trending Market Intelligence /marketintelligence/en/news-insights/trending/kU1kL2vP1OhvlVVUiXi0_g2 content esgSubNav
In This List

Brexit reactions; FCA spares banks; Lloyd's of London FY'16 profit flat


Commercial Banking: June 22nd Edition


Commercial Banking Newsletter June Edition - 2022


Street Talk | Episode 96: Considering recession risks, prospects that the Fed achieves a 'soft landing'

Case Study

Actions to Reduce Emissions at an Asian Financial Services Firm

Brexit reactions; FCA spares banks; Lloyd's of London FY'16 profit flat

* The U.K. has formally declared its intention to leave the European Union, starting a two-year negotiation over the terms of its departure. However, its goal to reach a future trade agreement with the bloc to retain as much access to EU markets as possible may be difficult to achieve, as a draft European Parliament resolution obtained by The Guardian has ruled out special access for, among others, the City of London financial center and said that any transition deal could last only up to a maximum of three years.

* EU President Donald Tusk warned of "difficult negotiations ahead" after the U.K. set in motion the Brexit process, but pledged to seek an "orderly" withdrawal of the country from the bloc, Bloomberg News writes. Meanwhile, German Chancellor Angela Merkel maintained a tough line on the sequencing of the Brexit talks, insisting that the terms of the U.K.'s future relationship with the EU could only be addressed after the terms of its exit from the bloc are finalized, the Financial Times reports. Reuters also covers.

* Meanwhile, Deutsche Bundesbank board member Andreas Dombret said banks seeking to shift operations from London are already holding talks with Frankfurt, but stressed that the country will not offer banks any special exemptions from regulations to move to the German city, Reuters reports.


* The U.K. Financial Conduct Authority has spared banks and financial services firms from misconduct fines amounting to £1.2 billion over the past four years by giving them discounts after settling early, the Financial Times reports. Lawmaker John Sharkey has called on the regulator to tighten the rules and to only give firms discounts on fines if they agree to hold an individual personally responsible for misconducts and take disciplinary measures.

* Regulatory and banking experts on the U.K.'s International Regulatory Strategy Group are working on proposals based on a largely untested "mutual recognition" system in an effort to ensure that firms will be able to keep serving EU clients post-Brexit, Reuters reports.

* JPMorgan Chase & Co. is on the hunt for its next European hub post-Brexit and is exploring eight cities, including Paris, Frankfurt, Luxembourg and Dublin, The Wall Street Journal reports. CEO Jamie Dimon has projected that a quarter of the firm's U.K. staff may be moved to a different location.

* Morgan Stanley Chairman and CEO James Gorman has warned U.K. Prime Minister Theresa May that London's rival financial centers made compelling propositions to woo parts of the Wall Street firm's business from the U.K. capital in the nine months since the Brexit vote, Sky News reports.

* Meanwhile, Goldman Sachs Group Inc. Europe CEO Richard Gnodde has moved to reassure the firm's London staff that there will be no imminent changes to the firm's business due to Brexit, Reuters writes.

* In a letter to Treasury Select Committee Chairman Andrew Tyrie, the FCA will outline proposals to address fraudulent contactless payment transactions that will shift the responsibility for identifying suspicious payments to banks, City A.M. writes.

* Lloyd's of London reported a full-year 2016 pro forma pretax result of £2.11 billion, virtually unchanged from its year-ago result of £2.12 billion, and announced its plan to set up an EU subsidiary in Brussels.

* London Stock Exchange Group Plc said this morning that it will buy back £200 million of its shares, to be carried out in two tranches.

* The U.K. Serious Fraud Office has delayed decisions on Barclays Plc's controversial 2008 emergency fundraising involving Qatar to the end of May from the end of March, insiders tell Bloomberg News.

* Standard Life Plc agreed to sell its Hong Kong insurance business, Standard Life (Asia) Ltd., to its Chinese joint venture insurance business, Heng An Standard Life Insurance Co. Ltd.

* Howard Shore, founder and executive chairman of Shore Capital Group Ltd., is relinquishing his operational responsibilities as CEO of the group, to be replaced by Simon Fine and David Kaye as joint CEOs, effective in April. Shore will remain executive chairman and will focus on the group's international investment strategy.


* The European Commission blocked the proposed merger between Deutsche Börse AG and London Stock Exchange Group, as anticipated, arguing that such a merger would have created a de-facto monopoly for clearing fixed-income instruments.

* KfW reported consolidated IFRS profit for 2016 of €2.00 billion, down from €2.17 million a year earlier due to effects from the revaluation of derivatives. The bank pledged "complete clarification" of the circumstances that led to its accidental transfers of €7.6 billion to other banks in February, Handelsblatt writes. To improve its outdated computer system, KfW raised the IT budget to €850 million from €500 million.

* Deutsche Bank AG is said to be involved in so-called cum-ex dividend deals as a processing bank for deposit transfers, Stern reports, citing internal documents of the state court of Hesse and noting that, in the worst case, the bank could face another substantial lawsuit.

* Meanwhile, an independent evaluation commissioned by the German Society for the Protection of Securities Holders showed that Deutsche Bank does have insufficient risk control system for legal risks, as well as an inadequate software system to identify such risks, Handelsblatt reports.

* Landesbank Hessen-Thüringen Girozentrale is also suspected of having made cum-ex deals, with the total volume amounting to €3.7 billion, according to Handelsblatt.

* UBS Group AG plans to restructure its Asia business after it realized it is too focused on the Chinese market, Sam Kendall, the bank's investment banking head in Asia, tells Bloomberg News. The lender will now additionally focus on Southeast Asia, South Korea and India, and double the size of his regional advisory team.


* Euronext NV is still considering buying clearing house LCH.Clearnet SA despite the failure of the merger between Deutsche Börse and London Stock Exchange Group, which was meant to be a prerequisite for the acquisition, Les Echos reports.

* Russia's JSC VTB Bank is considering withdrawing from France and restructuring its European activity this year, deputy CEO Iouri Soloviev told Reuters in an interview, according to L'Agefi.


* The Portuguese government and the country's resolution fund are hoping to reach a compensation agreement with large investors in Novo Banco SA who lost money when Banco Espírito Santo SA was wound up and its obligations transferred to the new bank, Economia Online reports. The investors would receive a total of €600 million from the €2.2 billion losses incurred.

* Banco Bilbao Vizcaya Argentaria SA will issue a maximum of 121,603,985 new shares at 49 euro cents each to increase its capital by about €59.6 million to fund its flexible dividend program, under which shareholders can choose payment of dividends in new shares or cash, Europa Press reports.

* Without admitting any responsibility, Banco Santander SA unit Santander Consumer USA agreed to pay €20.5 million to put an end to investigations led by the U.S. states of Delaware and Massachusetts into the granting of high-risk consumer loans for the purchase of cars, Cinco Días reports.


* Eurobank Ergasias SA reported a full-year profit of €230 million, compared to a loss of €1.18 billion in 2015. Its fourth-quarter 2016 net profit after tax totaled €38.3 million, down from €85.4 million in the previous quarter.

* UniCredit SpA wrote down the value of its stake in bank rescue fund Atlante by 80%, cutting its valuation of the €686 million stake by €547 million, Reuters says. Italy's 12 largest banks wrote down the value of their combined €1.98 billion investment in Atlante by €1.01 billion, or 51.2%, writes Il Sole 24 Ore. Intesa Sanpaolo SpA CEO Carlo Messina said the bank would not make further investments in Atlante, adding that he would prefer Atlante's remaining €1.7 billion in funds to be used to purchase nonperforming loans, Il Sole 24 Ore reports separately.

* Meanwhile, Intesa Sanpaolo has set an April 4 deadline for investors to make binding offers for a €2.5 billion NPL portfolio it has put up for sale, while Banco BPM SpA has set an April 10 deadline for nonbinding offers for a €750 million NPL portfolio it is selling, reports MF.


* The Finnish government is staying silent on the possibility of Nordea Bank AB (publ) moving its headquarters to Helsinki, Dagens Industri reports. While Denmark said Nordea is welcome to move to Copenhagen, Finland's Finance Minister, Petteri Orpo, has not publicly invited the lender to move to the Finnish capital.

* Danske Bank A/S' asset management division has laid off 18 employees as part of a strategy to become more efficient, FinansWatch reports.


* Asset management company Region is no longer interested in purchasing GLOBEX Commercial Bank JSC and Interregional Bank for Settlements of the Telecommunications & Postal Services from Vnesheconombank, Vedomosti reports. VEB received three bids for the units and they are currently being analyzed, the lender's representative said without disclosing any names.

* Ukrainian investors and a consortium of other foreign investors are interested in acquiring VTB Bank's Ukrainian unit PJSC BM BANK, Reuters says. The Russian state-controlled lender expects the deal to be finalized in May or June. VTB also received two bids for its Serbian unit, Vedomosti reports.

* PAO Sberbank of Russia, which recently signed a deal to divest PJSC Sberbank, plans to complete the sale of its second Ukrainian unit, PJSC VS Bank, in the near future, Reuters reports.

* The National Bank of Ukraine's offices were raided by the country's National Anti-Corruption Bureau as part of a corruption probe, Reuters writes. The authorities accused central bank officials of colluding with a number of bank executives and of violating banking rules, which it said resulted in serious damage to the state's interests.


Asia-Pacific: Citi seeks Asian insurance partner; Kotak Mahindra may buy finance company

Middle East & Africa: BoG governor resigns; Abu Dhabi fund loses US arbitration

Latin America: Peru braces for insurance losses; Brazil delays budget edict

North America: Wells to pay $110M to settle fake account suit; BofA fined $45M for foreclosure

North America Insurance: Senate GOP open to bipartisan ACA overhaul; '16 global insured losses spike


EU hints at Ukraine-style deal for Brexiting UK: The U.K. will trade with the EU on worse terms after it leaves the bloc, a draft document said. But there was also the prospect of a deal that could provide considerable access to the single market.

Motor insurance execs see industry crashing as automation goes mainstream: U.K. motor insurance executives say the industry is set to go the way of the dinosaurs as self-driving cars take to the road, but insist that there are healthy profits to be made in the medium term.

Eurobank sees upside in new tax credit law, despite worrying macro trends: The Greek lender's management is optimistic about cutting back its bad loans and hitting its capital targets thanks to a new law prolonging its tax advantages by 20 years.

David Hutter, Arno Maierbrugger, Danielle Rossingh, Esben Svendsen, Beata Fojcik, Thanasis Kakalis, Ali Kayalar, Heather O'Brian, Stephanie Salti, Praxilla Trabattoni and Mariana Aldano contributed to this report.

The Daily Dose has an editorial deadline of 7 a.m. London time. Some external links may require a subscription.