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€150B EU bank rescue program proposed; BoE rate cut likely; Deutsche Börse, LSE move for merger

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€150B EU bank rescue program proposed; BoE rate cut likely; Deutsche Börse, LSE move for merger

Top economist calls for €150B bank rescue program: Chief EconomistDavid Folkerts-Landau proposes a bank rescue program of €150 billion torecapitalize European financial institutions short of equity, Welt amSonntag reports.Italy's banks alone would need €40 billion, he said, adding that Europe is"seriously sick and needs to resolve its problems."

* The European Court of Justice is likely to rule July 19that the European Commission cannot apply EU state aid rules to impose losseson a troubled bank's private investors during a bailout, Reuters writes.The court is seen upholding conclusions issued by its advocate general inFebruary, stating that the EC has no binding powers on the matter and thatso-called bail-ins of investors are not needed to inject public funds intobanks.

* German Finance Minister Wolfgang Schäuble said in aninterview with Augsburger Allgemeine thatthe EU must act quickly in addressing its most pressing issues so that "noconflagration emerges" from the U.K.'s decision to leave the EU, accordingto Reuters.

* More than 1,000 lawyers signed a letter urging U.K. PrimeMinister David Cameron to allow parliament to vote on triggering Article 50 ofthe EU's Lisbon Treaty that lays out how a member can leave the bloc, sayingthe result of the country's recent EU referendum was not legally binding, City A.M. and The Guardian report. The lawyersalso called for the creation of a royal commission that will look into theeffects of triggering Article 50 and present its findings before theparliamentary vote.

UK AND IRELAND

BoE may cut rate:Economists expect the Bank of England to cut its bank rate to a new record lowof at least 0.25% this Thursday from the current level of 0.5% amid risingfears of a recession in the U.K. following its decision to leave the EU, The Daily Telegraph reports.Bank of America Merrill Lynch sees the BoE cutting the rate to as low as 0.1%.The Financial Times and The Guardian also cover.

* Moody's said Friday that the U.K.'s decision to leave theEU will likely result in a shock to confidence that will curb Britain'seconomic growth. The agency said global spillovers of the Brexit vote,excluding political contagion, are likely to be limited.

* U.K. Chancellor George Osborne will today meet with U.S.investors in New York to persuade them that the Brexit vote provides a"golden opportunity" to further strengthen ties between the U.K. andthe U.S., The Guardian reports.New York is the first leg of a series of investor meetings that will also seeOsborne visit Singapore and China in search for business partnerships outsidethe EU, accordingto The Daily Telegraph.

* U.K. regulators are looking into requiring property fundsto increase liquidity buffers as part of emergency measures that would preventlarge outflows, accordingto The Daily Telegraph. The movecomes after trading in six main U.K. property funds was suspended last week as investorssought to withdraw their money following the Brexit vote.

* LloydsBanking Group Plc is increasing its target annualized costreductions by 20% to about £1.2 billion by 2017-end, potentially leading to layoffsof about 1,800 employees and closures of 40 branches, in addition to previouslyplanned 9,000 job cuts and 200 branch closures, the Financial Times reports.

* British banks could wait for a few more months beforereceiving their minimum requirement for own funds and eligible liabilities, orMREL, and the January 2020 implementation deadline for the requirement could berelaxed, potentially providing relief for the banks, insiders tell IFR. The delay comes as regulators awaitfinal technical standards from the European Banking Authority.

* Consumer body Which? called on the U.K. Financial ConductAuthority to look into overdraft charges, accordingto The Guardian.

* The London commercial insurance market will this week allowonline transactions involving terrorism insurance, marking a step away fromtraditional face-to-face transactions between insurance brokers and clients,the Financial Times writes.Extending the online system to the entire commercial insurance market isexpected to take about two years.

* A crowdfunding campaign to raise legalfees for former UBS GroupAG trader Tom Hayes has reached £26,705, or 18% of a £150,000target, City A.M. writes.Hayes would use the money to fund an appeal to his conviction for LIBORmanipulation.

GERMANY, SWITZERLANDAND AUSTRIA

DeutscheBörse, LSE move to save merger: For their merger to push through,Deutsche Börse AG andLondon Stock Exchange GroupPlc are looking into lowering the minimum acceptance threshold of75% of the shares in Deutsche Börse for the entity named HLDCO123 Plc toacquire all registered no-par-value shares in the German firm. Lowering theacceptance threshold would allow index funds, which represent up to 15% ofDeutsche Börse shares, to participate in the offer. The Wall Street Journal has a report.

* Lower Saxony Chief Minister Stephan Weil said his statewill "make all efforts" to rescue ailing , but not through a joint capital increasewith the state of Bremen, Handelsblatt notes.The bank needs about €400 million in equity.

* German banks will have to shell out a total of €1.76billion in bank levy this year, the Federal Agency for Financial MarketStabilization says.The levy is up from €1.58 billion in 2015.

* German financial market supervisory authority Bafin saidthat as of Jan. 1, just three of 342 insurers had insufficient equity capital, Handelsblattreports.

* UBS GroupAG CEO Sergio Ermotti complains about the lack of support by theSwiss government for the banking industry, alleging the Federal Assembly ofbeing too "center-leftist" in an interview with SonntagsZeitungand Le Matin Dimanche cited by Tages-Anzeigerand Handelszeitung.

* CreditSuisse Group AG CEO Tidjane Thiam tellsNZZ am Sonntag that the bank's dipping share price was "noindicator" for its condition, partly blaming "speculativeinvestors" for the drop. "I am sure the share price will recover assoon as we deliver results," he said.

* Edmond deRothschild Holding SA closes its asset management arm in Frankfurtand relocates it to Paris, finews.ch writes.

* Austria's financial market supervisory authority willlikely disapprove the spin-off of UniCredit Bank Austria AG's eastern European business,arguing that the remaining part of the bank in Austria would lack sufficientequity capital after the split and would have no sustainable business model anymore, Wiener Zeitung reports.

* The founder of Leonteq Securities AG, Jan Schoch, is launching adigital service platform called Flynt for wealthy customers and family offices,finews.ch reports.

FRANCE AND BENELUX

France's2 insurance bodies to merge: The two major French insurance industry tradebodies — La Fédération Française des Sociétés d'Assurance and Groupement des Entreprises Mutuelles de la Assurance —are to merge to form a new body representing 280 companies and 99% of theindustry, Les Echos reports.

* AXA warned that the rise of autonomous vehicles couldlead to new risks that the insurance industry will have to take into account,such as the possibility of driverless cars being hacked for ransom or for useas a weapon, City A.M. reports.

* Patrick de Fayet, a former top executive at , admitted hisguilt in illegal selling in interviews with investigators, weakening theposition of the bank in its up-coming trial, Le Monde reports.  Prosecutors are asking for a fine of around €5 billion for thebank.

* Argentinean prosecutors have started formal legalproceedings against 20 former managers of BNP Paribas SA's local branch for criminal conspiracy,money laundering and tax evasion between 2000 and 2008, and have frozen theirbank accounts totaling €729 million, LesEchos reports.

* La BanquePostale's loans to businesses exceeded €1.5 billion in the firstsix months of 2016, equivalent to that for the whole year of 2015, Les Echos notes.

* StephanJanssens, CEO of Rabobank's Rabobank.be, will leave the online savingsbank after almost two years in charge, DeTijd reports.Janssens will become a partner at the Brussels branch of consultancy firmRoland Berger. Janssens' job will be taken over by Johan Vanhulle, who leadsall of Rabobank's activities in Belgium.

*Netherlands-based exchange The Order Machine may have fallen victim to marketmanipulation, Het Financieele Dagbladreports,citing the Amsterdamtrader blog. The case reportedly came to light last weekafter a string of suspicious trades in AEX index options. 

SPAIN AND PORTUGAL

EC clears Santander's acquisition of Banif: The EuropeanCommission approved BancoSantander Totta SA's purchase of Banif-Banco Internacional do Funchal SA, Diário Económico writes.The EC notes that the transaction does not raise competition problems sinceboth banks' activities are limited to Portugal.

* Newly appointed PresidentTeixeira dos Santos asked for transparency in the recapitalization process ofCaixa Geral de DepósitosSA. In an interviewwith TSF Rádio Notícias, he defendedthe creation of a new mechanism to deal with bad loans as a way to reduce riskyactivity from banks and to anticipate solutions to credit problems.

* Banco de Portugal filedlawsuits against Banco BIC Português over money laundering and creditirregularities, Jornal de Negócios reports.

* Market rumors on possiblemergers in Spain have now focused on banks such as , and , Expansión writes.

ITALY AND GREECE

Italy's Visco hints at state intervention on banks:Bank of Italy Governor Ignazio Visco said public funds should be used to helpItaly's troubled banks in a financial system "full of risks" afterBritain decided to leave the EU, Reuters writes.Meanwhile, Visco also said that the €360 billion in bad loans on the books ofItalian banks did not amount to an emergency for the banking sector as a whole,the news agency also reports.

* shares rose Friday amid expectations that a deal will be reached shortly tosell €9.6 billion in net nonperforming loans to bank rescue fund Atlante, whichhas begun raising money to finance this and other potential transactions, IlSole 24 Ore says.Cassa depositi e prestitiSpA could contribute €500 million to the fund.

* Meanwhile, CEOVictor Massiah denied a report that the lender could be interested in a mergerwith Banca Monte dei Paschi once it shed some of its NPLs, Reuters writes.

* CEO Alessandro Vandelli said the lender hopes to sell €450 million in NPLs nextweek to specialist investors Algebris and Cerberus and plans to sell up to €300million more by year-end, Reuters reports.Vandelli said the planned sales will not have any impact on the bank's balancesheet.

* Italian banks could put some€51.4 billion in gross NPLs up for sale in coming months, Il Sole 24 Ore calculates.

* An 82.4% stake in Piraeus BankCyprus is being sold to Lebanese businessman Maurise Sehnaoui for €40 million, Kerdos reports.Piraeus Group's regulatory capital position is expected to improve byapproximately 15 basis points as a result of the transaction.

NORDIC COUNTRIES

SEB may post weaker-than-expectedQ2 result: Thereare indications that Skandinaviska Enskilda Banken AB may post a weaker-than-expectedsecond-quarter result this week, GöteborgsPosten reports.Some uncertainty also reigns over the earnings and profit performance of otherprimary players in the Swedish banking industry, such as and .

*Avanza Bank Holding AB(publ) named Johan Prom CEO, DagensIndustri reports.Prom, who will take up the role in January 2017, previously held managerialroles in the wholesale and food industry.

*Sparebanken Vest isthe latest bank in Norway to advocate that more stores prioritize bank cardtransactions and treat cash as an "optional-extra" form of payment,e24.no reports.CEO Jan Erik Kjerpeseth wants card payments to replace cash as the sole meansof payment within the wider retail sector within 10 years. For its part,DNB ASA is predictingthat Norway will go "cashless" by 2025. The banking sector is intalks with the Norwegian government about a general agreement on setting anofficial target date to effect the transition to a cashless society.

EASTERN EUROPE

Croatiatold to reconsider loan conversion law: The European Commission askedCroatia to reconsider a law requiring lenders to convert Swiss franc loans intoeuros, Reuters reports.The Croatian government said it had received a warning about the law breakingEU rules and promised to make an effort to prevent potential negativeconsequences.

* BNPParibas, present in Poland through BGZ BNP Paribas, is interested in acquiringRBI Polish unit Raiffeisen Bank Polska, Reuters reports. PKO Bank Polski, ING Bank Slaski and PZU unitAlior are also among potential buyers.

* Promsvyazbank PJSC owners Dmitry Ananyev and AlexeyAnanyev hired a number of former Deutsche Bank executives to run their assetmanagement company PSB Asset Management and plan invest almost €100 million tobuild its investment business, Vedomostireports.

* Polish units of foreign lenders arewell-capitalized and will show resilience to problems affecting European banks,including low interest rates in the eurozone or concerns about the economiceffects of Brexit, Rzeczpospolita writes.

* TheSlovenian central bank defended its conduct in the country's 2013 bank rescueand accused local police of seizing a number of confidential documents from thebank that were not related to the investigation, Reuters says.The central bank's governor, Bostjan Jazbec, was also cited as saying that thepolice took original documents which could pose risks to financial stability.

IN OTHER PARTS OF THEWORLD

Asia-Pacific:

Middle East and Africa: Ivorian bank's stake sale; Mozambique's downgrade

NOW FEATURED ONS&P GLOBAL MARKET INTELLIGENCE

Brexitdoubts as UK banks face higher costs for hefty bond issuance: U.K. bankshave to sell billions of dollars worth of bonds to meet new too-big-to-failrules. Brexit will make that more expensive.

Aberdeen,other European asset managers may be heading for M&A: Europeanasset managers have had a rough start to the year. Consolidation may be on thehorizon.

Sheryl Gesto-Obejera,Arno Maierbrugger, Brian McCulloch, Danielle Rossingh, Praxilla Trabattoni,Mariana Aldano, Heather O'Brian, Mike Hatzidakis, Gerard O'Dwyer, Beata Fojcikand Ali Kayalar contributed to this report.

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