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Deutsche pledges tough cutbacks; BNP eyes German growth; LCF collapse probed


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Investment Banking Essentials Newsletter April Edition - 2022


Banking Essentials Newsletter April Edition - 2022

Deutsche pledges tough cutbacks; BNP eyes German growth; LCF collapse probed

* The Financial Stability Board is seeking feedback as part of its review of the effects of too-big-to-fail reforms for banks in the wake of the 2008 financial crisis, which will assess whether the reforms are reducing the systemic and moral hazard risks for systemically important lenders, among others. The FSB is accepting comments until June 21.

* The EU's General Court ruled that the ECB does not have to compensate private holders of Greek sovereign bonds who incurred losses during the country's international bailout in 2012, Reuters reported. Some investors were seeking redress, claiming that the ECB had acted unlawfully when it did not object to the Greek law that authorized the haircut to the bonds they held.


* The U.K. government postponed to the week of June 3 the publication of its new Brexit legislation amid backlash over Prime Minister Theresa May's offer to facilitate a second referendum. European Commission President Jean-Claude Juncker expressed concern that the U.K. may be heading for another extension to the Brexit date of Oct. 31.

* British Prime Minister Theresa May intends to resign as leader of the U.K. Conservative Party on June 10 and remain as a caretaker prime minister until her successor is named, insiders told Bloomberg News. Former Foreign Secretary Boris Johnson is reportedly tipped to replace May to steer the U.K.'s departure from the EU.

* The U.K. Treasury launched an independent probe into the failure of London Capital & Finance PLC and the U.K. Financial Conduct Authority's oversight of the company, which filed for administration in December last year. The Treasury will also set out an industrywide review of how the so-called mini-bonds and other non-transferrable securities are regulated.

* Lloyds Banking Group PLC CEO António Horta-Osório was asked to appear in a parliamentary hearing before the summer recess to explain the firm's executive pension payments, Reuters noted. The lender is facing criticism for granting executives with substantially higher payments compared to those offered to its broader workforce.

* Bank of Ireland Group PLC has started to refinance a £2.27 billion portfolio of performing U.K. residential mortgages, the Irish Independent wrote. The deal will include the issuance to third-party investors of bonds backed by a £250 million to £350 million chunk of the mortgages.

* London-listed South African insurance group Old Mutual Ltd. said it suspended CEO Peter Moyo, effective immediately, due to "a material breakdown in trust and confidence." COO Iain Williamson will become acting CEO.


* Deutsche Bank AG CEO Christian Sewing said the Frankfurt-based group has managed to lay a "rock-solid" foundation for its future restructuring but will need further "far-reaching" changes to complete it. He added that the bank's management is prepared to make "tough cutbacks," especially in its investment bank, to accelerate the transformation of the business.

* Only 9.75% of Deutsche Bank's shareholders voted to oust Paul Achleitner as chairman during the group's annual general meeting yesterday, news outlets including Reuters and the Financial Times reported.

* Deutsche Bank is said to be planning to lay off staff at its loss-making U.S. equities business, particularly in the prime brokerage and equity derivatives divisions, to appease shareholders left dissatisfied with its performance. The group has also eyed other areas for further cuts, including U.S. trading.

* Deutsche Börse AG CEO Theodor Weimer said the German stock exchange operator is looking at big M&A deals this year, particularly in the foreign exchange and commodities markets, to "gain further scale," Financial News reported. Meanwhile, CFO Gregor Pottmeyer ruled out a potential combination with another bourse operator following the company's botched £21 billion merger with London Stock Exchange Group PLC two years ago.

* Wirecard AG wants to elect Thomas Eichelmann, former CFO of Deutsche Börse AG, to its supervisory board at its annual general meeting in June, Handelsblatt wrote, adding that according to insiders, he could advance to the head of the board by 2020.

* Swiss private bank Julius Bär Gruppe AG said its AUM jumped to a record CHF427 billion in the first four months of 2019, representing a year-to-date increase of 12%. The group said its cost reduction strategy is on track, with its cost-to-income ratio falling to below 73% from 74.3% in the second half of last year.


* BNP Paribas SA wants to expand further in Germany and aims to increase revenues from the country to €2 billion by 2020 from €1.5 billion in 2016. However, executives at the Paris-based lender said the bank does not need to acquire a German bank to bolster its growth, with Chairman Jean Lemierre adding that the group is "not a candidate for an acquisition" of Commerzbank AG.

* BNP Paribas' Compte Nickel will launch its operations overseas, according to l'Agefi. The unit, which manages 1.28 million bank accounts, is targeting 2 million by the end of 2020 and 4 million by 2025 as a result of its international expansion.

* Société Générale SA will end its offerings to companies that use 50% or more thermal coal in their activities and to companies using between 30% and 50% thermal coal that do not have a strategy to reduce their usage to 30% by 2025. SocGen will release a new policy July 1.

* Robeco Asset Management will close down its €221 million Hollands Bezit fund, which is aimed at investments in companies listed on the AEX and Midkap index in Amsterdam, amid a lack of investor interest, Het Financieele Dagblad reported. The fund will be merged with Robeco's European investor fund RobecoSAM Sustainable European Equities, with the new fund to be called Robeco Sustainable European Stars Equities.

* French reinsurer Scor SE, through its portfolio management arm SCOR Investment Partners SE, agreed to buy 100% of U.K. insurance-linked securities manager Coriolis Capital Ltd. The deal, which would raise Scor Investment Partners' AUM to $2.1 billion, is expected to close in the second half, after which Coriolis will become a unit of Scor Investment.

* La Caisse des Depots et Consignations, or CDC, clinched an agreement with the French state over the governance of La Banque Postale SA, according to Les Echos. But the institution is likely to bring some fresh cash, in addition to the securities it holds in CNP Assurances SA, to finalize the takeover of La Poste.

* Jürg Zeltner, former head of UBS Group AG's private bank, will be appointed CEO of Luxembourg-based KBL European Private Bankers SA today after acquiring an unspecified but significant stake in the Luxembourg-based wealth manager, unnamed sources told

* ABN Amro Group NV closed the sale of a 75% stake in its mortgage administration services arm, Stater NV, to India's Infosys Ltd. The Dutch banking group will keep the remaining 25% of Stater.


* Banco Santander SA has begun formal redundancy negotiations during which it promised unions that it will relocate all of the 3,713 employees who will be affected by the bank's merger with Banco Popular Español SA, according to Expansión.

* CaixaBank SA will create a commission that will assist with all matters related to technological innovation and digital transformation and serve as an advisory body to the board of directors, Europa Press wrote.


* U.S. asset managers Blackstone Group LP, Warburg Pincus LLC and Värde Partners Inc. are considering the possibility of co-investing in the bailout of Banca Carige SpA through a consortium, MF reported. Salvatore Maccarone, the chairman of Italian depositor guarantee fund, said the liquidation of the bank isn't being considered.

* The League, the ruling political party in Italy, is willing to back the possible state bailout of ailing lender Banca Carige if it fails to find a buyer, Reuters reported, citing an interview of Deputy Prime Minister Matteo Salvini with newspaper Il Secolo XIX. BlackRock Inc. recently dropped its takeover bid for Carige, following a similar move by Värde Partners.

* The MPS banking foundation is seeking damages of at least €623 million in the framework of the trial against former top managers of Banca Monte dei Paschi di Siena SpA for alleged market manipulation, false accounting and other charges between 2008 and 2012, according to MF.


* The Norwegian finance ministry has junked a proposal by the country's banking watchdog to revise how systemically important banks are determined, but said it would consider amending banks' capital requirements, Reuters wrote. Regional banks had reportedly opposed the revisions as it would categorize them as systemically important and their capital buffer requirements would increase.

* SpareBank 1 SR-Bank ASA is acquiring crowdfunding company Monner AS for more than 100 million Norwegian kroner, Stavanger Aftenblad reported. The aim is to establish a national bank for entrepreneurs, and SR-Bank said it hopes to have 10,000 new customers within five years.

* Danish banks are worried about the prospect of a new stock trading tax for banks and pension companies, Finanswatch wrote. The political opposition in Denmark, which is likely to win the next election, has agreed on the new tax, and bank association Finans Danmark said this would lead to stock trading moving to other countries.

* Swedish debt collector Intrum AB plans to increase the size of its Italian unlikely-to-pay loan portfolio to about a gross €6 billion from the roughly €1 billion it now services, MF wrote.


* Ukraine-based JSC CB Privatbank filed a lawsuit in the U.S. against its former owners, Ihor Kolomoisky and Gennadiy Bogolyubov, to seek redress for losses it incurred after the businessmen allegedly acquired assets in the U.S. when they still owned the bank through the misappropriation and laundering of proceeds from corporate loans issued by the bank.

* The Czech central bank decided to increase the countercyclical capital buffer rate for local banks to 2% from July 1, 2020, citing a rise in risks associated with the upward phase of the financial cycle of the Czech economy. The Czech Banking Association estimates that local lenders will have to set aside up to tens of billions of Czech koruny to meet the increased buffer requirement, which could negatively affect dividend payouts, Reuters noted.

* Armenia's Evocabank CJSC appointed Karen Yeghiazaryan chairman, Armbanks reported. Yeghiazaryan formerly served as deputy chairman, while Emil Soghomonyan, outgoing chairman, will be incorporated to the board and will coordinate on strategic development tasks.


Asia-Pacific: Nomura Securities faces penalty; South Korean securities firm sells assets

Middle East & Africa: PE firms to take over Phoenix; Egypt holds rates; Moody's downgrades Zambia

Latin America: Brazil cuts 2019 growth forecast; Costa Rica lowers benchmark rate

North America: Wells Fargo, TD Bank hand over Trump's records; FDIC, payday lenders settle suit

Global Insurance: British Steel's disputed insurance claim; Scor in ILS M&A; Unum CFO retiring


Ex-cons game UK corporate registration system, enabling fraud, money laundering: Research by a British fintech suggests that 1 in 8 disqualified directors are still active on the Companies House register, one of the most open in the world, undermining efforts by financial institutions to weed out money launderers and fraudsters.

Exits and cutbacks as Lloyd's of London profit crackdown takes hold: Annual accounts show that some of the worst performing managing agents and syndicates have been making changes as Lloyd's as a whole strives to improve underwriting profitability.

Metro Bank must replace Vernon Hill as chairman, says investor Royal London: Founder and chairman Vernon Hill must step aside and make way for a truly independent chairman after significant numbers of shareholders voted against Metro Bank's directors, investor Royal London Asset Management said.

Deza Mones, Arno Maierbrugger, Danielle Rossingh, Esben Svendsen, Beata Fojcik, Heather O'Brian, Stephanie Salti, Sophie Davies and Mariana Aldano contributed to this report.

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