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Monte dei Paschi's bailout; Deutsche Bank/Credit Suisse agree to US settlements

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

Italy steps in to rescue Monte dei Paschi

* The Italian government approved a state bailout of Banca Monte dei Paschi di Siena SpA after the lender failed in its last-ditch attempt to raise €5 billion from private investors. The funds to be used to rescue Monte dei Paschi would come from a €20 billion package recently approved by Italy's cabinet, but it was not clear how much of this would be allocated to the embattled bank.

Regulatory boulevard

* Deutsche Bank AG reached an agreement in principle with the U.S. Department of Justice to settle an investigation into the bank's sale of mortgage-backed securities in the U.S. Subject to the negotiation of definitive documentation, the bank agreed to pay a civil monetary penalty of $3.1 billion and provide $4.1 billion in consumer relief over a period of at least five years. Credit Suisse Group AG also reached an agreement in principle with the DOJ to pay $5.3 billion to settle similar claims.

* Separately, the DOJ filed a lawsuit against Barclays Plc unit Barclays Bank Plc and several of its U.S. affiliates over alleged fraud in the sale of MBS. The DOJ claimed that the MBS sold between 2005 and 2007 relied on defective mortgage loans that were misrepresented to investors. Barclays rejected the claims, saying it intends to seek the dismissal of the case.

* The Swiss Competition Commission fined various major European and U.S. banks over four instances of interest rate cartels.

* BNP Paribas SA, Société Générale SA, Crédit Agricole SA and Crédit Mutuel Group are among a number of French banks that filed lawsuits against the ECB as they seek exemption from having to hold capital against deposits held in a government-backed fund.

* The European Court of Justice ruled that Spanish banks will need to repay more to reimburse mortgage customers over so-called floor clauses on loans subscribed before 2013. The new charges are likely to amount to billions of euros.

On the deal table

* Lloyds Banking Group Plc will acquire British credit card issuer MBNA Ltd. from FIA Jersey Holdings Ltd., a wholly owned subsidiary of Bank of America Corp., for a cash consideration of £1.9 billion. The purchase price includes approximately £800 million of acquired equity and assumes £240 million for future payment protection insurance claims, with Lloyds' exposure to PPI liability capped at this amount.

* Euronext NV entered into exclusive talks with London Stock Exchange Group Plc and LCH.Clearnet Group Ltd. regarding the potential acquisition of LCH.Clearnet Group's French-regulated clearing house business, LCH.Clearnet SA.

* Standard Chartered Plc is transferring its retail banking business in Thailand to TISCO Financial Group PCL.

* Royal Bank of Scotland Group Plc is closing in on the sale of shipping loans worth at least $600 million to various buyers, Reuters wrote. The loans, which will be sold in tranches, mostly come from the bank's Greek shipping business. Meanwhile, technical issues impeding the sale of its Williams & Glyn business may force RBS to request that some 1.7 million of its customers switch bank accounts, The Sunday Times reported. The bank, which is now reportedly looking to sell a smaller portion of Williams & Glyn, is struggling to create a database of customers that can be easily transferred to the institution that buys the operations.

* Intesa Sanpaolo SpA received at least seven nonbinding bids for a €2.5 billion nonperforming loan portfolio, a deal which the lender is expected to conclude in the first quarter of 2017, Reuters reported.

In other news

* HSBC Holdings Plc completed its share buyback program with 325,273,407 ordinary shares purchased for US$2.5 billion at a volume-weighted average price of 605.67 pence per share.

* Raiffeisen Bank International AG will weigh its options regarding Raiffeisen Bank Polska SA after floating the Polish unit on the Warsaw Stock Exchange, the deadline for which is June 2017.

* Some of the biggest U.K. law firms said British banks can sue the EU if it fails to grant them a transitional deal in Brexit negotiations. The law firms said that the Vienna Convention on the Law of Treaties, which states that rights awarded under a treaty continue even after the treaty has been withdrawn, should enable banks to secure a staggered exit from the bloc.

* The European Council extended its economic sanctions against Russia for another six months until July 31, 2017. The sanctions include limiting access by five major Russian majority state-owned financial institutions and their non-European subsidiaries to EU capital markets.

* Quaestio Capital Management SGR SpA, which manages Italian bank rescue fund Atlante, pledged to inject up to €628 million and €310 million to Veneto Banca SpA and Banca Popolare di Vicenza SpA, respectively, by Jan. 5, 2017, to help boost their capital ratios.

Featured during the week on S&P Global Market Intelligence

Monte dei Paschi capital fail may trigger wider Italian bank bailout: Italy may be about to begin to catch up with Spain, which bailed out its banks in 2012.

LSE-Deutsche Börse tie-up faces major challenges despite possible LCH SA sale: London Stock Exchange Group is edging closer to selling off its French clearing operations as it seeks to appease European regulators over its potential merger with Deutsche Börse, but the sale may not go far enough to solve major challenges.

MBNA deal raises questions on capital, asset quality for Lloyds: Lloyds closed its first major acquisition since the 2008 financial crisis with the £1.9 billion purchase of credit card business MBNA, but analysts are divided about the impact of the deal on the bank's capital ratio.