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Banks react to Panama Papers; Barclays' i-bank issues; Italy's NPL problem


Banking Essentials Newsletter: 22nd March Edition


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Banks react to Panama Papers; Barclays' i-bank issues; Italy's NPL problem

Baselwarns against 'myopic' calls for capital easing: WilliamCoen, secretary-general of the Basel Committee on Banking Supervision, warnedagainst "myopic" calls to ease capital requirements for banks toboost lending, Bloomberg News reports.Coen insisted that the Basel standards are the minimum standards supporting asound banking system and that the regulator's focus is on the longer term.

* An analysis by Moody's found that most banks in Europe havemoderate exposures to the energy sector, with gross exposures of 19 Europeanlenders totaling €270 billion at 2015-end. BNP Paribas SA, ING Groep NV, HSBC Holdings Plc and Crédit Agricole SA held the highest absolute exposures,Reuters notes.Moody's, however, said that a prolonged oil price slump could lead toadditional provisions and weigh on lenders' profitability, already under pressuredue to the weak operating environment.

* German Finance Minister Wolfgang Schäuble indicated yesterdaythat the ECB's policy is less favorable for his country than the rest of theeurozone, Reuters reports.Schäuble said an independent central bank conducting unified monetary policyfor all eurozone states is a problem of the common currency union.

* Research from Moody's showed that many reinsurers raised theirallocation to peak zone catastrophe risks at the Jan. 1 renewals despite acontinued decline in rates across the industry, Artemis writes.The increase is apparently meant to secure additional premiums from lowprobability event risk.


BarclaysQ1 i-bank warning: BarclaysPlc said its board does not expecta strong performance from its investment bank in the first quarter in light ofcurrent market conditions for investment banking. The group also expects afurther decline in noncore income in the period. BloombergNews, The Guardian and Reuterscover. Barclays also said it is seeking prior approval from shareholders forany transaction that could result in the deconsolidation of Barclays AfricaGroup Ltd.

* U.K. opposition leader Jeremy Corbyn called on Prime MinisterDavid Cameron to clarify his family's tax arrangements after the Panama Papersshowed that his late father was a director of an offshore investment fund,Bloomberg News reports.A spokesman for Cameron said the prime minister and his family did not benefitfrom any offshore funds, Reuters notes.The Guardian also has a report.

* It emerged that some members of the Bank of England's FinancialPolicy Committee wanted to raise the countercyclical capital buffer for banksto 0.75%, Bloomberg News reports,citing a record of the panel's March 23 meeting. The committee ended up raisingthe buffer to 0.5%.

* Social payments app Circle is launching in the U.K. today,Reuters reports.Barclays' corporate banking division is providing the account Circle needs tostore sterling, making it the first U.K. bank to establish a partnership with adigital currency firm. Circle runs partly on bitcoin's blockchain network.

* The U.K. Financial Conduct Authority's 2016/2017 businessplan includes a full-blown review into the impact of pension freedomreforms that took effect in April 2015. The work is meant to ensure that thechanges would not lead to another mis-selling scandal. BloombergNews notes that the FCA introduced few new initiatives. The FCA's annualfunding requirement will increase 7.8% to £519.3 million. Post Online notesthat brokers, insurers and Lloyd's of London companies will see a decline intheir contribution to the FCA funding requirement.

* The U.K. Investment Association saidChris Cummings will become CEO. Cummings will join the association from TheCityUK,where he is a founding CEO. Reutersand SkyNews cover.

* Standard CharteredPlc promoted Rajan Bagri to head of FIG debt capital markets forEurope and the Americas, IFR reports.Bagri joined the lender 10 years ago.

* ECB Governing Council member Ewald Nowotny told Die Presse that London's financialsector will suffer from Britain's possible exit from the EU, Reuters reports.Nowotny added that in the event of a Brexit, "we will have to holddifficult exit negotiations."


Germanbanks set up more than 1,200 offshore firms: At least 28 German banks used the services of Panama-basedlaw firm Mossack Fonseca over the past years, Süddeutsche Zeitung writes.They had more than 1,200 offshore companies registered for clients andadministered most of the shell firms on their clients' behalf. set up more than 400offshore companies until 2007.

* is selling itsSouth Korean life insurance business to China's for about$216 million, Reuters reports,citing the Korea Economic Daily.

* booked 2015 pretax profitof €737 million after a loss of €56 million in the previous year.

* RheinischerSparkassen- und Giroverband, the umbrella organization of 33 savings banks inRhineland, in the wake of low interest rates and tighter banking regulation, isadvocating "step-by-step mergers" between savings bank and insurersregulated by public law to consolidate the industry, Handelsblatt reports.


SocGencaught in Panama Papers mire: French media was buzzing with newsyesterday of Société GénéraleSA's involvement in thePanama tax case. The French bank set up 979 offshore companies through law firmMossack Fonseca, LeMonde and LeFigaro note. Finance Minister Michel Sapin was due to meet last eveningsenior SocGen managers. The bank had said earlier in the day yesterday that"only a few dozen" of these companies created for its clients werestill active and they were managed like totally transparent structures, Les Echos writes.L'Agefi also has a report.

* Alvaro Aleman, chief of staff of Panamanian President Juan CarlosVarela, said his country may take reciprocal measures after France put it on ablacklist of uncooperative tax jurisdictions, Reuters reports.The issue comes amid the fallout of Panama Papers.

* About a third of the profit generated by the five largestFrench banks comes from tax havens, according to a report citedby Le Figaro. These territories onlyaccount for one quarter of their reported activities, one-fifth of their taxesand one-sixth of the number of employees.

* Car-sharing service BlaBlaCar and extended their partnership inBelgium to offer additional services to their customers, accordingto L'Echo.


Italy mulls state-backed fund to solve NPL problem:Italy is considering the creation of a state-backed fund to buy bad loans andhelp fill capital holes at troubled banks, sources tell Reuters.The fund would be majority owned by private investors. The issue was discussedat a meeting yesterday, with the CEOs of Intesa Sanpaolo SpA, UniCredit SpA and Unione di Banche Italiane SpA attending.

* Italian banks think the ECB could start setting deadlinesfor the disposal of nonperforming loans in specific cases, senior bankingsources tellReuters.

* A group of shareholders in isworking on the creation of a shareholding pact with a combined 5% stake, MFsays.

* BancaMediolanum SpA is targeting a common equity Tier 1 ratio above 20%this year, MF writes.Chairman Ennio Doris said the bank sees opportunities for organic growth inGermany, where it plans for its business to reach breakeven in 2017 or 2018,following a €7 million loss in 2015, Reuters reports.

* The board of Società Cattolica di Assicurazione - SC approved plansto incorporate the insurer's Fata subsidiary, Il Sole 24 Ore says.

* Banco BilbaoVizcaya Argentaria SA CEO Carlos Torres said that despite therebeing no long-term point in having more than 3,800 branches in Spain, the grouphad no plan in place for closures, EuropaPress reports.Bloomberg News citeshim as saying that the bank will trim its branch network over the next fewyears, and may manage just 1,000 branches in Spain, "over an unspecifiedlong-term time frame, many years ahead."

* Meanwhile, CaixaBank SA said its more than 5,000 branches — thelargest bank branch network in Spain — represented points of sale for theentity and that in no circumstances would they be reduced in number, Expansión writes.

*CaixaBank wants Fernando Ulrich to stay on as CEO of and will back a change tocompany statutes that currently obliges executives to retire at 62, Jornal de Negócios reports.

* Bank of Greece Governor Yannis Stournarasapproved the establishment of a new bank, Credicom Consumer Finance, asubsidiary of Crédit Agricole. Anthimos Thomopoulos, former CEO of , will head thenew bank, Euro2day says.


Panama Papers claim 1stpolitical casualty: Icelandic Prime Minister SigmundurDavíð Gunnlaugsson resigned yesterday after seeking the dissolution of thecountry's parliament, the Financial Timesreports. Sigurður Ingi Jóhannsson, minister of fisheries and agriculture, willsucceed Gunnlaugsson to attempt to continue the present coalition government.The Icelandic premier became the first major political casualty of the leaks, The New York Times notes.

*Nordea Bank AB willend its association with Panamanian law firm Mossack Fonseca, FinansWatchand Reutersreport.

* Aday after DNB ASA CEORune Bjerke said the bank's management had no knowledge of any contact withMossack Fonseca, Aftenposten reportsthat two present DNB managers were the Panamanian law firm's contacts inLuxembourg.

*Bank Norwegian AS isto raise 300 million Norwegian kroner in a private offering, Dagens Næringsliv reports.The share issue is already fully subscribed. Bank Norwegian is planning for anIPO in the second quarter, and another share issue is expected before the IPO.Reuters also covers.

* SwedbankAB'sannual general meeting yesterday did not discharge former CEO Michael Wolf andoutgoing Chairman Anders Sundström from liability, Affärsvärlden reports. All other board members weredischarged from liability for the last financial year. Lars Idermark was votedchairman at the meeting, Realtid adds,noting that Idermark was chairman of the bank between 2010 and 2013. His 2016nomination was controversial as he was involved in approving the disputedproperty transactions of several Swedbank executives. Idermark said a new CEOwill be appointed in a few weeks.


Russianbanks comment on Panama Papers: Commenting on the Panama Papersscandal, PAO Sberbank ofRussia CEO Herman Gref said the lender was never involved inquestionable transactions, while BANK ROSSIYA, which is named in the documents, said itbecame a target of "groundless information attacks" by western andRussian media outlets, the Moscow Timesand TASSreport. PAO VTB Bankalso issued a statement saying that Cypriot unitRCB Bank Ltd. did notissue any dubious loans and the operations of the lender and VTB Group are inline with legislative and regulatory requirements.

* Russianbanks put up for sale 76 billion rubles of bad loans in the first quarter, down18% year over year, Vedomosti writes.

* The new management of will prepare abusiness model for the state lender by June 30, Vedomosti, RBK Daily and Kommersant report,adding that it will continue to operate as a development bank. Reuters cites VEB President Sergey Gorkov as saying that thebank, which was recently promised 150 billion rubles form the state budget,will not have liquidity problems this year and does not expect anyadditional support from the Russian Finance Ministry.

* BANK ROSSIYSKY CAPITAL (PJSC), controlled by the RussianDeposit Insurance Agency, will receive an additional 800 million rubles fromRussia's bank recapitalization program, Kommersantwrites.The bank was initially eligible for 5.3 billion rubles, but the figure was amendedseveral times and with the latest increase it reaches 14.3 billion rubles.

* The Polish competitionauthority cleared the acquisition of Liberty Mutual Insurance Group's Polishunit Liberty Ubezpieczenia by AXA, PulsBiznesu reports.

* Alior BankSA said today that it seeks to raise 2.2 billion Polish zlotys froma rights issue aimed at financing its takeover of and boosting its capitalbase, Reuters reports.


* The total dollar value of the U.S. life insuranceindustry's investments in mortgage loans hit another high in 2015,as companies continued to turn to the asset class in an effort to find yield ina low-for-long interest rate environment.

* Brazilian Attorney General Jose Eduardo Cardozo urgedmembers of Congress to reject an impeachment request against President DilmaRousseff, Reuters reports."The impeachment process was compromised from the start and as such it isinvalid," Cardozo said.

* MitsubishiUFJ Financial Group Inc. is actively pursuing overseas acquisitionopportunities in the fund administration business, Reuters reports,citing Mikio Ikegaya, president of MitsubishiUFJ Trust & Banking Corp. The executive, however, did not givedetails on the potential acquisitions.

* The ratio of bad loans at Chinese banks may grow threefoldin the next two years due to a slowing economy, the South China Morning Post reports,citing a report by Lin Yuan and Polar Zhang, analysts at BOC International. Theratio could climb to 6.6% by 2018, compared with 1.67% at the end of 2015.


Mobile walletsand easing regulations a threat to European banks, card companies:Mobile wallets like Android Pay and Apple Pay currently hitch a ride on existingfinancial infrastructure provided by banks and card companies. In Europe, thatcould be about to change.

The £40B PPIquestion facing UK banks: The cost of mis-selling paymentprotection insurance has cost U.K. banks dear. But the worst may be yet to come.

Xana Kakoty, ArnoMaierbrugger, Stephanie Salti, Praxilla Trabattoni, Heather O'Brian, BeataFojcik, Kees Pijnappels, Esben Svendsen, Thanasis Kakalis, Helen Popper and AliKayalar contributed to this report.

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