UK AND IRELAND
* The U.K. Prudential Regulation Authority is planning to order an independent inquiry into Royal Bank of Scotland Group Plc's plans to offload its Williams & Glyn business amid mounting pressure from the European Commission to sell the division, The Daily Telegraph reports. The bank, which has been struggling to dispose of Williams & Glyn for more than seven years, is poised to press ahead with a sale to either CYBG Plc or Banco Santander SA, neither of which has made offers to acquire the entire business.
* Meanwhile, RBS' remuneration committee is in talks with shareholders over proposals to reduce the long-term incentive plan award to CEO Ross McEwan to about £1.8 million from £3 million beginning next year, insiders tell Sky News. The plan, which is part of the bank's revised pay policy, will be subjected to a shareholder vote at its next annual meeting.
* Lloyds Banking Group Plc is considering converting one of its two branches in Germany or the Netherlands into a subsidiary if the U.K. is unable to retain access to the EU's single market, insiders tell the Financial Times. The plan is one of the options being considered by the bank as it seeks to keep its relatively small number of retail clients in the two countries and retain access to the bloc's payment system.
* Former Bank of England Governor Mervyn King said Brexit will pave the way for "real opportunities" for new trade deals and economic reforms, BBC News writes. King said the U.K. will be better off economically if it were completely out of the EU's single market and that remaining in the customs union could hinder the British government's ability to reach trade deals with non-EU countries.
* Separately, Stephen Martin, the incoming director general of British business lobby group the Institute of Directors, said the U.K.'s impending exit from the EU will give the country an opportunity to become trading partners with far-flung countries in areas such as Africa, The Daily Telegraph writes.
* New research by pro-leave group Change Britain suggests that the U.K. could save between £20.1 billion and £38.6 billion per year if it leaves the EU's single market and customs union in a "clean Brexit."
* Tullett Prebon Plc confirmed this morning that it will issue 310,314,296 new shares, representing approximately 56% of its issued share capital, to shareholders of NEX Group Plc, the holding company of ICAP Plc and its subsidiaries. The share issue is in relation to Tullett Prebon's acquisition of NEX's global hybrid voice broking and information business.
GERMANY, SWITZERLAND AND AUSTRIA
* The ECB required Deutsche Bank AG to maintain, on a consolidated basis, a minimum phased-in common equity Tier 1 ratio of at least 9.51%, starting January next year. The ratio includes a 1.00% requirement for it being a global systemically important bank.
* Moody's affirmed Deutsche Bank's ratings, including its A3/P-2 long- and short-term foreign- and local-currency deposit ratings and its "ba1" baseline credit assessment, following its announcement that it reached an agreement in principle with the U.S. Department of Justice to settle claims that it missold RMBS. Separately, the rating agency affirmed the ratings of Credit Suisse Group AG unit Credit Suisse AG, including its A1/P-1 long- and short-term foreign- and local currency deposit ratings and its "baa2" baseline credit assessment, following a similar settlement with the DOJ.
* Zürcher Kantonalbank agreed to pay €5.7 million to settle an investigation by German judicial authorities in relation to untaxed assets of the bank's German clients, swissinfo.ch reports. For its still-unresolved tax dispute in the U.S., the bank made provisions of CHF200 million, Tages-Anzeiger reports.
* Bank Vontobel AG clarified its Dec. 22 statement on its tax case with the U.S. Department of Justice, saying it was "unclear" as it implied that Vontobel has resolved the issue. In fact, the statement said the bank and its lawyers determined that Vontobel had not committed any crime under U.S. tax law and proactively engaged in discussions with the DOJ.
* The automatic exchange of information on financial accounts, AEOI, is also expected to revive a 2013 deal between Switzerland and Germany that allows Swiss banks to operate in Germany without having a branch or representative office there, Handelszeitung reports. With the AEOI providing legal security, up to 12 small- and medium-sized banks could enter the German market next year.
* Large shareholders of Leonteq Securities AG, the Swiss fintech whose share price dropped 75% this year and whose CEO and co-founder Jan Schoch last week was forced to release a surprise profit warning, are increasing pressure on the company's supervisory board to replace Schoch, Schweiz am Sonntag writes.
FRANCE AND BENELUX
* London Stock Exchange Group Plc is poised to announce the sale of its Paris-based clearing business LCH SA to Euronext NV within days in a deal worth approximately €510 million, insiders tell the Financial Times. Both parties sought to ink a deal before Christmas but had to delay the announcement due to a last-minute disagreement over the terms of the transaction, which has now been resolved.
* The Belgian government may sell some of its holding in BNP Paribas SA as the stock is trading close to its highest level since the 2008 financial crisis, De Standaard reports. The Belgian government has a 10.2% stake in the bank. L'Echo also reports.
* SCOR SE received authorization from Indian authorities to open a composite branch office in the country, after having a liaison office in the country since 2005, Capital.fr reports. Reuters also covers.
* Housing loans reached record highs in France in 2016, Les Echos reports.
* Luxembourg yesterday unveiled changes to its corporate tax rules in an effort to crack down on tax evasion, Reuters reports. The changes will take effect Jan. 1, 2017. Les Echos and Le Monde also cover.
SPAIN AND PORTUGAL
* Portuguese banks will have to increase their payments to the National Resolution Fund following a tax increase for 2017, Jornal de Negócios writes.
* Bankinter SA launched a new real estate investment vehicle in partnership with Portuguese property company Sonae Sierra, Expansión writes. The listed vehicle will invest some €400 million in assets, of which around half will come from financing and half from client contributions. The minimum investment per client will be €250,000.
ITALY AND GREECE
* The ECB said Banca Monte dei Paschi di Siena SpA needs approximately €8.8 billion to boost its balance sheet, compared to the €5 billion previously estimated by the lender. The central bank said it still considers the troubled lender solvent but that its liquidity position had worsened since the end of November.
* The Italian government is expected to spend about €6.5 billion to bail out Monte dei Paschi, sources tell Reuters. The remaining €2.3 billion should come from the conversion into shares of subordinated bonds held by institutional investors. The capital injection would give the government a stake in MPS of approximately 70%.
* Meanwhile, Moody's extended its review of Monte dei Paschi's "ca" stand-alone baseline credit assessment, but changed the direction to review for upgrade from review with direction uncertain. The agency said it expects the lender to improve its credit profile through a combination of a mandatory conversion of subordinated bonds into shares and a precautionary recapitalization of the bank by the Italian government.
* Italy's Treasury confirmed that a €20 billion fund set up by the government should still be sufficient to deal with emergency situations at other Italian banks despite the higher-than-expected cost of the Monte dei Paschi rescue, Il Sole 24 Ore writes.
* Intesa Sanpaolo SpA has drawn up a shortlist comprising Apollo, Cerberus and a third bidder for the disposal of a €2.5 billion nonperforming loan portfolio, Il Sole 24 Ore says.
* UniCredit SpA completed the sale of its UniCredit Business Integrated Solutions (UBIS) business in Italy, Germany and Austria to SIA SpA for €500 million, Reuters writes.
* Banco di Desio e della Brianza SpA and its Banca Popolare di Spoleto SpA unit sold a portfolio of NPLs with a nominal value of €150 million to Mediobanca SpA's Creditech unit, Il Sole 24 Ore reports.
* Helvetia Holding AG acquired the 47% stake it did not already own in Chiara Assicurazioni SpA for €20 million, Il Sole 24 Ore says.
* GEK TERNA SA acquired 23.0 million shares of Piraeus Bank SA for €4.8 million, Capital reports.
NORDIC COUNTRIES
* Faroese bank P/F BankNordik issued a profit warning, saying it expects profit of between 165 million Danish kroner and 180 million kroner in 2016, down from a previous forecast of 175 million kroner to 200 million kroner, on the back of higher insurance costs due to severe weather on the Faroe Islands in December, Børsen reports. BankNordik offers insurance services through partner Privatsikring.
* The Swedish FSA will maintain the systemic risk buffer for the country's top lenders at 3%, Reuters writes.
* Two former managers at Swedish payment services provider Klarna launched a fintech company, Breakit reports. Stoer will offer banks a new digital platform for lending services and aims to make the loan process easier for both banks and their customers.
* Swedish government-owned investment fund Swedfund is investing in Nigerian bank Guaranty Trust Bank Plc via a loan of 135 million Swedish kronor, Realtid notes. The loan is to be used to finance small and medium-sized enterprises.
EASTERN EUROPE
* Eurobank Ergasias SA concluded the sale of Ukrainian unit PJSC Universal Bank to TAS Group. The Greek lender said the transaction, which is consistent with its restructuring plan as agreed with the European Commission, is capital-neutral on a group level.
* The Ukrainian central bank provided nationalized PAO KB Privatbank with another refinancing loan, of 10.75 billion Ukrainian hryvni, at the end of December, Vedomosti reports, citing Interfax Ukraine.
* The Russian central bank will reduce the maximum amount of foreign-currency funding available to commercial banks to $25 billion in 2017, Reuters says.
* The value of compensation to be paid out to deposit holders of Russia's Tatarstan Republic-based PJSC Tatfondbank by the Russian Deposit Insurance Agency is estimated at 53.7 billion rubles, Vedomosti reports. The central bank could also allocate about 120 billion rubles to support banks operating in the Tatarstan Republic.
* The board of directors of PAO AK Bars Bank recommended to the lender's shareholders to approve a 10 billion ruble authorized capital increase, Prime says.
* Vnesheconombank Chairman Sergei Gorkov said the bank will post a loss of 130 billion rubles this year, Reuters writes. Gorkov said the figure, which is less than the initially estimated loss of 200 billion rubles, is driven by the bank's sale of American depository receipts in Russian state gas company Gazprom, which contributed 118 billion rubles in losses to the overall sum.
* The Russian Association of Trading Companies and Manufacturers of Household Electrical Equipment and Computers filed a complaint with Russia's Federal Antimonopoly Service against Visa and MasterCard regarding acquirer fees, Kommersant reports.
* PZU SA head Michal Krupinski said the insurer has no plans to merge Alior Bank SA and Bank Pekao SA, Rzeczpospolita reports.
* The Kazakh central bank canceled the license of JSC Kazinvestbank due to its problems with processing payments and money transfer, Reuters reports. The regulator will launch liquidation proceedings for the lender.
* The Polish FSA asked Bank BGZ BNP Paribas SA to hold additional capital buffers to cover risks stemming from its FX mortgage exposure, PAP reports.
* The Slovenian government decided to increase the capital reserves of the Bank Assets Management Company by €50 million, SEENews reports.
* Akbank TAS decided to liquidate 100% subsidiary Akbank (Dubai) Ltd. in the United Arab Emirates. The Turkish lender instead will open a representative office in Dubai, Finans Gündem writes.
IN OTHER PARTS OF THE WORLD
Asia-Pacific: Anbang to buy Allianz South Korea biz; Sany-led group sets up commercial bank
Middle East & Africa: The attraction of Africa; M&A activity in the Middle East
Latin America: BNDES makes 100B reais repayment; Argentina revamps finance ministry
North America: Barclays gets kudos for defying DOJ; former Wells banker testifies today
North America Insurance: Trump administration could cut ACA benefits; 2016 quiet for IPOs
NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE
Barclays in no rush to settle with DoJ over alleged misselling over RMBS: Barclays says it will fight the U.S. Department of Justice over alleged misselling of residential-mortgage-backed securities, but the British lender may just be biding its time, analysts said.
Frankfurt and Paris favorites to host EBA, but smaller city may win: Frankfurt and Paris are already home to key EU financial institutions, making them arguably the most likely candidates to host the European Banking Authority after it leaves London, but several other cities are also putting their stall out.
Xana Kakoty, Arno Maierbrugger, Danielle Rossingh, Esben Svendsen, Beata Fojcik, Thanasis Kakalis, Ali Kayalar, Heather O'Brian, Brian McCulloch, Sophie Davies and Mariana Aldano contributed to this report.
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