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A call for transparency; more pain at SocGen; Hungary mulls lower bank levy

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


A call for transparency; more pain at SocGen; Hungary mulls lower bank levy

EBA headcalls for transparency: European Banking Authority Chairman AndreaEnria called on regulators to be more transparent about new capitalrequirements for banks in an effort to boost financial stability and regaininvestors' confidence, Reuters reports.Enria particularly indicated that the uncertainty surrounding the Pillar 2framework could be affecting lenders' valuations. He said market participants"are naturally inclined to think the worst of each and every bank" ifthey are "unable to compare and contrast the situation of banks vis-a-visa specific risk."

* The global over-the-counter derivatives markets experienced a broad-baseddecline in activity in the second half of 2015, according to data from the Bank forInternational Settlements. The notional amount of outstanding contractsdeclined to $493 trillion at the end of the year from $552 trillion six monthsago, while the gross market value fell to $14.5 trillion, the lowest levelsince 2007, from $15.5 trillion. The decline was driven by trade compression, atool used by banks to limit the impact of new regulatory requirements, the Financial Times notes.

UKAND IRELAND

RSAsays Q1 profit 'strong': RSA Insurance Group Plc said today that its netattributable profitsfor the first quarter were "strong" and ahead of expectations. Netwritten premiums amounted to £1.58 billion, down from £1.59 billion a year ago,taking into account premiums from the group's Latin American businesses in thefirst quarter of 2015. RSA expects to complete its two remaining Latin Americandisposals by the middle of the year.

* BarclaysPlc sold 103,592,491 ordinary shares in Barclays Africa Group Ltd.at 126 South African rand per share, raising gross sales proceeds of roughly13.05 billion rand. Following the sale, Barclays' holding in the unit fell toapproximately 50.1%. The transaction is not affecting talks between Barclaysand former CEO Bob Diamond about his acquisition of the Africa unit, City A.M. notes.

*Intercontinental ExchangeInc., which owns the New York Stock Exchange, said yesterdaythat it has no intention of making an offer for ,paving the way for the latter's merger with Deutsche Börse AG. Following due diligence, ICE said it determinedthat "therewas insufficient engagement to confirm the potential market and shareholderbenefits of a strategic combination." ICE chief Jeffrey Sprecher blamed a lack ofcooperation by the LSE for its decision to forego an offer, the Financial Times reports.

* Standard CharteredPlc Chairman John Peace yesterday told shareholders that theremight be a staff exodus if the bank were to reduce bonuses, Reuters writes.Peace made the remark as some prominent investors threatened to shoot down thebank's new pay policies, which were eventually approved by the majority ofshareholders.

* Lancashire Holdings Ltd. appointed Heather McKinlay CFOof Cathedral Underwriting Ltd., the Lloyd's of London managing agency within the LancashireGroup. The appointment is subject to approval from Lloyd's and regulators.

* Moody's said banks in the U.K.face moderate short-term risks in the run-up to the June 23 referendum on thecountry's membership in the EU. The agency expects banks to face more durablebut moderate challenges in the event of a Brexit.

* Hermes InvestmentManagement Ltd. expects the Bank of England to face the need toextend its quantitative easing program in the event of a Brexit, City A.M. writes.The asset management firm said if the U.K. were to vote to leave the EU, thepound could fall to roughly $1.20, inflation could rise and growth could be hit.

* Royal Bank ofScotland Group Plc Chairman Howard Davies said the bank ispreparing for a possible period of economic uncertainty that could result froma Brexit, Reuters reports.Speaking at the bank's annual shareholders meeting, Davies also indicated thatthe bank has enough provisions to meet the 2018 deadline for compensation forpayment protection insurance mis-selling. RBS aims for a further £800 millioncost reduction in 2016 and a 12% return on tangible equity. City A.M. notesthat RBS shareholders approved the bank's remuneration report.

* Former UBS GroupAG and Citigroup trader Tom Hayes, who is serving an 11-year prisonsentence for conspiring to rig LIBOR, hired a new lawyer to take his case tothe Criminal Cases Review Commission, the FinancialTimes reports.Hayes hopes that a diagnosis that he has Asperger's syndrome, as well as adaily spreadsheet that UBS traders purportedly used to log their exposure,would convince the commission to reopen his case. Hayes aims to raise £150,000through a crowdfunding website to fund the appeal, but has so far drawn onlyover £3,000. The Guardian and BloombergNews also have reports.

GERMANY,SWITZERLAND AND AUSTRIA

Schäublesays dividend stripping not legitimate: German Finance Minister Wolfgang Schäuble saidbanks' dividend tax avoidance schemes are not legitimate, even though they may belegal, Reuters reports.The remark followed media reports alleging the widespread use of such schemes.

* Deutsche BankAG said it can easily generate more than €6 billion in commonequity Tier 1 capital over the next three years, Reuters notes.The bank plans to meet with investors next week to market a potential self-ledTier 2 bond issuance, IFR says.

* CreditSuisse Group AG is looking to cut dozens of jobs inits securities trading division as part of wide-ranging efforts to reducecosts, Handelsblatt reports. Thebank plans to eliminate some 80 jobs in its bonds business and nearly 50positions in stock trading. Most of the cuts will be in London and are part ofthe 2,000 planned staff reductions in the trading division. Credit Suisse islooking to eliminate a total of 6,000 jobs companywide.

* Dagmar Maria Kamber Borens, CFO ofUBS Asia-Pacific in Singapore, stepped down from her post, Finews reports. Kamber joined UBS in 1999 and has served as Asia-PacificCFO since 2012.

* Allianz Group CEOOliver Bäte, speaking at the insurer's annual meeting yesterday, attributed thecompany's 6.4% decline in first-quarter sales on changes made to its lifeinsurance operations, Reuters reports. Bäte said the group has completely refocused its life insurance business and that thechanges would produce "positiveeffects." Facing difficulties in the currentlow interest rate environment,Allianz is looking to sell fewer policies with guaranteed returns and is insteadfocusing on more flexible products for which it has to reserve less capital.

FRANCEAND BENELUX

Morecuts at SocGen: SociétéGénérale SA announced a new round of cost-cutting measures in itsinvestment banking division that will enable it to reduce expenses by anadditional €220 million by the end of 2017, LesEchos reports,noting that this is in addition to the already planned €850 million of costsavings across the group, of which €323 million will be in the investment bank,by the end of 2017. L'Agefi also reports.

SPAINAND PORTUGAL

IMFto launch new study of Spanish banking sector:Four years after its last review, the IMF will undertake a new assessment ofthe Spanish banking sector to identify vulnerabilities and to measure thesector's resistance to another financial crisis. Back in 2012, the fund'sanalysis and recommendations played a significant role in the overhaul of someof the country's banking groups, Expansiónwrites.

* Spanish banks reduced nonperforming assets held on theirbalance sheets by 14.5% in 2015 to €213 billion, Europa Press reports.

*CaixaBank SAincreased its participation in Banco BPI SA to 44.54% by acquiring 6.48 million shares,representing 0.445% of the share capital of the Portuguese lender, betweenApril 27 and May 4, according to a statement from Portuguese regulatorCMVM. The total acquisition value was €7.13million.

ITALYAND GREECE

Atlante seeks co-investors for Popolaredi Vicenza: Italian bank rescue fund Atlante is looking forco-investors in Banca Popolare diVicenza SpA and has contacted private equity groupsInvestindustrial, Warburg Pincus, Atlas, Centerbridge and Baupost, Il Sole24 Ore says. Italian PrimeMinister Matteo Renzi said Popolare di Vicenza can re-launch with the backingof Atlante and a new management, Reuters writes.Separately, MF saysthe bank's pro forma phased-in common equity Tier 1 ratio stood at 12.8% at theend of December following Atlante's acquisition of a 99.33% stake in the bankat the capital increase shunned by other investors.

* Italy's Treasury may invest in the Atlante fund via aninvestment vehicle it is acquiring from Intesa Sanpaolo SpA, a government source tellsReuters. Meanwhile, Economy Minister Pier Carlo Padoan said state lenderCassa depositi e prestitiSpA has no plans to raise its contribution to the fund, Reuters reports,noting that a source had placed its contribution at €500 million.

* Separately, Padoan said government measures implementedlast year to simplify bankruptcy procedures are estimated to cut creditcollection time by an average of three years, MF writes.

* Volumes of new nonperforming loans to companies fell 5.3%in 2015, compared to a year earlier when they declined 7.7%, MF writes,citing data from Italian banking association ABI and Italian informationprovider and credit risk analysis Cerved.

* Piraeus Bank SA will sell a 15% stake in European Reliance General Insurance Co. SA to theEuropean Bank for Reconstruction& Development, Reuters writes.

NORDICCOUNTRIES

Norwaymulls tax on financial services firms: Norway's political parties yesterday unveiled plansto reduce the corporate income tax rate to 23% from the current 27% by 2018 andintroduce a tax on financial services companies in 2017 after lawmakers agreedon a compromise, Reuters reports.The basic personal tax rate will also be reduced to 23% from 27%.

* Housingassociation Saltsjön is suing Swedbank AB (publ) for allegedly violating banking secrecywith regard to a real estate project that fell through, Svenska Dagbladet reports.

* TheDanish FSA failed to find any reason to report failed bank SparekassenØstjylland to the police, FinansWatch reports,noting that in the years leading up to the financial crisis, the bank hadsignificantly higher lending growth than the rest of the sector.

* Nordea BankAB (publ) helped customers with shell companies in tax havens as late as 2014, althoughit claims that it stopped such activities in by 2010, SVT reports.A Nordea Bank customer told SVT thatthe bank helped him get Panamanian law firm Mossack Fonseca to extend the lifeof his company in Panama, which he used to avoid paying taxes.

EASTERNEUROPE

Hungaryto cut bank levy: Hungary will further reduce its bank levy in 2017, Reuters reports,citing a draft bill submitted by the government to parliament. The tax ratewill be set at 0.15% for up to 50 billion forints of the tax base, and at 0.21%above that amount, compared with 0.24% in 2016.

* The EBRD's board of directors approved the acquisition of a 15%stake in Erste Group BankAG's Hungarian subsidiary, Reuters says.

* Albania's central bank yesterday reduced its key interest rate by25 basis points to 1.25%, a new record low, SEENews reports.The decision comes amid lower-than-expected inflation, which is now projectedto hit the central bank's 3% target around 2018-end.

*The Banking Agency of Bosnia's Republika Srpska issued a decision revoking thebanking license of local lender Banka Srpske in a bid to protect the interestsof depositors and maintain the stability of the banking system, Capital.ba reports. The decision was takenApril 27 and is not yet final, as it can be contested by the bank'sshareholders within eight days from its issuance. The lender is controlled byRepublika Srpska's government institutions.

* said hackers stole 508 million rubles from its correspondingaccount with the Russian central bank in January, Vedomosti reports.Between September and March, Russian banks lost more than 2 billion rubles as aresult of hackers' attacks on their corresponding accounts. The central banknow plans to review payment security requirements.

* Otkritie HoldingJSC holds 74%, or 831.96 billion rubles, of Russia'seurobond issue maturing in 2030, Kommersantreports. Vedomosti addsthat this is the first time that a private entity has acquired such a largeholding of Russia's sovereign debt.

* Russian lender JSCALFA-BANK sent requests for proposals to banks regarding possiblebond issuances, Reuters says,adding that the lender is gauging the market for feedback on three products: Seniorbonds, Additional Tier 1 and Tier 2 debt.

* TheCzech competition authority is looking into the planned acquisition of 's Czech subsidiary by unit Essox, with the decision on the deal expectedto be issued by the end of this month, E15 reports.

*Turkish mobile phone operator Turkcell will start talks to buy IsNet, thetechnology subsidiary of TürkiyeIs Bankasi AS, Finans Gündem writes.

* TheTurkish Competition Board approvedthe sale of FinansbankAS and its subsidiaries to Qatar National Bank. QNB agreed lastDecember to acquire National Bankof Greece SA's entire 99.81% stake in Finansbank.

INOTHER PARTS OF THE WORLD

* The Malaysian Ministry of Finance said it will disband theprime minister-led advisory board of 1Malaysia Development Bhd. and take overits assets, Reuters reports.The move comes in the wake of at least six international investigations forpossible money laundering.

* Malaysian Treasury Secretary-General Irwan SerigarAbdullah said a memorandum of understanding will likely be signed betweenMalaysia Venture Capital Management Bhd. and the Islamic Development Bank toestablish the world's first Islamic venture capital, the Malay Mail reports.

* Japanese insurance companies have continued to invest in U.S.-basedcompanies as they struck deals worth $18.4 billion in 2015, with moreinvestments expected to come, Bloomberg News reports.

* Brazilian Prosecutor-General Rodrigo Janot asked theSupreme Court to authorize an investigation into President Dilma Rousseff overher alleged attempt to hinder a corruption probe into state-run oil companyPetrobras, Reuters reports,citing local media. Janot also requested a corruption investigation into formerPresident Luiz Inacio Lula da Silva, Bloomberg News adds.

NOWFEATURED ON S&P GLOBAL MARKET INTELLIGENCE

AXA CFO saysChinese business improving after sharp fall in Q1 margin: AXA CFOGérald Harlin said margins in the Chinese business were already showing signsof improvement after a sharp fall in the new business value margin in the firstquarter.

SocGen beatsQ1 expectations, announces €220M more cuts in wholesale banking:SocGen said the goal is to take a further €220 million out of the wholesalebank by 2017, in addition to the €323 million already announced.

Erste will tapTLTRO II, says CFO: The bank will tap the ECB's latest targetedlong-term refinancing operations, according to its CFO.

Xana Kakoty, Ed Meza,Stephanie Salti, Praxilla Trabattoni, Heather O'Brian, Beata Fojcik, KeesPijnappels, Esben Svendsen, Mariana Aldano, Thanasis Kakalis and Ali Kayalarcontributed to this report.

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