* The ECB said five large eurozone banks face a cap on payouts of dividends, bonuses and coupons next year as they are falling short on capital, Reuters reports. The banks were not named. The central bank warned that low profits and bad loans continue to weigh on the banking sector.
* Separately, the ECB said no broadly based increase in countercyclical capital buffers is currently warranted as cyclical systemic risks remain contained in most countries in the bloc, with the financial cycle gradually picking up.
* The International Organization of Securities Commissions said new IFRS 9 rules requiring banks to set aside capital upfront to cover potential loan defaults could have a major impact on their financial statements and urged firms to outline the potential implications of the new accounting standards before they come into force, Reuters writes.
* The ECB's Single Supervisory Mechanism warned that banks in the eurozone are facing fresh risks from political uncertainty across the bloc, particularly the fallout from the U.K.'s decision to leave the EU, as well as the current low growth environment, The Wall Street Journal reports.
* Ivan Rogers, Britain's ambassador to the EU, has privately warned ministers in October that the consensus among the other 27 EU states was that a final free-trade agreement between the U.K. and the bloc might not be struck until early to mid-2020s, and that even once concluded, the deal may not be ratified, BBC News reports. U.K. Prime Minister Theresa May's spokesman, Greg Swift, downplayed Rogers' remarks, saying that the government is fully confident of reaching a deal within the established timeframe, Bloomberg News writes.
* The European Insurance and Occupational Pensions Authority's stress test found that under a scenario of a prolonged period of low interest rates, the excess of assets over liabilities on insurers' balance sheets would fall by €100 billion. Under a second "double hit" scenario, which combines a low risk-free rate and a negative market shock to asset prices, insurers would take a €160 billion hit.
* Total economic losses from disaster events in 2016 amount to at least $158 billion, compared to $94 billion a year earlier, according to Swiss Re Ltd. The reinsurer's preliminary sigma estimates also indicate that insured losses have risen in 2016, to approximately $49 billion from $37 billion a year earlier.
UK AND IRELAND
* Michel Barnier, the European Commission's chief Brexit negotiator, told EU leaders that the U.K. will have to pay a Brexit settlement fee of up to €60 billion for outstanding liabilities, insiders tell Sky News. The calculation is understood to be inclusive of the obligation for the U.K. to pay into the EU budget until 2020-end, as well as outstanding pensions liabilities and payments linked to loan guarantees.
* London could lose its flagship euro-denominated clearing business to the eurozone as the European Commission considers supporting rule changes designed to give the ECB a remit over the location of the key market infrastructure, the Financial Times reports. A French central bank official called on the EU executive body to incorporate restrictions on euro clearing in legislative proposals due to be published in April 2017.
* The Bank of England's monetary policy committee voted unanimously to keep the existing policy framework in place, maintaining its main interest rate at 0.25% and the size of its quantitative easing program at a maximum of £435 billion.
* Royal Bank of Scotland Group Plc is seeking for EU approval to sell a smaller portion of its Williams & Glyn business after failing to draw interests for the entire operation, insiders tell Bloomberg News.
* In its macro-financial review, the Central Bank of Ireland said it is seeing an increasing number of global insurance groups seeking to move to the country from the U.K.
GERMANY, SWITZERLAND AND AUSTRIA
* The trial of Deutsche Bank AG and Nomura Holdings Inc. executives accused of conspiring with Banca Monte dei Paschi di Siena SpA to falsify accounts began yesterday, Bloomberg News writes. The executives allegedly used complex derivative trades to cover up the Italian lender's losses, resulting in a misrepresentation of its accounts between 2008 and 2012.
* Deutsche Bank maintained staff salaries at approximately the same level as a decade ago despite the financial crisis and a sharp decline in profits, Reuters reports. The lender paid its staff more than €13 billion in 2015, including benefits and bonuses, despite a loss of nearly €6.8 billion. The figure is nearly on par with 2007, when the bank made a profit of €6.5 billion.
* Credit Suisse Group AG appointed Michael Stewart head of equities at its global markets unit, finews.com reports. Stewart joins from UBS Group AG, where he most recently served as head of investment products and services.
* UBS Group is slashing nearly two dozen jobs in its Asian investment banking business as part of its cost-cutting drive, insiders tell Reuters. The cuts will mainly affect mid-level staff in Hong Kong and Singapore and a few managing directors.
* Responding to reports of potential security deficiencies in its system, German smartphone bank N26 said it had patched all of the holes in its app, Handelsblatt reports.
* The Swiss National Bank is keeping its expansionary monetary policy unchanged, with interest on sight deposits remaining at negative 0.75%. Describing the Swiss franc as "still significantly overvalued," the SNB said the negative interest rate and its willingness to intervene in the foreign exchange market were intended to make Swiss franc investments less attractive, thereby easing pressure on the currency.
FRANCE AND BENELUX
* ING Groep NV and Amundi SA will no longer buy ABS on behalf of the ECB beginning April next year, Reuters writes. The ECB said it has decided that its ABS buying program "should be fully implemented by national central banks rather than relying on the support from external managers."
* SCOR SE launched a new three-year contingent capital facility that will provide the group with €300 million coverage in case of extreme natural catastrophe or life events impacting mortality. The facility will take the form of a contingent equity line.
* State Street Global Advisors' French subsidiary will cease its asset management operations in Paris and will relocate its activities to London, L'Agefi writes, citing Newsmanagers.
* Corinne Dromer, currently communications director at the French central bank, will replace Emmanuel Constans as head of the advisory committee for the financial sector, Les Echos reports.
* Achmea BV is set to cut 2,000 jobs between now and 2020, in addition to the 4,000 jobs that have already been axed since 2013, Het Financieele Dagblad reports. The measure is intended to cut costs by €200 million.
* AEGON NV appointed Martin Edixhoven CEO of unit AEGON Netherlands, Het Financieele Dagblad reports. Edixhoven will start in his new role in January 2017.
* Van Lanschot NV finalized the acquisition of AEGON unit Staalbankiers NV, Het Financieele Dagblad reports. Van Lanschot paid €16 million for the private bank.
* Philippe Voisin will succeed Luc Versele as CEO of Crelan NV, De Tijd reports. Voisin will stay on as chairman of the bank's board.
* Euronext NV closed its acquisition of a 20% equity stake in EuroCCP for €13.4 million.
SPAIN AND PORTUGAL
* Spanish central bank Deputy Governor Fernando Restoy said there is room for further bank mergers in the country, Reuters writes. His comment follows reports that Banco Popular Español SA could be merged with a rival.
* Spain's Economy Minister Luis de Guindos voiced doubts on the possibility of a state disinvestment from Bankia SA and Banco Mare Nostrum SA within a year. Speaking in Parliament to present the government's decree for urgent measures in relation to finance matters, de Guindos, explained that the decree provisions included extending to two years the terms established for the sale of its stakes in the two nationalized banks. Further to the decision, the state will disinvest from Bankia by December 2019, while Banco Mare Nostrum will be privatized by March 2020, Expansión writes.
* A decision on the sale of Novo Banco SA was postponed to January to allow Chinese group Minsheng to have enough time to present a financial proof that it has the resources required to acquire the bank, Jornal de Negócios writes.
* Banco BPI SA may have to issue €350 million in subordinated debt in order to achieve the solvency ratio stipulated by the ECB in 2017, Dinheiro Vivo reports.
* Banco Santander SA CEO José Antonio Alvarez said he expects London to become a smaller financial hub post-Brexit and that financial hubs in Europe could be approaching a model similar to that in the U.S., Reuters writes.
ITALY AND GREECE
* Intesa Sanpaolo SpA agreed to pay New York state's financial regulator a fine of $235 million for anti-money laundering shortfalls and bank secrecy law violations, Reuters reports.
* Banca Monte dei Paschi di Siena said its planned share issuance will be priced at a maximum of €24.90 apiece and a minimum of €1, with the deadline for completing the transaction set for Dec. 31. The bank also extended the offer period for its debt-for-equity swap, from Dec. 16 until Dec. 21.
* If needed, Italy is ready to inject €15 billion into Monte dei Paschi and other Italian banks to prevent them from being wound down, sources tell Reuters.
* Italy's financial police searched the offices of Banca Popolare di Bari SCpA as part of an investigation into alleged obstruction of regulators, Reuters writes.
* The Consiglio di Stato, Italy's highest administrative court, agreed that an Italian government decree reforming the cooperative banking sector was unconstitutional, a move that could lead Popolare di Bari and Banca Popolare di Sondrio SCpA to put their plans to be transformed into joint stock companies on hold, MF writes.
* Greek lawmakers yesterday refused to bow down to its international creditors, pushing forward fiscal measures to raise spending, The Wall Street Journal reports. The measures include giving payouts for pensioners and suspending a sales-tax increase on Aegean islands that received refugees.
* National Bank of Greece SA made a repayment of contingent convertible bonds amounting to €2.03 billion, Imerisia reports. The bonds were issued in December 2015 and were held by the Hellenic Financial Stability Fund.
* Norway's finance ministry is increasing the countercyclical capital buffer rate for banks to 2% from 1.5% beginning Dec. 31, 2017, in line with a recommendation from the country's central bank. Meanwhile, Torbjørn Hægeland, Norges Bank's head of financial stability, said banks in the country are well placed to cope with a higher capital buffer requirement, Reuters writes.
* Sweden's FSA scrapped plans to change its "traffic light" model for insurers following concerns raised by companies that such a move constituted an additional capital requirement, Reuters reports.
* Moody's revised to stable from negative the outlook on Finland's banking system, reflecting the agency's view that a moderate upswing in the Finnish economy will support banks' credit profiles.
* Aktia Pankki Oyj said Martin Backman will take up his role as CEO of the bank on March 7, Kauppalehti reports.
* JSC VTB Bank confirmed its 2017, 2018 and 2019 net profit outlooks at 100 billion Russian rubles, 150 billion rubles and more than 200 billion rubles, respectively, Vedomosti says.
* VTB head Andrey Kostin's idea for the bank to acquire government bonds to support the state budget instead of selling a 10.9% state-owned stake in the lender drew support from the Finance Ministry, which is worried the shares would have to be sold at a discount due to Western sanctions and that the reduction of the state stake would lower dividends from the lender, Kommersant writes.
* The 2017 aggregated profit of the Russian insurance sector could be lower than in 2016 due to stagnation in the motor insurance segment, Vedomosti writes.
* The placement of PJSC Tatfondbank under the provisional administration of the Russian Deposit Insurance Agency and uncertainty regarding its future could create panic among local deposit holders and threaten the stability of smaller institutions operating in the region, Kommersant writes. The Russian Deposit Insurance Agency estimated that payments to Tatfondbank deposit holders will amount to 57.6 billion Russian rubles, Reuters notes.
* State aid provided to Russian development lender Vnesheconombank did not significantly improve the financial situation of the bank, Vedomosti writes.
* EU leaders agreed on a Dec. 15 summit in Brussels to prolong economic sanctions against Russia for its involvement in the conflict in Ukraine for further six months, Rzeczpospolita reports.
* The Polish Financial Supervision Authority approved a financial rehabilitation program for Bank Ochrony Srodowiska SA, Rzeczpospolita says.
* Poland's appeal court decided that the Court of Competition and Consumer Protection will have to once against consider the appeal of PZU SA against a 2011 decision of the Polish competition authority, which imposed a 56.6 million zlotys fine on the insurer for unlawful collaboration in the accident insurance segment, Puls Biznesu reports.
* Polish regulator FSA asked mBank SA to keep a 325-basis-point additional consolidated capital buffer related to its forex mortgage exposure, PAP reports. The additional requirement should be covered at least in 244 basis points in Tier 1 capital and 182 basis points in core Tier 1 capital.
* Pozavarovalnica Sava d.d. decided to launch legal proceedings against Nova Ljubljanska Banka d.d. and Slovenia's bad bank DUTB, the sole successor of Factor banka, over the 2013 cancellation of subordinated financial instruments issued by the two banks carried out as part of emergency measures introduced at the time by the Slovenian central bank, SEENews reports.
* Turkey's Akbank TAS said it came under a cyber attack targeting IT systems related to international money transfers. "Our bank has immediately taken all the preventive measures and all our systems continue to function properly," Akbank said.
IN OTHER PARTS OF THE WORLD
Asia-Pacific: Indonesia keeps key rates; Taiwan's First Commercial to open Manila branch
Middle East & Africa: More Gulf central banks raise rates; Standard Bank seeks protection
Latin America: Brazil credit bureau approval under fire; Argentina takes Mercosur presidency
North America: Chinese-led group's takeover of Chicago Stock Exchange gets US committee's nod
North America Insurance: Prudential Financial probe to go multistate; insured losses hit $49B in 2016
NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE
Regulator to tighten P2P rules as industry matures: The U.K.'s Financial Conduct Authority is seeking to tighten the country's light-touch peer-to-peer lending rules as the larger end of the market evolves into something resembling asset management.
Data Dispatch Europe: Many Italian banks would struggle to securitize bad loans: While the outcome of Monte dei Paschi's recapitalization is in doubt, at its heart is a scheme to sell off bad loans that could lead the way for other Italian banks. But can they afford to follow?
Dutch central bank seen to back Delta Lloyd/NN deal: De Nederlandsche Bank's call for insurers to do more to adapt to changing market conditions is a sign of implicit support for the potential merger between Delta Lloyd and NN Group.
Sheryl Obejera, Ed Meza, Meike Wijers, Gerard O'Dwyer, Beata Fojcik, Mike Hatzidakis, Ali Kayalar, Heather O'Brian, Stephanie Salti, Praxilla Trabattoni and Mariana Aldano contributed to this report.
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