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Phoenix buys Swiss Re unit; EU approves NordLB rescue; Julius Bär eyes EFG


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Banking Essentials Newsletter: December 7th Edition


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Phoenix buys Swiss Re unit; EU approves NordLB rescue; Julius Bär eyes EFG

* Swiss Re AG agreed to sell ReAssure Group PLC to Phoenix Group Holdings PLC in a deal that values the British unit at £3.25 billion. From the deal, Swiss Re expects to receive £1.2 billion in cash, a 13% to 17% stake in Phoenix and a seat on the Phoenix board. ReAssure's minority shareholder, Japan-based MS&AD Insurance Group Holdings Inc., will also get an 11% to 15% stake in Phoenix.

* Moody's changed the outlook for global banks to negative from stable due to slower economic growth, low interest rates and volatile operating conditions. The British banking sector would weaken if the U.K. and the European Union fail to reach a trade deal, the agency said.

* The global macroeconomic outlook for 2020 has steadied following policy actions by major central banks in 2019 that eased recession risks, S&P Global Ratings said.

* The European Securities and Markets Authority said the new Markets in Financial Instruments Directive, or MiFID II, still fails to reduce costs of market data two years after it came into force. In its first review report of the MiFID II implementation, the Paris-based regulator recommended that a bloc-wide real-time consolidated tape for equity instruments be formed.

* Finance ministers in the EU agreed to support plans for more power to fight money laundering and terrorist financing, emphasizing the need to reform and bolster anti-money laundering regulatory frameworks. The EU Council urged national authorities to quickly transpose legislation into national law for effective implementation and urged the European Commission to explore other means, including the formation of an EU body with supervisory responsibilities.

* The EU Council and the European Commission said no global stablecoin businesses must be carried out in the block until the legal, regulatory and oversight problems are addressed. The tough stance is seen as a blow to Facebook cryptocurrency Libra, which has drawn global regulatory criticism for the impact it could have on the financial system, Reuters noted.


* The U.K. Financial Conduct Authority is opening a consultation on operational resilience in financial institutions, aiming to have companies review how they handle risks in their daily operations. The watchdog proposes that financial institutions map out and test critical business services — especially those provided by third parties — to spot potential vulnerabilities.

* The CFOs of U.K. businesses believe that there is a 46% chance the country will leave the European Union in 2020 with a Brexit deal, according to a survey by the Bank of England. Of the 2,987 survey respondents in November, 57% expect Brexit uncertainty to be resolved in 2020, up from 54% in October.

* HSBC Holdings PLC is set to introduce a 39.9% overdraft rate beginning March 2020, up from current rates of between 9.9% and 19.9%, City A.M. reported.

* Businessman Steve Cohen cut his stake in London-based Metro Bank PLC for the fourth time to 5.8%, The Telegraph reported.

* Daily outflows from the Aberdeen UK Property fund of Standard Life Aberdeen PLC was recorded yesterday following the temporary suspension of a rival product of M&G Investments, the Financial Times reported. Some £2.97 billion of outflows happened in 15 British open-ended funds that offer daily liquidity to investors from October 2018 and October 2019, The Times wrote, citing Morningstar data.

* British peer-to-peer lender Landbay Partners Ltd. will overhaul its business model and close its retail funding segment. The company will now become "a solely institutional marketplace lending platform."


* The European Commission approved Germany's plans to boost the capital of government-owned Norddeutsche Landesbank Girozentrale, or NordLB, saying the measure is free of any state aid. The commission's ruling was based on the findings that the planned measures are carried out on market terms.

* Frankfurt-based DekaBank Deutsche Girozentrale began exploring closer cooperation with Landesbank Hessen-Thüringen Girozentrale, or Helaba, representing the first step toward a deal that could form the country's biggest public-sector bank by assets, Reuters reported. The banks are set to kick off structured talks in January 2020.

* Deutsche Börse AG's supervisory board nominated Martin Jetter to succeed Joachim Faber as chairman to be approved in an extraordinary meeting following the company's annual general meeting in 2020. Jetter currently serves as senior vice president and chairman for International Business Machines Corp.'s European business.

* UBS Group AGs asset management arm has been in talks to sell its UBS Fondcenter fund platform for at least CHF500 million, insiders told Bloomberg News. The potential sale reportedly forms part of asset management head Suni Harford's plan to revive the underperforming division.

* Credit Suisse Group AG sought to block Geneva prosecutors from accessing a critical report by financial regulatory FINMA into the bank's failure to prevent fraud in its wealth management unit, a spokesman for the prosecutor's office told Bloomberg.

* EFG International AG's shares jumped at least 8% yesterday following a report by Swiss news website Inside Paradeplatz that peer Julius Bär Gruppe AG was interested in a potential acquisition. The deal could reportedly be part of Julius Bär's new strategy that CEO Philipp Rickenbacher plans to unveil early next year.

* Commerzbank AG is hoping to sell Polish subsidiary mBank SA by the end of 2020, with the money from the sale to be reinvested in core business, Handelsblatt reported.


* ING Groep NV and Milan prosecutors have reached a so-called "agreed penalty" of €30 million to close an investigation into shortfalls in the Dutch bank's local controls against money laundering, insiders told Reuters. The deal is still reportedly pending confirmation from a judge.

* Dutch banks ABN Amro Bank NV, ING Groep NV, Rabobank and Volksbank NV will not charge negative interest to customers with less than €100,000 in their savings account, Het Financieele Dagblad reported.


* The ECB raised CaixaBank SA's common equity Tier 1 capital requirement for 2020 to 8.78% from 8.75% in 2019. The bank said that given the current capital levels of the group, the newly established requirements would not lead to any limitations in terms of dividend or coupon payments and variable retributions to the holders of the bank's debt, Expansión wrote.

* Meanwhile, the ECB's capital requirements for Spanish peer Banco de Sabadell SA ECB for 2020 remained unchanged from 2019. Given that such thresholds have already been exceeded, Spain's fourth-largest lender will not face limitations in its dividend and coupon distributions, Expansión reported.


* Italy-based Banca Popolare di Bari SCpA sent a preliminary request to the FITD depositor protection fund for a capital injection to bridge its capital deficit, unnamed sources told Reuters. FITD would still need to examine the bank's business plan before making a decision. The bank reportedly needs up to €1 billion of additional capital.

* Intesa Sanpaolo SpA could take a 10% to 15% stake in payment services provider Nexi, said MF.


* Danske Bank A/S revised its profit outlook for full year 2019 for a second time this week, saying it now expects a net profit of roughly 15 billion Danish kroner, up from a previous guidance of a net profit in the middle of a range of 13 billion kroner to 15 billion kroner. The bank attributed the revisions to extraordinary items regarding tax, goodwill impairment testing and other elements to be booked in the fourth quarter. The extraordinary items are expected to have a net impact of around 1.1 billion kroner.


* Moody's said the move by Turkish banking regulator BDDK to amend rules to remove bad loans from banks' balance sheets is credit positive for the local banking sector, Reuters reported. The regulator changed loan classification regulations last week.

* The Russian central bank accused a former trader at State Development Corp. VEB.RF and a foreign company, Fengda Trading, of currency trading manipulation, Kommersant reported. The transactions, which allegedly brought Fengda 49 million rubles, were carried out on the Moscow Exchange between April and June 2018. The regulator said it notified local law enforcement authorities about the results of its investigation.

* Kazakh President Kassym-Jomart Tokayev signed a decree creating an agency responsible for regulation and oversight of the financial market, which will operate separately from the Kazakh central bank, wrote. The new agency will be launched at the beginning of 2020 and will report directly to the president.


Asia-Pacific: SMFG to expand Indonesia biz; RHB Bank to exit Hong Kong; Yes Bank downgraded

Middle East & Africa: Israel outlines open banking rules; Orange Bank's MEA plans; Bankia in Morocco

Latin America: Argentine central bank chief stepping down; Chile holds key rate at 1.75%

North America: Mass. banks in deal; regional banks worried about transition to SOFR; BofA sued

Global Insurance: Catalina in Singapore deal; Centene/WellCare progress; next Lancashire CFO


Metro Bank's new CEO not expected before February strategy update at earliest: Craig Donaldson's departure leaves the bank without a permanent CEO or permanent chairman after Vernon Hill stepped down from the post but, with regulators still probing the bank, a replacement for Donaldson is unlikely to arrive soon.

As M&G freezes £2.5B property fund, experts criticize open-ended structure: The U.K.-based fund manager's decision to suspend its property fund following a number of redemptions has reignited a debate about whether open-ended funds should invest in illiquid assets such as property.

Financing oil and gas can be responsible banking, say banks, UN: Banks can continue to finance carbon-intensive industries and still be in line with the UN Principles for Responsible Banking, according to Simone Dettling of the UN Environment Program Finance Initiative.

Insurers, governments must work together to stave off cyber warfare: panelists: Security specialist Elisabeth Braw told a conference that state-sponsored cyber attacks are too big for non-government entities to tackle alone, while a fellow panelist described a "glaring hole" in governments' and insurers' cyberrisk approach.

Sheryl Obejera, Daniel Stephens, Meike Wijers, Gerard O'Dwyer, Beata Fojcik, Heather O'Brian, Brian McCulloch, Praxilla Trabattoni, and Mariana Aldano contributed to this report.

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This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.