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Banks' MREL funding need estimates cut; more calls for transitional Brexit deal

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Banks' MREL funding need estimates cut; more calls for transitional Brexit deal

* The European Banking Authority estimated that possible funding needs for minimum requirement for own funds and eligible liabilities, or MREL, would range between €186.10 billion and €276.20 billion, for a sample comprising 133 banks from 18 EU member states. The new range compares to the regulator's prior estimate of as much as €790 billion.

* ECB Governing Council member François Villeroy de Galhau told The Wall Street Journal that the central bank's monetary policy is providing a "yardstick of predictability and stability" as the bloc faces heightened political uncertainty from the looming cycle of elections next year, Reuters writes.

* As widely expected, the U.S. Federal Reserve yesterday raised the target range for the federal funds rate -- the second time in more than a decade -- to between 50 basis points and 75 basis points "in view of realized and expected labor market conditions and inflation."

UK AND IRELAND

* Brexit Secretary David Davis said he is open to the idea of a transitional agreement to cushion businesses from the effects of Brexit but that the U.K. and the EU must first agree on a broad shape of the country's future trading relationship with the bloc, Bloomberg News reports.

* Separately, Bank of England Deputy Governor Sam Woods said a transitional deal is necessary "sooner rather than later" to reduce the risks of Brexit undermining financial stability, Reuters writes. Woods said details of a transitional arrangement should be established within nine months after the Article 50 is triggered, adding that such a deal would be in the interest of both the U.K. and the EU, The Guardian also covers.

* The U.K. House of Lords' EU Committee urged the government and the EU to pursue negotiations on a transitional agreement "as early as possible" after the country formally begins the Brexit process. The committee said the transition period should extend through the negotiations on the country's new relationship with the bloc and continue thereafter "for a period sufficient to provide stability after that relationship is agreed."

* The U.K. Financial Conduct Authority unveiled new proposals that set out a range of options for changing both how the country's Financial Services Compensation Scheme is funded and the coverage it gives customers, including implementing risk-based levies. The regulator also seeks to extend coverage to some aspects of fund management and debt management firms and requiring Lloyd's of London to contribute appropriately to the retail pool.

* Royal Bank of Scotland Group Plc is close to reaching a settlement with a group of shareholders represented by law firm Leon Kaye Solicitors over its ill-fated £12 billion rights issue in 2008, the Financial Times writes. The bank already reached settlements with three of the five claimant groups litigating its rights issue.

* Various institutional investors in Hastings Group Holdings Plc agreed to sell up to 29.9% of its issued ordinary share capital to South Africa's Rand Merchant Investment Holdings Ltd. at a price per share of between 248 pence and 255 pence, for an aggregate cash consideration of between £487.3 million and £499.5 million.

* London-based Algebris Investments (UK) LLP is seeking to raise €1 billion to invest in bad debt issued by Italian banks. CEO Davide Serra said the fund has secured commitments of €210 million so far and is in line to clinch a further €500 million from major institutional investors.

* CMC Markets Plc is likely to consider relocating its headquarters, as well as other London-based contract for difference operations, to Germany ahead of the U.K.'s Financial Conduct Authority's leveraged bet clampdown, an insider tells Sky News.

* London Stock Exchange Group Plc and Deutsche Börse AG said yesterday that they received a statement of objections from the European Commission in relation to their planned merger, which they said reflected "a narrower scope of issues."

* ICAP Plc said yesterday that a court ordered to sanction a scheme to establish NEX Group Plc as the holding company of ICAP and its subsidiaries, confirming ICAP's related capital reduction. The scheme, which entitles holders of ICAP ordinary shares to one NEX Group ordinary share for each ICAP ordinary share, is expected to take effect today.

GERMANY, SWITZERLAND AND AUSTRIA

* Deutsche Bank AG could reach an out-of-court settlement with Madeleine Schickedanz, former majority shareholder of Arcandor AG, over the 2009 insolvency of the German retail company, as early as next week, Süddeutsche Zeitung reports. Schickedanz filed a €1.9 billion lawsuit against private wealth management firm Sal. Oppenheim, which was acquired by Deutsche Bank, and a former financial adviser in 2012 over the loss of her fortune. She will reportedly receive a settlement in the three-digit millions but well under €1.9 billion.

* Prosecutors in Cologne, Germany, have suspended investigations of Joh. Berenberg Gossler & Co. KG executives at the company's main office in Hamburg as well as its branch in Luxembourg for allegedly aiding tax evasion, Manager Magazin reports. An investigation against the bank's Swiss subsidiary continues, and the bank may have to pay a fine of several hundred thousand euros, in addition to forfeiting up to €4 million in profit earned in Switzerland from offshore activities.

* UniCredit SpA German unit UniCredit Bank AG will seek to avoid layoffs in its planned elimination of 1,500 roles and instead use fluctuation and fill vacant positions internally, Handelsblatt writes.

* While some major banks remain wary of financing business activities in Iran, some of Germany's volksbanken are embracing the market, Handelsblatt reports. A group of Volksbanken from the German state of Baden-Württemberg, among them Volksbank Schwarzwald-Neckar eG, has formed a new competence center aimed at international financing, including business activities in the Middle Eastern country.

* Deutsche Pfandbriefbank AG is facing a possible £113 million loss in connection with credit linked notes issued in 2007 by Hypo Real Estate Bank International AG, which has since merged into the bank, Börsen-Zeitung writes.

* An Italian judge approved Credit Suisse Group AG's tax settlement deal with the country's authorities, judicial sources tell Reuters. Under the deal, the bank will pay €109.5 million to resolve the case alleging that it helped clients move undeclared funds offshore.

FRANCE AND BENELUX

* After Crédit Agricole SA, Société Générale SA also issued new bond securities created by the Sapin II law and intended to absorb losses in case of a bank bankruptcy, according to Les Echos. Société Générale issued €1 billion of such notes.

* Norbert Dentressangle stepped down as vice chairman of AXA's board of directors. André François-Poncet was appointed to the board for the remainder of Dentressangle's mandate, while board member Jean-Martin Folz was named senior independent director.

* In an interview to Les Echos, French Treasury head Odile Renaud-Basso said the Sapin II law will strengthen the attractiveness of Paris as a financial center.

* Created in 2013, fintech Morning is on the verge of ceasing its activities, according to Le Figaro. The activities of the company were blocked in December by French regulator ACPR.

* Crédit Agricole unit CFM Indosuez Wealth Management SA is targeting an additional €3 billion of net inflows per year between 2016 and 2019, according to Les Echos. The company wants to achieve this result by purchasing wealth management companies in Italy, Belgium and Spain.

* Belfius Banque SA will start talks about an IPO next year or in 2018, De Tijd reports. CEO Marc Raisière strongly opposes selling the bank to a foreign group and has confirmed he wants to talk to the government about a potential IPO.

* Online bank and broker Keytrade Bank SA will start offering customers mortgage loans from April 2017, De Tijd reports.

SPAIN AND PORTUGAL

* The Spanish central bank maintained at 0% the countercyclical capital buffer applicable to credit exposures in Spain of Spanish deposit-taking institutions in the first quarter of 2017. Separately, it designated Banco Santander SA a global systemically important institution in 2018.

* Banco de Sabadell SA will postpone the implementation of its new three-year strategic plan by a year to 2018, Expansión writes. Chairman Josep Oliu said 2017 would be a transition year in which the bank will finalize the integration of TSB Banking Group Plc and its commercial transformation and cost cutting process.

* Portuguese securities regulator CMVM started the formal analysis of CaixaBank SA's takeover bid for Banco BPI SA, Jornal de Negócios writes.

* After voting in favor of transforming Caixa Económica Montepio Geral from a savings bank into a public limited company, shareholders will decide in 2018 whether the company should list on the Lisbon stock exchange, Jornal Sol reports.

ITALY AND GREECE

* The European Stability Mechanism suspended a recently announced debt relief package for Greece after the country's Prime Minister Alexis Tsipras unveiled unexpected social welfare measures, including pre-Christmas bonuses for some 1.6 million retirees, The Guardian reports. A spokesman for the ESM said the institution is currently assessing the impact of Tsipras' new measures and their compatibility with the ESM program commitments.

* Italian Prime Minister Paolo Gentiloni yesterday won a confidence vote in the country's Senate, a day after securing a similar victory in the lower chamber of parliament, Reuters writes. The confidence votes allow Gentiloni's government to formally take office.

* ECB Chief Economist Peter Praet told German paper Die Zeit that EU rules allow Italy banks to be propped up with state aid, Reuters reports. Praet called for a cleanup in the Italian banking sector, saying: "There are too many banks in Italy and they are not profitable enough."

* Meanwhile, European Commission President Jean-Claude Juncker told German television ZDF that he does not view problems in the Italian banking sector as unsolvable and dismissed concerns that "something could arise from Italy that would look similar to a new euro crisis," according to Reuters.

* UniCredit yesterday launched €500 million in Additional Tier 1 notes. The securities are perpetual and can be called after 5.5 years, with a 9.25% fixed rate coupon.

* Banca Monte dei Paschi di Siena SpA could today reopen a debt-for-equity swap offer in order to raise €5 billion by year-end, insiders tell Reuters. Should the board approve the plan, Monte dei Paschi would launch a private placement of newly issued shares next week to avoid the Italian government having to rescue the bank.

* Banca Popolare dell'Emilia Romagna SC and Crédit Agricole Cariparma SpA denied any interest in buying the good bank carved out of failed Italian lender CARIFE SpA, according to MF. Giampiero Maioli, CEO of Cariparma, said his bank was not interested in CARIFE, while Alessandro Vandelli, CEO of BPER, said: "we aren't buying anything."

* Attica Bank SA said it will establish an asset management company that will handle claims from nonperforming loans. The bank will transfer an NPL portfolio of approximately €1.05 billion to the special purpose vehicle, which will issue a €415 million senior note and a €630 million junior note.

NORDIC COUNTRIES

* The Central Bank of Iceland yesterday lowered its main interest rate by 0.25 percentage points to 5.0%.

* Nordea Bank AB (publ) named Nils Bolmstrand head of its asset management unit, effective in January 2017, Dagens Industri reports. Bolmstrand replaces Christian Hyldahl, who left Nordea to become CEO of Danish pension group ATP in October.

* Fitch Ratings' outlook for major Nordic banks next year is stable, reflecting benign operating environments and stable, concentrated banking systems across the region.

EASTERN EUROPE

* JSC VTB Bank approved its new strategy under which it wants to record net profit of more than 200 billion Russian rubles in 2019 and eyes ROE of around 13% and 14%, Vedomosti reports. PAO Sberbank of Russia also expects its ROE to be in the high teens in 2017. Reuters also has reports.

* The Russian central bank placed PJSC Tatfondbank under the provisional administration of the Deposit Insurance Agency and introduced a moratorium on creditor claims for a period of three months, Banki.ru writes. Meanwhile, Moody's downgraded Tatfondbank's ratings to Caa1 from B3 and placed them on review for further downgrade after the lender lost 10% of deposits within three weeks, Vedomosti reports.

* Getin Noble Bank SA's management board President Krzysztof Rosinski will resign from the post Jan. 9, 2017, due to personal reasons, Rzeczpospolita reports. He will be replaced by Deputy President Artur Klimczak.

* The Warsaw Stock Exchange decided to exclude Bank BPH SA from trading as of Dec. 20, Parkiet reported. The core business of the lender, excluding mortgage loans and investment fund manager BPH TFI, was recently acquired by Alior Bank SA. The legal merger with the new owners took place at the beginning of November.

* BNP Paribas SA plans to launch a new mobile bank in the Czech Republic, Hospodarske Noviny reports. The lender will operate under Hello Bank brand, also used by BNP Paribas in other European countries, and is expected to launch activities in 2017.

* PAO KB Privatbank said media reports about its potential nationalization are politically motivated and are aimed to create panic among its clients and destabilize the situation in Ukraine, Reuters writes.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: China Minsheng Banking shareholder boosts stake; India's LIC gets new chairman

Middle East & Africa: Central banks respond to Fed hike; Gabon restructures 3 banks

Latin America: Brazil Senate OKs spending cap; Banco Interfinanzas sale approved

North America: Out today: the FOMC announcement and possibly news of Blankfein's new No. 2s

North America Insurance: Anthem/Cigna antitrust trial phase 1 ends; Life Partners exits bankruptcy

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Sheryl Obejera, Leo Magno, 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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