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Banca Carige's lifeline; HSH Nordbank sued; Danske Bank may face French probe


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Banca Carige's lifeline; HSH Nordbank sued; Danske Bank may face French probe

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

Italy steps in for Carige

* The Italian government will establish a €1.3 billion rescue fund to cover the costs of emergency measures aimed at shoring up Banca Carige SpA. The state-backed measures include a precautionary recapitalization of Carige, but the lender said it would only consider this option as a last resort and has opted to access state-backed guarantees on bond issues. The 5-Star Movement's change of heart about using state funding to support Carige is a positive development for the bank, according to analysts.

* Carige is said to have sounded out 10 potential buyers, including Italian peers UniCredit SpA and Banco BPM SpA and France's BNP Paribas SA and Crédit Agricole SA. The potential buyers, which also include foreign funds, have indicated interest in the troubled lender on condition that it cuts its bad loans and borrowing costs, a source told Bloomberg News.

* Italian deputy Prime Minister Matteo Salvini said the government would consider taking control of Carige. "If there are profits, the state will receive them, not some private bodies," he said, according to Bloomberg News.

Problems mount for Danske Bank, Deutsche Bank

* Danske Bank A/S said it could be placed under investigation again in an ongoing French probe into potential violations of money laundering laws from 2007 to 2014. The announcement comes after Hermitage Capital Management Ltd. co-founder and CEO Bill Browder urged French authorities to investigate the bank instead of treating it as an assisted witness.

* An institutional investor filed a class-action lawsuit in the U.S. against Danske and four of its former executives, including former CEO Thomas Borgen and former Chairman Ole Andersen, for allegedly providing false and misleading information about the lender's businesses and operations.

* German financial supervisory authority BaFin has instructed Deutsche Bank AG to re-examine the accounts of around 20,000 clients at its corporate and investment bank by June-end, in an effort to ensure that the group complies with the latest anti-money laundering rules and know-your-client procedures. Meanwhile, German prosecutors found a list of 900 clients involved in the Panama Papers tax evasion case during their November 2018 raid at the bank's Frankfurt offices, sources told Bloomberg.

* Germany-based private bank M.M. Warburg & CO Gruppe GmbH has filed a damages claim against Deutsche Bank over missed capital gain tax payments in the years 2010 and 2011, and is seeking the repayment of €46 million in taxes including interest. The claim is linked to illegal cum-ex trades German authorities have alleged M.M. Warburg had conducted between 2007 and 2011.

* A series of internal audits commissioned by Deutsche and carried out by Freshfields showed that some of the lender's managers may have discussed the reputational risk of issuing withholding tax certificates at the center of a cum-ex share trading scheme, Reuters reported.

Legal and regulatory actions

* A group of 18 bond investors lodged a lawsuit against HSH Nordbank AG alleging that the German lender improperly reduced the book value of securities issued between 2002 and 2005, and is seeking €1.4 billion in damages.

* The Italian Competition Authority fined FCA Bank SpA €178.9 million as part of an investigation into alleged breaches of competition rules by several banks and car manufacturers.

* TBC Bank Group PLC unit JSC TBC Bank is under inspection by Georgia's central bank over certain transactions carried out in 2007 and 2008 suspected to have been in violation of conflicts of interest regulations.

Bonus cuts and staff layoffs

* Deutsche Bank is looking to slash its bonus pool by about 10% in a bid to cut costs, a source told Bloomberg.

* Banco Santander SA unit Santander Bank Polska SA plans to lay off up to 1,400 employees, equivalent to around 11% of its workforce, in 2019.

Stakes and sales

* Savings banks in the state of Lower Saxony, which own a 26.4% stake in Norddeutsche Landesbank Girozentrale, will write off the value of their holdings in the lender as zero for 2018, corresponding to a total write-off of €400 million, Börsen-Zeitung reported. Those in the state of Saxony-Anhalt and Mecklenburg-Western Pomerania are also considering writing off the value of their holdings, according to Handelsblatt.

* Netherlands-based ABN Amro Group NV agreed to sell a €2 billion loan portfolio to Nederlandse Waterschapsbank NV.

In other news

* The U.K.'s Financial Conduct Authority outlined plans to put in place the Financial Services Contracts Regime, which would allow finance firms in the European Economic Area, or EEA, to fulfill their existing contractual obligations in the U.K. The FSCR does not allow EEA firms or managers to take on new business after exit day; instead they will need to enter the Temporary Permissions regime and can notify the regulator of their intention to do so until March 28.

* The valuation of N26 Bank GmbH has hit $2.7 billion after it secured $300 million in funding. The German mobile bank said it intends to use the proceeds to expand globally, starting with the U.S. in the first half.

* Female employees at HSBC Holdings PLC were paid 61% less on a mean hourly basis than their male counterparts in 2018, the biggest difference among U.K. banks, according to data published by the U.K. government.

* Edward Bramson, an activist investor with a more than 5% stake in Barclays PLC, will call for board changes at the British bank after he was denied a board position himself. Bramson is pushing for the lender to downsize its investment banking business, putting him at odds with CEO Jes Staley.

Featured during the week on S&P Global Market Intelligence

Transparency, liquidity to be in focus in future European banking wind-downs: Although Spain's Banco Popular has been hailed as a textbook example of banking resolution, future cases will need to address transparency and liquidity, and the system could be challenged by larger and more complex cases.

Doubts grow that the ECB will be able to raise rates in 2019: Weakening economic indicators and stubbornly low inflation have led many economists to re-evaluate whether the European Central Bank will be able to hike rates this year.

European banks worry higher funding costs may thwart new debt issuance in 2019: European banks see rising funding costs as a key barrier to their debt issuance in 2019 as most of them plan to expand bail-in-able debt buffers to comply with new regulations, a recent survey of the European Banking Authority shows.