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EU banks face new bad loan provision rules; UK stress test to include IFRS 9

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EU banks face new bad loan provision rules; UK stress test to include IFRS 9

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

Bad loan rules and guidelines

* The European Commission proposed requiring banks in the EU to set aside more funds to cover the risk of new loans that become nonperforming, a move which market participants see will prevent banks from having to make large provisions for existing loans.

* Meanwhile, the ECB outlined nonbinding guidelines, under which it expects banks to take no more than two years to fully provision for unsecured bad loans formed after April 1, 2018, and a maximum of seven years for secured loans that go bad after the same date.

Regulatory avenue

* The Bank of England said the stress test scenario for 2018 will be the same as that used in 2017, but banks will need to pass tougher capital hurdles, primarily due to the new IFRS 9 accounting rules.

* Greece's four largest banks — Piraeus Bank SA, National Bank of Greece SA, Eurobank Ergasias SA and Alpha Bank AE — estimated a combined impact of €5.25 billion from the implementation of IFRS 9.

* A plan by the Irish Oireachtas Public Accounts Committee to limit lenders' use of losses incurred during the financial crisis to offset future tax bills would hit Allied Irish Banks Plc and Permanent TSB Group Holdings Plc the most, The Irish Times reported.

* Denmark has required banks to hold countercyclical buffers of 0.5%, and set the deadline at March 31, 2019.

IPO price watch

* Deutsche Bank AG set the price range for its DWS asset management division's planned IPO at ?€30 to ?€36 apiece, valuing the unit at up to €7.2 billion. The German lender has reportedly attracted investor demand for all the DWS shares being offered in the IPO.

* NIBC Holding NV said it will price its shares at €8.75 to €10.25 apiece, corresponding to an equity value of €1.28 billion to €1.5 billion for the company.

Resignation and compensation

* Société Générale SA Deputy CEO Didier Valet resigned due to a "divergence of approaches" in the bank's management of a certain legal issue reportedly connected with LIBOR-rigging allegations.

* Banca Monte dei Paschi di Siena SpA named Chief Risk Officer Andrea Rovellini its new CFO, replacing Francesco Mele. Leonardo Bellucci replaces Rovellini as chief risk officer.

* Deutsche Bank's management is reportedly looking to cut as much as 6,000 jobs at its retail unit by 2022-end, although the final figure may still be reduced. Meanwhile, the bank's management board again waived its bonuses.

* ING Groep NV's supervisory board scrapped plans to increase pay for CEO Ralph Hamers following opposition from politicians and the public in the Netherlands.

In other news

* BNP Paribas SA is in the final stages of discussions to acquire Raiffeisen Bank International AG unit Raiffeisen Bank Polska SA, Reuters reported. Separately, RBI will propose a dividend of 62 euro cents per share for 2017, four years after it last paid a dividend of €1.02 per share for 2013.

* The Serbian central bank reduced its key policy rate by 25 basis points to 3.25%. Meanwhile, the central banks of Georgia, Iceland, Switzerland and Norway opted to keep their rates unchanged.

* Nordea Bank AB (publ) won shareholder approval to relocate its headquarters to Finland from Sweden.

Featured during the week in S&P Global Market Intelligence

Eurobank profit lifted by 'aggressive' foreclosures; auctions to surge in 2018: The Greek lender turned a modest profit in 2017, while boosting its provisions and common equity capital, thanks to an improvement in loan repayments spurred by an increase in foreclosures, CEO Fokion Karavias said.

Austria's RBI expects future growth in Russia despite local market challenges: The bank expects to continue to grow in the Russian market over the next few years despite lower interest rates and increasing competition from local banks, according to CEO Johann Strobl.