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ECB bad-loan extension; €100B EU fund; Deutsche prime brokerage move

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ECB bad-loan extension; €100B EU fund; Deutsche prime brokerage move

* The European Central Bank has revised its supervisory expectations for banks' provisioning for new nonperforming exposures. Banks will now have three years to set aside provisions against unsecured NPEs, nine years for real estate-backed NPEs and seven years for other secured NPEs.

* European Union civil servants have drafted a plan for a €100 billion sovereign wealth fund aimed at financing European companies in technology and other strategic sectors in a bid to compete with major foreign rivals, the Financial Times reported, citing an internal EU document.

UK AND IRELAND

* The U.K. regulator Competition and Markets Authority has asked Royal Bank of Scotland Group PLC and Banco Santander SA, which operates in Britain as Santander UK, to appoint an independent body to audit their payment protection insurance processes after they failed to send or sent inaccurate annual PPI reminders. PPI mis-selling has been an ongoing scandal that has cost U.K. banks billions of pounds in customer compensation.

* Responding to the ongoing Hong Kong protests, British bank HSBC Holdings PLC published advertisements in five local language newspapers saying the rule of law was vital to maintaining Hong Kong's status as a financial center, and it fully supported the ambition to resolve the present situation peacefully, the Financial Times reported. Standard Chartered PLC said it resolutely supports "one country, two systems," and supports the special administration government in its effective maintenance of social order and security.

* HSBC has cut 200 staff in its India operations. The layoffs were in the bank's technology function across the mid-management level.

* The U.K. Financial Conduct Authority is investigating Qatari-owned U.K. lender Al Rayan Bank PLC over money laundering concerns, and the bank has agreed to place temporary restrictions on new deposit accounts for certain individuals after discussions with the regulator, The Times reported. The newspaper had earlier reported that some of the bank clients have connections with hard-line Islamists.

GERMANY, SWITZERLAND AND AUSTRIA

* Deutsche Bank AG is ceding control of its prime brokerage business that services hedge funds to France-based BNP Paribas SA, in a move that will involve the transfer of as many as 800 staff, the Financial Times reported, citing sources.

* The Securities and Exchange Commission has fined Deutsche Bank more than $16 million to settle charges that the bank hired poorly qualified relatives of foreign officials in Asia and Russia at their request in order to win or retain business, Reuters reported. The bank has agreed to the fine without admitting or denying the allegations.

* Deutsche Bank CFO James von Moltke has responded to an opinion piece in American Banker, which said the bank's restructuring plan, which it says involves reducing capital to increase short-term returns for shareholders, is grossly irresponsible. The executive said this "could not be further from the truth" and that the bank is tackling its underlying strategic challenges at the expense of short-term returns, but with a view to generating benefits for all stakeholders in the medium term.

* Germany-based Commerzbank AG is planning another downsizing and could cut up to 2,500 jobs after exiting the investment banking and shipping finance business, Börsen-Zeitung reported. Meanwhile, one of Commerzbank's anchor investors, Norway's $1 trillion sovereign wealth fund, increased its stake in the lender, Bloomberg News reported.

* Landesbank Hessen-Thüringen Girozentrale, or Helaba, posted half-year net profit of €255 million, up from €140 million in the first half of last year, mainly owing to the takeover of Dexia Kommunalbank Deutschland and the subsequent consolidation.

* Several German banks are preparing to introduce negative interest rates on mortgages as early as in a few weeks, finanz-szene.de reported, without naming the institutions.

* U.S. investment bank Goldman Sachs is ready to enter the Swiss mortgage market this year, insiders told finews.com. The NYSE-listed company was close to entering the market last autumn.

* U.S. bank JPMorgan Chase is expanding in Germany and aims to tap the corporate banking market for medium-sized companies, the head of corporate client banking and specialized industries Germany at the investment bank told Börsen-Zeitung.

* RSA Luxembourg S.A. CEO Richard Turner will leave the company. Rachel Conran was named interim CEO, subject to regulatory approval. RSA Luxembourg is part of RSA Insurance Group PLC.

* Swiss financial technology firm Numbrs AG has raised $40 million, crossing the $1 billion mark in terms of valuation. The firm launched its app in Germany in 2014; starting from 2020, it plans to establish the U.K. as its second main market, and later on expand to other European countries, but has no plans for a U.S. launch, Bloomberg News reported, citing the CEO.

FRANCE AND BENELUX

* French bank Société Générale SA is considering options for its Lyxor Asset Management SAS unit, including a potential sale or merger, amid heavy competition in the asset management industry.

* BNP Paribas is planning around 500 job cuts at its French securities services unit through voluntary redundancies over the next three years, Reuters reported, citing a union representative. Some of the positions will reportedly move to Portugal.

ITALY AND GREECE

* Corrado Passera, the head of Italian digital lender and bad loan specialist illimity Bank SpA, said Italian banks could dispose of up to €150 billion in bad loans in the next five years, reported Reuters.

NORDIC COUNTRIES

* The Danish financial regulator Finanstilsynet said in its biannual risk assessment that interest rate levels are the greatest threat to financial stability in Denmark, Finans reported. Negative interest rates threaten the banking sector's earnings, and the regulator said they are unlikely to rise for some time.

EASTERN EUROPE

* Slovenia's Nova Ljubljanska banka d.d. and Brussels-based KBC Group NV are exploring opportunities to sell Slovenia's second-largest life insurer, NLB Vita d.d., to a single potential buyer. The divestment of NLB Vita is part of an additional commitment put forward by the European Commission for approving a delay in the partial privatization of Nova Ljubljanska banka.

* Russia's VTB Bank PJSC launched an online platform for the sale of its noncore assets, such as real estate, vehicles and special equipment, the lender said, noting that some of the assets will be offered with a discount of up to 20%.

* The Kazakh central bank approved the planned merger of JSC First Heartland Bank with its sister unit First Heartland Jýsan Bank. The planned integration is expected to improve the market position, investment attractiveness and competitiveness of the merged lender.

IN OTHER PARTS OF THE WORLD

Middle East & Africa: Old Mutual fires ex-CEO again; Egypt cuts rates; Sudan's new prime minister

Latin America: Paraguay cuts key rate; Fitch revises outlooks on Ecuador, Suriname

North America: Release of GSE privatization proposal approaches; SEC charges NY broker/dealer

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Ben Meggeson, Arno Maierbrugger, Meike Wijers, Esben Svendsen, Beata Fojcik, Heather O'Brian, Stephanie Salti, Sophie Davies and Helen Popper contributed to this report.

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