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Italian banking sector outlook revised; Old Mutual unit prices share sale

Banking Essentials Newsletter - November Edition

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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


Italian banking sector outlook revised; Old Mutual unit prices share sale

* The ECB will meet with loan bankers on Friday to discuss the proposed guidelines on leveraged lending transactions following concerns that the new rules, which mirror existing regulations in the U.S., will have a broader remit than originally expected, Reuters reports. Banks are seeking clarity on which types of loans will fall under the new guidelines and how it will affect their internal models.

* The 2017 outlook for global investment banks is stable, according to Moody's. The agency noted that since the financial crisis, global investment banks have "significantly" improved their capital and liquidity profiles, adding that the sector has seen a decline in tail risks from litigation and noncore portfolios.

* Guy Verhofstadt, the European Parliament's lead Brexit negotiator, said a transitional arrangement to cushion Britain from the effects of Brexit was "certainly possible" but that such a deal should have a strict time limit, BBC News writes.

* A survey by law firm Gowling WLG suggests that Brexit could put trade relations between the U.K. and the U.S. "in serious jeopardy" as some U.S. companies are thinking of exiting the U.K. following the vote to leave the EU, Reuters writes.

UK AND IRELAND

* Old Mutual Plc unit OM Asset Management plc priced its underwritten public offering of 13 million of its ordinary shares at $14.25 per share. The share offer is expected to close Dec. 19. In addition, OM Asset Management's repurchase of 6 million ordinary shares directly from OM Group (UK) was also priced at $14.25 per share.

* The bosses at U.K. challenger banks are concerned that the government is too tied up with Brexit matters and has put on the back burner a push to level the playing field in the country's banking sector, City A.M. writes.

* A report by consumer group Which? indicates that U.K. lenders have shuttered more than 1,000 branches over the last two years amid mounting pressure to cut costs as more customers switch to mobile banking, the Financial Times writes.

* Lloyd's of London has warned that insurers operating on its marketplace are slated to lose money on their 2016 underwriting activities and urged insurers to keep their plans under continued review in 2017 due to tough market conditions. Lloyd's also announced plans to reduce its market subscriptions by 10% for 2017 and to change its organizational structure at the start of next year.

* The U.K. Prudential Regulation Authority has greenlighted Phoenix Group Holdings' plan to acquire Deutsche Bank AG's Abbey Life Assurance Co. Ltd. Completion of the transaction is expected by the end of the year.

* Standard Life Plc unit Standard Life Investments named Archie Struthers head of investments, effective Jan. 9, 2017. Struthers, who was previously global head of investment solutions at Aberdeen Asset Management Plc, will succeed Bill Lambert, who will reportedly retire in March 2017.

* Former Barclays Plc CEO Antony Jenkins has joined the board of London-based bitcoin wallet startup Blockchain, The Wall Street Journal writes. City A.M. also covers.

GERMANY, SWITZERLAND AND AUSTRIA

* A New York appeals court yesterday rejected Credit Suisse Group AG's request to dismiss a $10 billion lawsuit accusing the bank of misrepresenting risks in MBS that it sold in the run-up to the 2008 financial crisis, Bloomberg News reports. The court said the bank must face the lawsuit, which New York Attorney General Eric Schneiderman filed in 2012.

* UniCredit SpA German subsidiary UniCredit Bank AG will eliminate 1,500 jobs, Handelsblatt reports. UniCredit has ruled out selling the German unit, calling it a "strategic investment."

* A software problem hit Deutsche Postbank AG yesterday, preventing customers nationwide from making money transfers on its service terminals, according to a DPA report carried by Handelsblatt.

* Deutsche Bank is set to introduce its newly developed system of digital services in 2017, Markus Pertlwieser, chief digital officer of the lender's private, wealth and commercial clients unit, tells Börsen-Zeitung.

* Edmond de Rothschild (Suisse) SA appointed Vincent Taupin to head Edmond de Rothschild Asset Management, effective Jan. 1, 2017. Taupin will replace Roderick Munsters, who stepped down for personal reasons. Taupin will assume global responsibility for the unit, alongside his existing role as président du directoire of Edmond de Rothschild (France). Separately, the bank named Renzo Evangelista and Stéphane Pardini deputy directors in the French private bank and appointed Didier Deléage CEO of Edmond de Rothschild Asset Management (France).

FRANCE AND BENELUX

* BNP Paribas SA is preparing a vast restructuring of its retail bank network in France, according to Les Echos. The initiative is intended to remove one layer of management and is very similar to the projects already carried out in Italy and Belgium.

* Crédit Agricole SA has begun marketing a euro 10-year senior nonpreferred transaction at 125 basis points to 130 basis points over mid-swaps, Reuters writes. The deal will mature Dec. 20, 2026.

* France's Council of State ruled that Crédit Mutuel Arkéa SACC must communicate all its financial data to Confédération nationale du Crédit Mutuel, Les Echos writes. Over the last two years, the two entities have been at odds, leading Crédit Mutuel Arkéa to stop communicating financial data to the central entity. L'Agefi also has a report.

* Euronext NV said Maria João Carioca, CEO of Euronext Lisbon, stepped down to take up a post, at the request of the Portuguese government, on the managing board of Caixa Geral de Depósitos SA.

* The Dutch central bank urged insurance companies to seek out merger opportunities in order to cope with deteriorating market conditions, Het Financieele Dagblad writes, citing a report on the future for insurers.

* A commission looking into how the Dutch central bank and the Authority for the Financial Markets appoint key executives at banks, insurers and pension funds said the process is lacking transparency and suggested that outside parties should check the suitability of the executives, Het Financieele Dagblad reports.

SPAIN AND PORTUGAL

* Portugal could face up to €1.5 billion in liabilities after the English Court of Appeal ruled that interest rate swap contracts between state-owned transport companies in Portugal and Banco Santander SA cannot be invalidated and should be governed by English law, the Financial Times reports. The Portuguese government, which deemed the interest rate swap contracts as "highly speculative," said it will appeal against the ruling. Jornal de Negócios says both parties are negotiating a deal outside the court.

* Bankinter SA said the ECB established that the entity maintain a common equity Tier 1 ratio of 6.5% on a consolidated basis for 2017, meaning that the banking group would have no limitations in terms of dividend payment, Europa Press reports. Given the financial institution's Solvency ratio of 11.89% at Sept. 30, Bankinter will comfortably cover the ECB minimum requirements for the year.

* Shareholders of Banco BPI SA approved the bank's sale of a 2% stake in Banco de Fomento Angola SA to Unitel, Dinheiro Vivo reports. Minority shareholders who voted against the sale are considering the possibility of appealing the decision in court.

* Holding company CriteriaCaixa is selling a stake in CaixaBank SA equivalent to 1.7% of the lender's share capital and is valued at €327 million at current market prices, Reuters writes.

* The Portuguese central bank requested proof that Chinese group Minsheng has the capacity to concretize its bid to acquire Novo Banco SA, Jornal de Negócios reports. So far, the group's offer stands out as the most attractive, and Economia Online writes that a memorandum of understanding has already been signed but that negotiations will not move forward unless a legal declaration stating the financing capacity of the group is presented.

* Caixa Económica Montepio Geral approved the change of the institution to a public limited company and all relevant statute alterations. Approval from the central bank is still pending, Jornal de Negócios notes.

* In its annual country assessment, the IMF lauded Spain's continued "impressive" economic recovery, which it said was helped by the government's reform measures and fiscal loosening, among other factors.

* Fitch Ratings' outlook for Spanish bank ratings for next year is positive, reflecting asset-quality trends helped by the country's economic recovery.

ITALY AND GREECE

* Moody's revised to negative from stable the outlook on Italy's banking sector, reflecting the agency's expectation that the recognition of losses will dampen the sector's profitability and erode its capital over the next 12 to 18 months. The revision is also driven by the adverse effect on confidence in the sector following a vote rejecting constitutional reforms.

* The ECB told Banca Monte dei Paschi di Siena SpA that a delay of its €5 billion capital increase could result in further deterioration in its liquidity position and capital base, Reuters reports, adding that the bank's board will meet today to assess whether the conditions are in place for the launch of a last-ditch private effort to rescue the bank as soon as tomorrow. One of new Italian Prime Minister Paolo Gentiloni's first measures is expected to be a decree aimed at propping up the bank.

* Istituto Centrale delle Banche Popolari Italiane SpA signed an agreement to buy payment services firm Bassilichi in a deal valuing Bassilichi at €230 million, Reuters reports, noting that Monte dei Paschi will sell its 11.74% stake in Bassilichi.

* Banca Popolare di Vicenza SpA CEO Fabrizio Viola said it is proceeding with the evaluation of a possible merger with Veneto Banca SpA, noting that the drafting of an industrial plan is the first priority and management changes will not delay an eventual deal, Il Sole 24 Ore writes. Popolare di Vicenza shareholders voted to take legal action against former managers after thousands of small investors lost their savings when the bank was bailed out by rescue fund Atlante, Reuters says.

* The ECB pushed back by one month to Feb. 28, 2017, the deadline for Banca Carige SpA to present its plan for disposing of nonperfoming loans, Il Sole 24 Ore reports.

* Banca Popolare di Sondrio SCpA is studying the possibility of postponing a Dec. 17 shareholders' meeting to approve its transformation into a joint stock company until Dec. 27 due to uncertainty following a court decision suspending some aspects of the government's reform measures on cooperative lenders, Il Sole 24 Ore says.

* Data from the Bank of Greece shows that the central bank's emergency funding for the country's lenders declined to €45 billion at the end of last month from €46.3 billion at October-end, Reuters writes.

* After six consecutive years, Greek banks have returned to operating profitability in 2016, Eurobank Ergasias SA Chairman Nikos Karamouzis told a forum in New York, Imerisia reports. He noted that despite the ongoing uncertainty and economic stagnation, the conditions in the Greek banking system showed a steady improvement.

NORDIC COUNTRIES

* Norwegian online lender Monobank is expected to achieve a fourfold increase in its loan portfolio over the next two years, Dagens Næringsliv reports. Owned by the Pareto financial services group, the online bank is on course to reach a lending level of 800 million kroner in 2016.

EASTERN EUROPE

* PJSC Tatfondbank's board of directors did not approve a financial rehabilitation program for the lender, with its main shareholder, the local government of Russia's Tatarstan Republic, trying to maintain control over the bank at all costs, Kommersant writes. RBK Daily says, on the other hand, that three alternative financial recovery plans are being considered for the lender and that they will be presented to the Russian central bank on Dec. 14.

* JSC VTB Bank will receive about 330 billion Russian rubles in state guarantee payments on loans provided to companies participating in Russia's state armament program, shut in 2015, Vedomosti reports, adding that PAO Sberbank of Russia will receive a similar amount. The government decided to pay off this year almost 800 billion rubles out of more than 1 trillion rubles of loans provided under the program.

* Sberbank could sell its stakes in Visa and Mastercard, but it is early to talk about potential transactions at this stage, news agency Prime reports.

* Sberbank CEO Herman Gref said the strategy of the lender's international unit in individual countries and regions will focus on optimization, digitization and the introduction of new business models, but will not include geographic expansion, Rzeczpospolita reports.

* The fourth-quarter financial results of Polish banks will be negatively affected by the cost of deposit guarantees for cooperative lender Bank Spóldzielczy Nadarzyn, which collapsed in October, Rzeczpospolita says.

* The Romanian central bank warned about risks to the country's financial stability stemming from investor sentiment and unpredictable legislation in the banking sector, SEENews says.

* The National Bank of Ukraine expects that the recapitalization of state banks and the cleanup of the banking sector will be completed in 2017, Interfax Ukraine reports.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: China Minsheng eyes Novo Banco; Allianz closing Australia aviation insurance biz

Middle East & Africa: Bleak outlook for Mozambique; Qatari fund eyes $10B investment in US

Latin America: Brazil plans new economic stimulus; Seguros Monterrey for sale

North America: Pacific Premier buying Heritage Oaks for $405.6M; Highland Capital sues investor

North America Insurance: Prudential Financial under probe; New York Life unit for sale

NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE

Proposed Basel IV deal would hit European banks hard: The Basel Committee wants to set capital floors at 75%, a move that could force European banks to raise much more capital. But the devil will be in the detail of the final agreement due in the new year.

UniCredit's giant rights issue unaffected by Italian headwinds, CEO says: Jean-Pierre Mustier was bullish about the prospects of the €13 billion capital raise announced Dec. 13, expressing confidence in Italy despite recent political turmoil and the saga surrounding Banca Monte dei Paschi.

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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