crédit Maritime Mutuel Atlantique SC and Caisse Régionale de Crédit Maritime Mutuel de Bretagne-Normandie SC — four regional lenders belonging to France's Groupe BPCE — agreed to merge to create a larger regional group called Banque Populaire Grand Ouest.
SPAIN AND PORTUGAL
* The period during which Banco Popular Español SA shareholders could opt to take loyalty bonds as compensation expired yesterday, according to Europa Press. Santander had designed the bonds to compensate Banco Popular shareholders who lost out after Santander acquired Banco Popular in June for a symbolic €1.
ITALY AND GREECE
* Banca Carige SpA agreed to sell 80.1% of consumer credit unit Creditis Servizi Finanziari SpA to Chenavari Investment Managers for €80.1 million.
* An appeals court in Florence, Italy, acquitted former Banca Monte dei Paschi di Siena SpA Chairman Giuseppe Mussari, former CEO Antonio Vigni and former finance head Gianluca Baldassari of charges that they obstructed an investigation into a 2009 derivatives trade with Japan-based Nomura Holdings Inc. that prosecutors said was used to hide losses, Reuters reported. The three are still on trial in Milan in connection with the derivatives trade and other transactions.
* Binding offers for Banco BPM SpA's €2 billion portfolio of mainly nonguaranteed loans are due at the beginning of next week, with Banca IFIS SpA, Lindorff and other smaller players said to be interested, MF wrote.
* French entrepreneur Denis Dumont is thought to have increased his stake in Credito Valtellinese SpA to 9% and could seal a strategic alliance with private equity group Cerberus that would see them increasing their joint stake to between 20% and 25%, following the lender's planned €700 million capital increase, MF said.
* Piraeus Bank SA received approval from Serbia's competition regulator to sell its banking and leasing operations in the country to Direktna Banka ad Kragujevac for a total cash consideration of between €58 million and €61 million, SEENews reported.
* The Danish government said the output floor agreed by the Basel Committee does not adequately take into account the very low risk of holding Danish mortgage bonds, Reuters wrote. Separately, the Swedish Financial Supervisory Authority said it does not intend to "mechanically" increase capital requirements for local banks due to the new rules, thought it cannot rule out that capital levels may need to increase, the newswire added.
* Polish Finance Minister Mateusz Morawiecki will replace Prime Minister Beata Szydlo, who quit hours after surviving a motion of no-confidence brought by the parliamentary opposition.
* Poland's two largest lenders, PKO Bank Polski SA and Bank Pekao SA, could merge in 2018, in order to help the lenders with international expansion, insiders told Rzeczpospolita. The Polish state is a key shareholder in both lenders.
* The results of the latest stress tests demonstrate that most Polish banks are able to absorb the effects of shocks associated with future threats in the financial system, PAP reported, citing the Polish central bank. The stress tests showed that lenders would require 7.1 billion Polish zlotys of new capital in a baseline scenario to meet capital requirements and combined capital buffer, with the sum growing to 24.9 billion zlotys under a shock scenario.
* The National Bank of Serbia decided to maintain its key policy rate at 3.5%.
* The Russian central bank will provide 456.2 billion Russian rubles to recapitalize financially troubled Otkritie Financial Corp. Bank. The funding will also be used to support insurer PAO Rosgosstrakh and pension funds which are part of Otkritie Group.
* JSC The Agency for Housing Mortgage Lending and JSC VTB Bank finalized the securitization of Bank VTB 24 mortgage portfolio through the issuance of mortgage bonds worth 48.2 billion Russian rubles, Banki.ru reported.
* The corporate and retail clients of VVB Bank, operating in Russia-annexed Crimea, have not been able to withdraw their funds from the lender due to its financial problems, Kommersant wrote. The lender is unlikely to cope with the liquidity crisis on its own, and financial support from the central bank is unlikely due to its relatively small size, the newspaper noted.
IN OTHER PARTS OF THE WORLD
Asia-Pacific: Indonesia moves to curb digital currencies; Nepal Rastra to cut bourse stake
Middle East & Africa: Bahrain eyes new rules for Islamic banks; Moza Banco cash call approved
Latin America: Said family seeks funding for BBVA Chile deal; Brazil cuts Selic rate
North America: Citi to take $20B hit from tax reform; Mississippi bank buying Florida bank
North America Insurance: ACA enrollment hits 3.6 million; Validus Holdings launches cat bond
NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE
MiFID II impact on EMEA i-banks 'manageable,' says Coalition: The impact of the new MiFID II rules coming into force in 2018 is 'manageable,' while other external factors could prove a far greater obstacle to CIB performance over the next two years, Coalition said.
Local regulation, phase-in key to success of Basel deal: European banking sector: "The output floor may do significant harm to our European economy and to the global competitiveness of European banks," said European Banking Federation CEO Wim Mijs.
Leo Magno, Ed Meza, Danielle Rossingh, Esben Svendsen, Beata Fojcik,Heather O'Brian, Stephanie Salti, Sophie Davies and Mariana Aldano contributed to this report.
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