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UniCredit maps out capital-raising plan; UK further cuts Lloyds stake


Insight Weekly: US inflation soars; real estate faces slowdown; megadeals drive tech M&A


Commercial Banking: June 22nd Edition


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Commercial Banking Newsletter June Edition - 2022

UniCredit maps out capital-raising plan; UK further cuts Lloyds stake

* The Basel Committee on Banking Supervision agreed on key elements of its new capital rules, Börsen-Zeitung reports. The committee approved limits on the use of internal models to calculate the capital requirements of financial institutions. The compromise package, to be adopted by the governors and heads of supervision on Jan. 8, 2017, stipulates that capital requirements calculated using internal models may be up to 25% below the volume that would result from applying the standard model. A transitional period for the introduction of the new guidelines would extend to 2025.

* ECB Executive Board Member Benoît Cœuré said deflation risks in the eurozone has "largely disappeared" but that the bloc still needed continued stimulus to put the economy on better track, Bloomberg News writes. Cœuré said the ECB Governing Council's recent decision to extend the quantitative easing program but at a lower monthly scale was "just the right amount" to bring inflation back toward the central bank's 2% target.

* Barclays Plc, JPMorgan Chase & Co. and Citigroup Inc. are cooperating with U.S. prosecutors in an investigation into a potential new antitrust conspiracy in foreign-currency markets and have handed over evidence relevant to the probe, Bloomberg News reports. Authorities said the ongoing probe involves currencies different than those at the center of the banks' guilty pleas in 2015.

* The European Union will discuss on Thursday their formal strategy in Brexit negotiations, Bloomberg News writes. A draft of the EU statement indicates that the remaining EU leaders will be asked to "proceed swiftly" in authorizing the start of the negotiations after U.K. Prime Minister Theresa May officially invokes Article 50 of the Lisbon Treaty.

* The European Commission is to pare down its investigation into the proposed £21 billion merger of London Stock Exchange Group Plc and Deutsche Börse AG, The Daily Telegraph reports.

* Eventual increases in interest rates may "do little by themselves" to boost European banks' net interest margins and hence their profitability as research suggests that the link between the two are weak and "limited in magnitude," according to Moody's.

* In a letter to its member banks, global financial messaging service provider SWIFT warned of the escalating and persistent threat of cyberattacks as hackers become increasingly refined in their tactics for compromising the system, Reuters reports.


* The U.K. House of Lords' EU external affairs sub-committee urged the government to set out a clear plan for a transitional trade agreement with the EU before it begins formal Brexit negotiations, Reuters writes. The committee also recommended a plan for the U.K. to remain a member of the bloc's customs union as an interim agreement.

* Meanwhile, U.K. Treasury Select Committee Chairman Andrew Tyrie said a Brexit "bridging" agreement with the EU would offer financial institutions some protection from any sudden changes in their operating environment and would ultimately prevent them from exiting the country, Reuters reports. Tyrie said the committee is consulting with banks, regulators, trade bodies and other industry experts on whether a transitional agreement is necessary and, if so, how such a deal should be constructed and negotiated.

* U.K. Chancellor Philip Hammond also backed calls for a transitional deal with the EU to ensure a smoother Brexit transition and prevent financial instability in the U.K. and across the bloc, Sky News writes. Hammond said there is a growing consensus among businesses, regulators and some politicians that the two-year Brexit process may not be long enough to determine the country's future relationship with the EU.

* The U.K. government further reduced its stake in Lloyds Banking Group Plc to less than 7%. The Treasury now holds 4,943,698,490 shares and an equivalent number of voting rights in Lloyds, representing 6.93% of the voting rights.

* Barclays agreed to sell its French retail business to AnaCap Financial Partners LLP. The deal, which completes Barclays' exit from retail banking in continental Europe, is expected to reduce the bank's risk-weighted assets by about £500 million and its annualized noncore costs by £130 million. Completion of the sale is expected by the second quarter of next year.

* Old Mutual Plc unit OM Asset Management plc launched a public offering of 13 million of its ordinary shares. The shares are being offered by Old Mutual through OM Group (UK) Ltd.

* Data from the U.K. Treasury shows that Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc have failed to comply with a 2014 government agreement to automatically shift existing clients with basic bank accounts into a new fee-free version, the Financial Times writes. The two banks have offered the new fee-free accounts to new customers since January but have not automatically shifted all its eligible existing clients to the new standard.

* Permanent TSB Group Holdings Plc withdrew from talks to acquire up to €100 million of mortgages that stemmed from GE Capital's former portfolio of subprime loans in Ireland, The Irish Times writes.


* Germany's introduction of new remuneration rules for bank managers originally slated for Jan. 1, has been delayed until March 1, 2017, pending a review in connection with the EU's revision of its Capital Requirements Directive IV. Following introduction of the new regulations, banks will be able to reclaim bonuses from bank managers if their success proves to be unsustainable, Handelsblatt reports.

* Alasdair Warren, Deutsche Bank AG's head of corporate and investment banking in Europe, Africa and the Middle East, tells Handelsblatt that he expects to see consolidation in the banking sector initially taking place in individual countries, noting that cross-border mergers are more difficult.

* Switzerland's attorney general's office is shifting the focus of its investigation into Brazil's bribery scandal by determining how Swiss banks helped funnel bribes to oil producer Petroleo Brasileiro SA, Bloomberg News reports.


* AXA has been fined €2.5 million for shortcomings in its anti money-laundering controls, according to Les Echos and L'Agefi. The decision by French supervisor ACPR followed a series of reviews from September 2013 and July 2014 that found 13 irregularities.

* ING België NV will close its head offices in the Belgian cities of Namur and Liège as part of a wider restructuring plan, according to L'Echo.


* Banco de Sabadell SA is selling its 4.1% stake in Millennium BCP, Jornal de Negócios reports. The shares will be sold in a private placement through accelerated bookbuilding, exclusively targeted at qualified private and institutional investors. The participation could fetch some €50 million, Expansión notes.

* The two largest shareholders of Banco BPI SA, CaixaBank SA and Angolan investor Isabel dos Santos, are scheduled to vote today on the sale of BPI's 2% stake in Banco de Fomento Angola SA to Unitel, a move that will help the Portuguese bank end its exposure to risky assets in Angola to meet an ECB requirement, Jornal de Negócios says. Dinheiro Vivo notes that the deal has been approved by Angola's central bank.

* Banco BPI received from dos Santos the last payment of a 2008 deal involving the sale of 49.9% of Banco de Fomento Angola to Unitel. The $30 million payment was a condition from BPI to proceed with negotiations on the sale of the remaining 2% in the Angolan bank, Jornal de Negócios notes.

* Customers who lost money after the resolution of Banco Espírito Santo SA will receive back more than half of their investments in a deal to be announced by Portuguese Prime Minister António Costa by the end of the week, Dinheiro Vivo reports. Some 90% of the 2,000 customers are expected to accept the government's solution.

* Caixa Geral de Depósitos SA submitted a plan to the Portuguese government to increase its capital by €5.9 billion, according to Público.


* UniCredit SpA this morning unveiled plans to launch a €13 billion rights issue, subject to shareholders' approval at a meeting on Jan. 12 next year, among other measures to boost its capital levels and profitability. Under its new Transform 2019 strategic plan, the bank will also reduce its workforce by an additional 6,500, bringing the total net reductions to roughly 14,000 by 2019.

* Separately, UniCredit said it entered into two separate agreements, one with Fortress Investment Group LLC and another with PIMCO, to transfer two portfolios of nonperforming loans to newly setup and independent entities in which UniCredit will retain a minority position. The bank said each of the two independent entities will be managed by the respective investment partner who will each have a majority position.

* The Italian government is ready to step in and bail out Banca Monte dei Paschi di Siena SpA if needed, a Treasury source tells Reuters, as the chances for success of a last-ditch effort to get the €5 billion the bank needs on the market are seen slim. European Commission Vice President Valdis Dombrovskis said the EU executive body is ready to discuss with Italy options to address the problems of its banks, Reuters also writes.

* Meanwhile, the Italian regulator Consob has only received generic information about Monte dei Paschi's plans to revive its privately funded rescue plan and has concerns that a planned reopening of a debt-to-equity swap might not be compatible with the Markets in Financial Instruments Directive, MF says.

* Banca Popolare dell'Emilia Romagna SC said the ECB has set its 2017 common equity Tier 1 ratio requirement at 7.25%. Meanwhile, the ECB lowered Credito Emiliano SpA's CET1 ratio requirement for 2017 to 6.75% from 7%, while the phased-in CET 1 ratio requirement for Unione di Banche Italiane SpA was set at 7.5%, Reuters notes. UniCredit's transitional CET 1 ratio requirement was set at 8.75%.

* New Italian Prime Minister Paolo Gentiloni unveiled his government, keeping almost all former ministers as he seeks to reassure financial markets, Reuters says.

* Generali appointed Tim Ryan, the former chairman and CEO of London-based AllianceBernstein Ltd., to serve as chief investment officer. The company also named Marco Sesana country manager for Italy, noting that he will retain his role as CEO of Generali Italia SpA.


* Leading bank economists in Norway expect the country's central bank to leave the key rate unchanged at 0.50% when its monetary policy committee meets on Thursday, Affärsvärlden reports. The central bank is expected to adopt a wait-and-see attitude.

* A technical glitch hit DNB ASA yesterday, preventing customers from using online banking platforms, reports.

* Helsinki-based OP Bank also experienced serious problems in its online and mobile banking networks yesterday, Helsingin Sanomat reports. The cause is still being investigated.

* Banks in Denmark have shed 9,000 jobs since the financial crash in 2008, Børsen writes, citing fresh Nordic bank statistics data. The number is equivalent to 20% of workers in the sector.


* The authorities of Russia's Republic of Tatarstan are considering the merger of PAO AK Bars Bank and financially troubled PJSC Tatfondbank as one of financial recovery variants mulled for the latter lender, Vedomosti reports. The newspaper also says Tatfondbank introduced restrictions on deposit and cash withdrawals as of Dec. 12. Kommersant adds that the value of financial support needed by the lender increased from 80 billion Russian rubles to 120 billion rubles within one week due to liquidity outflow.

* The Russian Federal Antimonopoly Service allowed Gazprom unit Gazprom Gazoraspredeleniye to purchase 12.5% shares of insurance company JSC SOGAZ, Vedomosti writes. After the deal, the stake owned by Gazprom Gazoraspredeleniye and affiliated entities will increase to 33.69%.

* Croatian regulator HANFA allowed CROATIA osiguranje d.d. to launch reinsurance services for the non-life insurance sector, SEENews reports.

* mBank SA's management board deputy chairman and financial markets head, Hans-Dieter Kemler, intends to leave the bank to join the management board of Landesbank Hessen-Thüringen Girozentrale, Parkiet reports.

* The Czech banking sector remains resilient to adverse economic shocks, Reuters reports, citing the local central bank's latest stress tests.

* The deposits in Turkey are not enough to meet funding needs of lenders, which force Turkish banks to seek loans at abroad, according to Hakan Ates, the CEO of DenizBank AS, Anadolu Agency writes.


Asia-Pacific: Indonesia, Japan extend currency swap; Philippines-EU free trade talks delayed

Middle East & Africa: Zimbabwe cuts withdrawal charges; Japanese bank to open Saudi branch

Latin America: Banco do Brasil expects lower payroll costs; Fitch cuts outlook on Mexico

North America: Prudential's Wells tie-up may mean it got fake accounts too

North America Insurance: Wells Fargo sales scandal hits Prudential Financial; Aetna defends exchange exit


Monte dei Paschi troubles may take toll on UniCredit's cash call: With UniCredit expected to announce an equity raise on Dec. 13, an analyst warned that the bank's appeal to investors will greatly depend on the Italian government's plans for Banca Monte dei Paschi di Siena, according to an analyst.

Swedish-led e-money revolution could end banks as we know them: "Central banks will have a direct means to interact with the people that are supposed to spend the money; it would directly connect the central bank to you and me."

Data Dispatch Latin America: 5 years of asset growth in Mexico leaves big foreign-owned banks bullish: With their Mexican units recording rising asset values since 2009, BBVA, Santander, Citigroup, HSBC and Scotiabank are set to continue investing in the country, yet a threat looms as its neighbor in the north prepares for a new president.

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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