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UK's Big 4 post FY'17 results; US firms to buy Germany's HSH Nordbank

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

Bottom lines

* HSBC Holdings Plc reported full-year 2017 profit attributable to ordinary shareholders of the parent company of $9.68 billion, up from nearly $1.30 billion in 2016. Outgoing CEO Stuart Gulliver said the bank plans to continue to grow "aggressively" in U.K. mortgages and is plowing resources into fintech development.

* Lloyds Banking Group Plc said it plans to launch a share buyback of up to £1 billion and pay a higher dividend for 2017 as it reported a year-over-year increase in full-year consolidated profit attributable to equity holders to £3.46 billion from £2.41 billion. CEO António Horta-Osório said the bank is investing £3 billion in technology in a bid to defend its market position.

* Barclays Plc reported full-year 2017 group loss attributable to ordinary equity holders of the parent of £1.92 billion, compared to a profit of £1.62 billion in 2016. The bank, which plans to more than double its dividend for 2018 despite the loss, has pledged to shareholders that they can look forward to greater returns of capital in the future, CEO Jes Staley said.

* Royal Bank of Scotland Group Plc reported full-year 2017 profit attributable to ordinary shareholders of £752 million, its first full-year profit since before its nationalization during the 2008 financial crisis, compared to a year-ago loss of £6.96 billion. Despite the improved result, a potentially hefty U.S. fine over its alleged misselling of residential mortgage-backed securities still hangs over the bank.

* Belgium-based KBC Group NV reported fourth-quarter 2017 IFRS profit attributable to equity holders of the parent of €399 million, down from €685 million in the year-ago period, although full-year 2017 profit increased on a yearly basis to €2.58 billion from €2.43 billion. CEO Johan Thijs said the lender may bid for Hungary's Budapest Hitel- és Fejlesztési Bank Zrt. if it comes up for sale in 2018.

* Denmark's Sydbank A/S and Jyske Bank A/S, the U.K.'s Metro Bank Plc, the Netherlands' Volksbank NV and Switzerland's Thurgauer Kantonalbank also reported full-year 2017 results during the week.

M&A buzz

* U.S. private equity firms Cerberus Capital Management LP and J.C. Flowers & Co. LLC reportedly struck a deal to acquire Germany's HSH Nordbank AG for up to €1 billion.

* Lloyds Banking Group reportedly ended talks over a merger of its life insurance operations with that of Standard Life Aberdeen Plc due to a disagreement over the ownership structure of the new venture.

* Cassa Centrale Banca Credito Cooperativo del Nord Est SpA is looking to sell as much as €2.5 billion of nonperforming loans by 2020, Reuters reported.

* BNP Paribas SA's Luxembourg unit agreed to purchase the entire outstanding shares of ABN Amro Bank NV's ABN Amro Bank (Luxembourg) SA and its fully owned subsidiary ABN Amro Life SA. The financial terms of the deal were not disclosed.

Regulatory corner

* HSBC said it could face penalties of up to or exceeding $1.5 billion due to multiple global investigations of several of its subsidiaries, including HSBC Pvt. Bank (Suisse) SA, which is being probed in connection with allegations of tax evasion, money laundering and unlawful cross-border banking solicitation. Meanwhile, an outside review found that the group and unit HSBC USA Inc. have made "significant progress" improving their money-laundering and compliance programs since reaching a $1.92 billion settlement with U.S. authorities in 2012.

* The U.K. Treasury Select Committee published the "final, unredacted report" into the alleged mistreatment of small business customers by Royal Bank of Scotland Group's now-defunct Global Restructuring Group.

Latvia crisis

* Latvia's Financial and Capital Market Commission imposed an ECB-mandated temporary moratorium on ABLV Bank AS's debit operations in all currencies. With regards to the move, the ECB cited the proposal by U.S. Treasury Department's Financial Crimes Enforcement Network, or FinCEN, to prohibit ABLV Bank from opening or maintaining a correspondent account in the U.S. after the regulator labeled the lender a foreign bank of primary money laundering concern.

* ABLV Bank Deputy CEO Vadims Reinfelds said the bank had committed "no violations of sanctions" in the wake of FinCEN's proposal, adding that it does not "participate in any illegal activities." The bank has reportedly requested temporary liquidity support from the Latvijas Banka after seeing about €600 million in deposit outflows, although it said it has sufficient liquidity and capital and that it will not seek a government bailout. Meanwhile, Latvian Prime Minister Maris Kucinskis criticized JSC Norvik Banka Chairman Grigory Guselnikov and CEO Oliver Bramwell after they accused central bank governor Ilmars Rimševics of demanding a €100,000-per-month bribe from the bank to do business in the country.

* Rimševics, who was reportedly questioned for eight hours by Latvia's Corruption Prevention and Combating Bureau, has been released on bail from corruption charges after being detained on a charge of soliciting a bribe from ABLV Bank.

Central banking

* The Eurogroup of eurozone finance ministers has endorsed the candidacy of Spain's Economy Minister Luis de Guindos for the position of vice president of the ECB.

* Andreas Dombret will not seek a new term as an executive board member of Deutsche Bundesbank and will resign May 1.

In other news

* Deutsche Bank AG has begun to engage with clients regarding its primary global booking hub, which it intends to move to Frankfurt from London in response to Brexit, unless a transition deal between the U.K. and the EU is agreed. Separately, the German lender has also started the process for at least 250 layoffs in its corporate and investment bank. Deutsche Bank is also reportedly planning to launch an IPO of 25% of its DWS asset management arm on Feb. 26 for an expected €1.5 billion to €2 billion.

* Nordea Bank AB (publ) lowered its estimate of the net present value of savings arising from its decision to redomicile its parent company to Finland from Sweden, with deposit guarantees and other transitional effects expected to be around €900 million to €1.2 billion, down from the previous estimate of €1.1 billion to €1.3 billion in December 2017.

* Barclays has come under fire from U.K. Treasury committee head Nicky Morgan over its gender pay gap after it revealed in its 2017 annual report that women working in the division housing its investment bank are paid on average barely half as much as men.

Featured during the week on S&P Global Market Intelligence

ECB blindsided by Latvian financial scandal as wind-up looms for top bank: The ECB is powerless to act on allegations of corruption against Latvian officials sitting on its governing board, as the Baltic nation goes through its deepest financial scandal yet.

S&P: Regulator may revise rules as new accounting hampers risk comparison: The Basel Committee is unlikely to want to allow accounting rules to be the only determining factor in how banks provision for bad loans, given that provisioning "is a fundamental element of banking soundness," analysts have said.

UK finance industry still needs to change 'hearts and minds' on gender equality: Lengthy approval processes and cross-border issues may be among the reasons that some global financial institutions are stalling on signing up to a U.K. government-backed pledge for gender equality, according to industry insiders.

Baltic capital markets union agreement a sign of progress for EU-wide plan: An agreement by Estonia, Latvia and Lithuania to create a pan-Baltic capital market bodes well for the revival of plans for a European Union capital markets union, analysts say.

Fixed-rate mortgage shift to prompt Spanish bank funding rethink: A shift toward fixed-rate mortgages from floating rates is taking hold in Spain and will lead to banks changing their funding models, industry observers have said.