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UK banks face new PPI hit, Commerzbank raided; HSBC eyes French unit sale

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UK banks face new PPI hit, Commerzbank raided; HSBC eyes French unit sale

S&P Global Market Intelligence offers our top picks of banking news stories and more published throughout the week.

PPI provisions

* Several U.K. lenders announced additional provisions for payment protection insurance compensation after they received higher than expected volumes of complaints and inquiries in the run-up to the Aug. 29 deadline for complaints. Lloyds Banking Group PLC will book an incremental charge in the range of £1.2 billion to £1.8 billion in the third quarter to cover costs related to PPI, while Barclays PLC will provision as much as £1.6 billion and Nationwide Building Society expects to be hit by an incremental charge in the range of £20 million to £50 million .

Investigation into lenders

* Police raided JSC CB Privatbank's headquarters in Ukraine as part of a criminal probe into alleged wrongdoing by some bank officials. The accusations are around overstepping the authority by signing agreements with certain domestic and foreign consulting firms and advisers.

* Deutsche Bank AG's regulators are investigating whether there is a conflict of interest at the lender's new supervisory board member, KBL European Private Bankers SA CEO Jürg Zeltner. Both companies have overlapping business which has raised concerns around Zeltner's suitability for the job.

* Public prosecutors in Cologne, Germany, searched Commerzbank AG offices as part of a probe into a dividend-stripping practice called cum-ex trading, which involves trading shares rapidly to create the impression of numerous owners who are each entitled to tax refunds.

Deals in the making

* HSBC Holdings PLC is moving to offload its loss-making French retail bank as part of longer-term efforts to unload businesses that lack scalability or strategic need.

* The Serbian government has received four nonbinding bids for Komercijalna banka a.d. Beograd, which is being privatized. The selected buyer will be able to acquire the government's entire stake in the lender.

* Ireland's Permanent TSB PLC agreed to sell its "Glas Tranche II" portfolio of nonperforming loans, which has a gross balance sheet value of €506 million, to two affiliates of U.S.-based private equity fund Lone Star for €264 million in cash. Proceeds from the deal will be used for general corporate purposes.

* BNP Paribas SA entered into a strategic partnership with financial technology company Kantox Ltd. which will allow the two firms to jointly offer Kantox's dynamic hedging software solution to the French bank's clients across Europe, the Middle East and Africa.

In other news

* Banco Santander SA sold its first bond issued via an end-to-end blockchain process, marking a step closer to a potential secondary market for mainstream security tokens in the future. The Ethereum blockchain was used to issue the one-year bond worth $20 million carrying a 1.98% quarterly coupon.

* The European Court of Justice's advocate general, Maciej Szpunar, could pave the way for a new round of lawsuits in Spain's banking system, stating that mortgages tied to the country's IRPH mortgage price index and marketed without sufficient transparency could be annulled. Szpunar assured that the IRPH could not be excluded from the remit of the EU directive on unfair terms. A definitive judgment from the European Court of Justice is expected at the end of the year or start of 2020.

* Swedish activist investor Cevian Capital AB wants Nordea Bank Abp to conduct a thorough review of its poorly performing wholesale banking operations. Cevian Capital has a 2.3% stake in the Nordic lender.

* Barclays PLC has become the latest big European bank to scale down its fixed-income workforce after letting go of several salespeople and traders in Japan.

Featured during the week on S&P Global Market Intelligence

World's big investment banks poised to keep slashing trading jobs: The 12 largest global investment banks have collectively slashed more than 6,000 jobs in their equities, fixed-income and investment-banking divisions since midyear 2014, a trend that looks likely to continue.

Unfavorable EU court ruling could force 'massive' provisions at Polish banks: An upcoming mortgage ruling from the European Court of Justice could leave Polish banks with a 60 billion zloty bill, but capital levels and loan amortization would cushion the blow.

Morgan Stanley, UBS, Deutsche see worst drops in weak Q2 for i-bank revenues: The trio booked the weakest second-quarter trading revenues, year over year, among major global investment banks, most of which also posted revenue drops as investor sentiment was swayed by fears over the economy, global trade and rates.

Deutsche restructuring was never about giving up US business, CFO says: The idea that the revamp was based on a geographic strategic decisions "always missed the mark," CFO James von Moltke said, and the U.S. business will remain "critical" for the group.