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Spanish banks' provision hits; Deutsche fined again; UniCredit issue terms


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According to Market Intelligence, April 2023

Spanish banks' provision hits; Deutsche fined again; UniCredit issue terms

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

Spanish banks book mortgage provisions

* Banco Bilbao Vizcaya Argentaria SA reported fourth-quarter 2016 net attributable profit of €678 million, down from €940 million a year earlier. The bank booked a gross provision of €577 million in the fourth quarter of 2016 to cover possible future claims relating to interest rate floors on previously sold mortgage contracts.

* CaixaBank SA reported fourth-quarter 2016 profit attributable to the group of €77 million, compared to a loss of €182 million a year earlier. The result was dented by an additional €110 million charge related to the lender's exposure to mortgage rate floor clauses.

* Banco Popular Español SA reported a fourth-quarter 2016 loss attributed to the controlling company of €3.58 billion, compared to a €172.6 million loss a year earlier. CEO Pedro Larena said the bank intends to revise its 2018 financial targets given the loss.

* Bankia SA reported fourth-quarter 2016 profit attributable to the group of €73 million, down from €185 million a year ago. CEO José Sevilla said the bank is aiming for quick settlements with customers affected by controversial mortgage practices.

More Q4'16 results

* Deutsche Bank AG booked fourth-quarter 2016 net loss attributable to shareholders and additional equity components of €1.89 billion, narrowing from a net loss of €2.12 billion a year earlier. CEO John Cryan said the bank does not intend to change its strategy, adding that the lender expects to return to profitability this year.

* ING Groep NV's fourth-quarter 2016 net result totaled €750 million, compared to the year-ago €819 million, and included a negative impact of €787 million of special items after tax related to the company's intended digital transformation programs. CEO Ralph Hamers warned that the company's Belgian business will continue to suffer in 2017 amid pressure from intense competition, among other factors.

* Nordic lenders Skandinaviska Enskilda Banken AB, Danske Bank A/S, DNB ASA and Swedbank AB (publ) and Turkish counterparts Türkiye Is Bankasi AS, Yapi ve Kredi Bankasi AS, Akbank TAS and Türkiye Garanti Bankasi AS also reported results this week.

* Meanwhile, UniCredit SpA expects to report a net loss of approximately €11.8 billion for full year 2016.

Penalty box

* Deutsche Bank agreed to pay fines of £163 million and $425 million to the U.K. Financial Conduct Authority and the New York Department of Financial Services, respectively, over failings in money laundering controls that purportedly allowed certain customers to launder roughly $10 billion out of Russia.

* Swiss regulator FINMA ordered Coutts & Co Ltd. to disgorge CHF6.5 million of unlawfully generated profits related to transactions with 1Malaysia Development Bhd., the scandal-plagued Malaysian sovereign wealth fund.

* London's Southwark Crown Court found six people, including former HBOS Plc senior managers Lynden Scourfield and Mark Dobson, guilty of bribery and fraud. They were all sentenced to jail terms later in the week.

Buyers and sellers

* Italian rescue fund Atlante II will purchase €2.2 billion of nonperforming loans from Nuova Banca delle Marche SpA, Nuova Banca dell'Etruria e del Lazio SpA and Nuova Cassa di Risparmio di Chieti SpA.

* Alpha Bank AE agreed to sell its 100% stake in Alpha Bank Srbija a.d. Beograd to the Serbian MK Group of companies, subject to regulatory approvals. Another Serbian lender, Findomestic Banka a.d. Beograd, was also sold.

* The U.K. government reduced its stake in Lloyds Banking Group Plc to below 5%.

* Inbank AS is acquiring a part of AS Eesti Krediidipank's shares together with Coop Eesti, with the intention to create a new bank in Estonia called Coop Pank.

In other news

* UniCredit's board approved the terms of its up to €13 billion rights issue. The bank also warned that it would not meet minimum capital adequacy ratios for 2016. CEO Jean-Pierre Mustier assured investors that the ECB is satisfied with the bank's strategic plan.

* Members of the U.K.'s House of Commons voted overwhelmingly in favor of a bill that would give Prime Minister Theresa May the authority to trigger Britain's exit from the EU. The U.K. government also published a so-called white paper on its strategy for negotiating Brexit.

Featured during the week on S&P Global Market Intelligence

FSB says initial margin, derivatives could be wiped out in clearing house crisis: Regulators should have powers to wipe out initial margins and tear up derivative contracts if a failing clearing house is in danger of causing a wider financial crash, the Financial Stability Board said Feb. 1.

Pan-EU 'bad bank' proposal fraught with challenges: The EBA's proposal for a pan-European bad bank is a good idea in principal but would be hard to implement, experts say.

BOE holds rates as post-Brexit growth continues to exceed expectations: The Bank of England upgraded its projection for 2017 GDP growth for the second time since slashing expectations in the wake of Britain's vote to leave the EU.

Co-op Bank bonds take a tumble on wind-up report: Co-op Bank's bonds fell to record lows after a press report questioned the long-term viability of the Manchester-based lender.