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Lloyds, Schroders in wealth tie-up talks; Monte dei Paschi selling Belgian unit


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Banking Essentials Newsletter: 8th March Edition

Lloyds, Schroders in wealth tie-up talks; Monte dei Paschi selling Belgian unit

* The ECB has warned financial institutions to limit their reliance on "back-to-back" booking models by 2022, three years after Britain exits the European Union, insiders told the Financial Times. Such an arrangement enables trades and loans processed in the EU to be booked in London, while also making it easier for companies to retain staff and capital in Britain.

* The number of global executives planning to acquire firms in the next 12 months has declined year over year amid regulatory uncertainty and trade tensions, such as Brexit talks and the trade dispute between the U.S. and China, according to EY's annual Global Capital Confidence Barometer survey. Only 46% of the respondents plan to acquire in next 12 months, down from 56% a year ago.


* Schroders PLC confirmed that it is in talks with Lloyds Banking Group PLC to work "closely together in parts of the wealth sector," following reports that the banking group is finalizing plans to merge its £13 billion wealth management unit into a new joint venture with the asset manager as part of a roughly £500 million three-pronged deal between the two firms.

* U.S. authorities have informed Standard Chartered PLC about plans to bring criminal charges against two of the lender's former employees for allegedly breaching sanctions involving companies linked to Iran, insiders told the FT.

* Royal Bank of Scotland Group PLC Chairman Howard Davies told The Times that the lender is considering changing its corporate name after resolving most of its financial and restructuring problems. Separately, RBS CEO Ross McEwan warned that it could take another decade for British customers to trust banks again due to the longstanding effects of the financial crisis in 2008, Sky News wrote.

* HSBC Holdings PLC named Peter Enns global head of its financial institutions group, effective from late October. Enns most recently served as chairman and CEO of Goldman Sachs Group Inc. in Canada.

* Citigroup Inc. is planning to establish a new London-based bank to house its U.K. consumer business after Brexit, Reuters reported, citing a note to customers. The consumer business, which was previously run through Ireland-based Citibank Europe PLC, will be transferred to the new banking subsidiary by March 2019.

* Lancashire Holdings Ltd. said it expects aggregate estimated net losses of about $30 million due to exposure to loss events within its marine portfolio. Additionally, the company also expects losses within the range of $25 million to $45 million due to a number of recent natural catastrophes, including hurricane Florence.

* The average net combined ratio of British property insurers is expected to rise to 101% this year due to the extreme weather conditions pushing up claims during the first half, the FT reported, citing new estimates from EY.

* Outgoing Lloyd's of London CEO Inga Beale told BBC News that the insurance market is accelerating plans to transfer contracts to a Brussels-based subsidiary as part of its Brexit contingency preparations.

* John Lloyd, one of the founding partners of Lloyd Thompson Group, is leaving Jardine Lloyd Thompson Group PLC after 38 years, reported.

* Standard Life Aberdeen PLC is in discussions with Saudi Arabia over the launch of one or more investment vehicles, which will be seeded by the country's sovereign wealth fund, insiders told Bloomberg News. Standard Life Aberdeen is looking at opening an office in Riyadh as part of the plan, though talks are at an early stage with no guarantee that an agreement will be reached.

* Separately, Standard Life Aberdeen received regulatory approval for the return of £1.0 billion to shareholders by way of a B share scheme, accompanied by a share capital consolidation.

* Legal & General Group PLC's Legal & General Assurance Society Ltd. completed a £2.4 billion buyout for the Nortel Networks UK Pension Plan.


* Switzerland's Federal Tax Administration said it had, for the first time, exchanged financial account data at the end of September under the framework of the global standard on the automatic exchange of information. The exchanged information allows tax authorities to verify whether taxpayers have correctly declared their financial accounts abroad in their tax returns.

* UBS Group AG will today go on trial in Paris over claims that it helped wealthy clients dodge French taxes by setting up a complex tax fraud network worth €10 billion, Bloomberg and Les Echos reported. Le Figaro and Le Monde also covered.

* Credit Suisse Group AG is set to rehire Ahmed Badr as a managing director responsible for strengthening the Swiss bank's equity operations in the Middle East and North Africa, sources told Bloomberg.

* Several of Raiffeisen Schweiz Genossenschaft member banks are planning to oppose the election of Basler Kantonalbank CEO Guy Lachappelle as chairman of the cooperative bank group, Aargauer Zeitung reported, citing sources.

* Julius Bär Gruppe AG is benefiting from steady growth of wealth creation in the U.K. and its bet that Brexit is not a long-term threat to business, Julius Baer International Ltd. CEO David Durlacher told Reuters.

* The implementation of the EU's revised Markets in Financial Instruments Directive, or MiFID II, is hampering Deutsche Bank AG's German wealth management business, Daniel Kalczynski and Anke Sahlén, co-heads of Deutsche Bank Wealth Management in Germany, told Börsen-Zeitung. Irrespective of net inflows, revenue and earnings in 2018 are expected to remain below last year's figures and not reach initial target figures for the year, they said.


* BNP Paribas Cardif is considering selling part of its stake in Indian insurance company SBI Life Insurance Co. Ltd., with Indian media saying the BNP Paribas SA unit is aiming at selling a 5% to 6% stake, Les Echos reported.

* French debt managers DSO Group SAS and MCS Groupe completed their merger after receiving regulatory and staff approval.


* The Lara family, which owns Spanish media group Grupo Planeta, sold a 2% stake in Banco de Sabadell SA held through investment fund Inversiones Hemisferio for about €140 million, according to El Confidencial.

* Kutxabank SA Chairman Gregorio Villalabeitia believes that the Spanish financial system does not need any further consolidation, but does not rule out that such an operation would take place, Europa Press wrote.

* Eight years after the financial crisis, the six largest Portuguese banks have a total of €5.5 billion in properties acquired from default payments, Economia Online wrote. More than a third of the houses available for sale belong to Novo Banco SA.


* The European Commission indicated concerns about the Italian government's planned budget deficits for the next three years, saying the plan goes against what European Union finance ministers asked Italy to do in July, Reuters reported.

* Banca Monte dei Paschi di Siena SpA is expected to begin the process to dispose of properties with a value of €500 million in the next few weeks, while it is seen receiving nonbinding bids for a €2.4 billion bad loan portfolio Oct. 12, both elements of a €5 billion disposal plan that is also expected to include the sale of its French operations, said Il Sole 24 Ore. Monte dei Paschi last week announced an agreement to sell Belgian unit Banca Monte Paschi Belgio SA to funds managed by private equity fund Warburg Pincus LLC for €42 million.

* Banca Carige SpA explored the possibility of merging with Banca IFIS SpA in the months following Carige's 2017-end capital increase, Il Sole 24 Ore said, adding that the idea has likely been permanently abandoned.

* UniCredit SpA wants 20% of senior leadership roles to be held by women by 2022 and will appoint a member of its senior executive team to oversee gender diversity and inclusion.


* The Danish Business Authority launched a formal inquiry into the external auditors that approved Danske Bank A/S' annual reports while billions of dollars were allegedly being laundered through the bank's Estonian subsidiary, Bloomberg reported. Meanwhile, Morten Mosegaard, the bank's interim CFO, said U.S. authorities' involvement in the money laundering scandal is very different from the situation at Latvia-based ABLV Bank AS, which collapsed after it was denied dollar funding amid accusations of covering up money laundering, Reuters wrote.

* Danske Bank's Estonian branch was on the brink of losing its banking license in the country in 2015 after the local Financial Supervision Authority found irregularities in the branch's portfolio of non-resident accounts, Dagens Industri reported. Meanwhile, the Estonian government commissioned a new report to investigate the scale of suspected money laundering activities at the branch, according to Børsen.

* Regulatory authorities in Denmark are closely monitoring international developments that connect Nordea Bank AB (publ) to money laundering activities by Belize-based company Barton Trading Ltd., FinansWatch wrote. Barton is suspected of using accounts held with Nordea in Denmark to launder substantial amounts of cash on behalf of dubious actors in Russia. The bank said it quickly detected irregularities in suspect accounts and mounted a legal action against Barton after closing all of the company's accounts.


* Fitch Ratings upgraded Estonia's long-term foreign- and local-currency issuer default ratings to AA- from A+ with a stable outlook.

* Bosnian Serb nationalist leader Milorad Dodik and Šefik Džaferović, candidate of the main Bosnian Muslim party, won the Serb and Bosnian seats in Bosnia's three-person presidency, BBC News wrote. Željko Komšić remains the Croat member of the presidency.


Asia-Pacific: China cuts reserve ratio; Axis Bank stake sale delayed; India holds rates steady

Middle East & Africa: South Africa's finmin faces pressure to resign; S&P lowers outlook on Morocco


Greece considering special vehicle to help banks shift billions in toxic debt: The Greek bank rescue fund is reportedly working on plans for a special purpose vehicle that would allow Greek lenders to shift billions of euros of toxic loans off their balance sheets. But banking industry insiders are skeptical.

British MPs face uphill battle in bid for Australia-style banking inquiry: A dedicated group of British parliamentarians say they will not stop until a public inquiry into small business lending is set up to investigate abuses, but the government, industry, regulators, and some fellow lawmakers, do not support the move.

Ireland welcomes some Brexit business, but issues no bank licenses: No new banking license was issued in Ireland between the Brexit referendum in June 2016 and June 2018, despite Dublin being ranked as a top location for financial firms seeking to leave Britain.

Drinking ban uproar showed Lloyd's exists in 'bubble,' says outgoing CEO: The reaction to the ban, which was revealed in February 2017, served as an example of the "embedded behaviors" at Lloyd's and the difficulty Inga Beale faced in trying to instill change in a market with such a strong culture.

Leo Magno, Ed Meza, Danielle Rossingh, Gerard O'Dwyer, Beata Fojcik, Heather O'Brian, Brian McCulloch, Sophie Davies and Mariana Aldano contributed to this report.

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