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Staley's role 'not affected'; BoE LIBOR scandal; Banco Popular open to merger


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Commercial Banking Newsletter June Edition - 2022

Staley's role 'not affected'; BoE LIBOR scandal; Banco Popular open to merger

* A loophole in the EU's financial regulations is enabling member countries to offer looser regulatory requirements in a bid to lure investment banks seeking to relocate from London, Reuters reports. Under EU law, the ECB is not directly responsible for divisions that conduct most of a bank's market trading, and countries seeking to attract banks could sweeten the pot by offering differing regulatory standards, which raises concerns of regulatory inconsistencies.

* The International Regulatory Strategy Group has outlined proposals for continued access of U.K.-based banks and financial services firms to the EU as part of their new trading relationship post-Brexit. The group has called for the creation of a joint U.K.-EU committee or forum that will ensure the monitoring of regulation and supervision as they evolve over time, and has set out a range of models for settling possible disputes. The Daily Telegraph has a report.

* EU member countries are poised to approve to tough Brexit negotiation guidelines outlined by European Council President Donald Tusk, the Financial Times reports. The draft guidelines want Britain to accept the bloc's laws, court and budget fees in exchange for a gradual transition from the EU single market. Officials are set to sign off on the draft guidelines in late April.


* Analysts speaking to S&P Global Market Intelligence believe that Jes Staley's role as CEO of Barclays Plc will not be affected by his attempt to identify a whistleblower. Ian Gordon, a London-based banks analyst at Investec, said the affair does not change "to any material extent the investment case for Barclays." While the author of the complaint was not identified, an insider tells Bloomberg News that the subject of the complaint was Tim Main, who formerly worked with Staley at JPMorgan Chase & Co.

* Convicted LIBOR trader Tom Hayes said the Bank of England should face an "urgent probe" after a secret recording obtained by BBC News revealed the regulator's involvement in manipulating the key financial benchmark, The Daily Telegraph reports. Hayes argued that traders like him should not be in prison given that the central bank has repeatedly pressured commercial banks into pushing their LIBOR rates down. Business Insider also covers.

* U.K. Treasury Select Committee members Stephen Hammond, Chris Philp and John Mann have also called for a probe into the BoE and Barclays' handling of LIBOR, City A.M. writes. Philp said former Barclays CEO Bob Diamond, BoE Governor Mark Carney and BoE Deputy Governor Paul Tucker "all have questions to answer." In the recording, senior Barclays manager Mark Dearlove instructed LIBOR submitter Peter Johnson to push LIBOR rates down, saying the bank was under "some very serious pressure" from the U.K. government and the BoE.

* In response to the BBC report, the BoE said it will not publicly disclose the details of its dealings with banks that manipulated benchmark interest rates during the 2008 financial crisis until the U.K. Serious Fraud Office's ongoing criminal fraud investigations into the matter has been concluded, Reuters writes.

* U.K. challenger bank Redwood Bank has secured a banking license after receiving regulatory approvals. The bank, which plans to open later this year, has also secured a £30 million investment from Warrington Borough Council, which took a 33% stake in its owner, Redwood Financial Partners.

* SVG Capital plc announced yesterday the results of its tender offer. The firm said 41,762,005 million shares were validly tendered and will be purchased at a price of 715 pence per ordinary share, for a total cost of around £298.6 million. The buyback represents approximately 63.8% of the company's issued share capital.

* Irish Finance Minister Michael Noonan has signaled that Bank of Ireland could be allowed to breach a government-imposed pay cap of €500,000 to attract a suitable replacement for outgoing CEO Richie Boucher, The Irish Times reports. The Irish Independent also covers.

* The U.K. Competition and Markets Authority said it has accepted measures proposed by U.S. credit card company Mastercard Inc. to address competition concerns over its planned acquisition of VocaLink Holdings Ltd. Following the CMA's approval, Mastercard said the deal is now expected to close in the coming weeks.

* Recruitment firm Robert Walters said recruitment activity in London's financial sector has picked up since January following a dip in the wake of the Brexit vote, the Financial Times writes.

* 1pm Plc said this morning that it acquired the entire issued share capital of Bell Finance Ltd., a specialist provider of funding for business-critical equipment, for £2.3 million in cash. 1pm said it intends to merge the operations of Bell Finance into unit Bradgate Business Finance Ltd.


* German drugstore chain owner Erwin Müller is suing Bank J. Safra Sarasin AG for €45 million, claiming he was misadvised by the lender in connection with now outlawed dividend-stripping deals, Süddeutsche Zeitung writes. Müller accuses the bank of fraud, adding that the bank promised a "12% yield" and that the investment was guaranteed by Allianz Group. Handelsblatt also covers.


* Agents and brokers of Record Bank SA, a subsidiary of ING België NV, are taking its parent company to court, De Tijd reports. They say the ING board failed to inform them adequately about the restructuring plans of the bank. L'Echo also covers.


* A group of Novo Banco SA investors who lost money during the resolution of Banco Espírito Santo SA is trying to obstruct the lender's planned sale to Lone Star in an attempt to minimize their €1.5 billion loss, Dinheiro Vivo writes. They have filed a lawsuit in a Lisbon court claiming that "the Portuguese central bank executed an illegal and discriminatory act by transferring €2.2 billion from Novo Banco to failed Banco Espírito Santo," Economia Online adds.

* Ignacio Sánchez-Asiaín has been named the new CEO of Banco Popular Español SA after the resignation of Pedro Larena last week, according to El País. He will take up his new role April 18. Meanwhile, Miguel Escrig, previously vice president, has been named new financial director.

* Emilio Saracho, president of Banco Popular Español, said during his first shareholder meeting that the institution could raise capital or merge with another bank in order to resolve its financial difficulties, according to an Expansión report. The Financial Times and Reuters also cover. Moody's said Monday that Popular will have to increase its capital to meet the requirements of the European Central Bank, according to a separate Expansión report.

* The mutual association that owns Caixa Económica Montepio Geral will vote on April 24 to ratify the lender's new status as a public limited company, meaning that it will no longer be exclusively owned by the association, Jornal de Negócios notes.


* Banca Monte dei Paschi di Siena SpA is once again considering a securitization deal to off-load €29 billion worth of nonperforming loans as it aims to get European Commission approval for a precautionary state-backed capital increase by late April or early May, says Il Sole 24 Ore.

* The boards of Banca Popolare di Vicenza SpA and Veneto Banca SpA are expected to announce today that their settlement offers to shareholders who suffered steep share-price losses will be carried out although the take-up by shareholders was slightly below a threshold set at the time the offers were launched, writes MF.

* Unione di Banche Italiane SpA's planned €400 million capital increase should begin in May or by mid-June at the latest, says MF.

* Banca Generali SpA appointed Tommaso Di Russo as CFO and head of the strategy area, effective April 10.

* Austrian Finance Minister Hans Jörg Schelling urged the EU to consider a €1 billion special investment program for Greece to help it get back on track, Reuters writes.


* Danske Bank A/S CEO Thomas Borgen faces fresh questions regarding the money-laundering controversy linked to the bank's subsidiary in Estonia, Dagens Næringsliv reports. It has now emerged that the Danish lender internally warned about possible problems at the Tallinn branch as early as 2013, even though Borgen said in March that the bank first became aware of money-laundering activities there in 2014, according to the publication.

* Norwegian Finans Holding ASA named Tine Wollebekk CEO of the company and unit Bank Norwegian AS.


* Raiffeisen Bank International AG is looking to reduce operations in Poland after failing to sell its Polish unit last year, Handelsblatt reports. RBI plans to close between 60 and 70 Bank Polska branch offices in 2018 and cut up to 950 jobs by the end of 2019. At the end of 2016, Bank Polska had 299 branches and 4,200 employees. Reuters also covers.

* The post-nationalization audit of PAO KB Privatbank revealed more problems at the bank, which would require additional capital from the state, Interfax Ukraine reports. The Ukrainian central bank's head Valeriya Gontareva said that the night before the nationalization, the lender's former owners carried out fraudulent transactions worth over 16 billion Ukrainian hryvnia. The audit also established that 100% of Privatbank's corporate loans were issued to affiliated parties, compared with initially estimated 97%.

* The Russian central bank withdrew the license of Commercial bank ROSENERGOBANK (JSC) and will report irregularities discovered at the lender to Russia's Investigative Committee, Vedomosti reports. The central bank said the lender failed to honor its liabilities to creditors and submitted unreliable information in its financial statements, while its managers and owners were involved in diverting assets from the bank through the issuance of loans to shell companies.

* Valeria Gontareva resigned as governor of the National Bank of Ukraine, effective May 10. Her departure comes a few days after local media reported that protesters attempted to prevent her from going to work and vandalized her house in a bid to exert pressure on the policy of the regulator and Gontareva herself. The Financial Times covers.

* Türkiye Is Bankasi AS Chairman Ersin Ozince will become chairman of Türkiye Sinai Kalkinma Bankasi AS, in which the former has a stake of just over 50%, Finans Gundem reports.


Asia-Pacific: Indian bank cyberattack similar to Bangladesh heist; VPBank eyes stake sale, IPO

Middle East & Africa: Saudi Arabia opens doors to Fitch; Mozambique cuts key rate

Latin America: BNDES approves dividend policy; Peru estimates up to $9B flood recovery cost

North America: ISS wants 12 Wells directors out; Triton Aviation Finance considers liquidation

North America Insurance: Rates may rise if insurers lose ACA subsidies; individual market improved in '16


Whistleblower affair not expected to unseat Barclays CEO, analysts say: Jes Staley is expected to remain in his role as CEO of Barclays Plc despite being censured for trying to identify a whistleblower, according to analysts speaking to S&P Global Market Intelligence.

Data Dispatch Europe: New tax law boosts Greek banks, as bailout talks edge close to breakthrough: A law allowing Greek banks to book some loan losses as regulatory capital for up to 20 years will help them meet toxic asset reduction targets set in conjunction with the European Central Bank.

Banco Popular may raise further capital or merge, says new chairman: Spain's Banco Popular's new executive Chairman Emilio Saracho did not rule out increasing the bank's capital nor a merger with another bank to help turn its finances around.

David Hutter, Ed Meza, Meike Wijers, Gerard O'Dwyer, Beata Fojcik, Mike Hatzidakis, Ali Kayalar, Heather O'Brian, Brian McCulloch, Sophie Davies and Mariana Aldano contributed to this report.e Daily Dose has an editorial deadline of 7 a.m. London time. Some external links may require a subscription.