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RBI, RZB consider tie-up; ECB eyes Brexit risk; Chinese take aim at Novo Banco


Banking Essentials Newsletter: 7th February Edition


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Case Study

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Private Markets 360° | Episode 8: Powering the Global Private Markets (with Adam Kansler of S&P Global Market Intelligence)

RBI, RZB consider tie-up; ECB eyes Brexit risk; Chinese take aim at Novo Banco

EU to move on sovereign bond holdings: The Dutch presidency of theEU suggested that the bloc should regulate banks' holdings of sovereign bondsahead of a decision on the matter at a global level by the Basel Committee onBanking Supervision, Reuters reports.The Netherlands made the suggestion in a document drafted as the basis fordiscussion on the policy by government officials in Brussels.

* The ECB will carry out an analysis, including a stresstest and an asset quality test, on four banks that it may start to directlysupervise, accordingto Reuters. The lenders are Banca Mediolanum SpA,Citigroup Inc.'sIrish unit, Abanka ddand JSC Rietumu Banka.


ECB eyes Brexitrisk: The ECB has asked eurozone banks with large exposures to Britain todetail their preparations for the country's possible exit from the EU, Reuters reports.The ECB particularly asked banks how they would deal with possible marketshocks and what changes to their business models they are considering.

* Meanwhile, Britain's financial firms would be hit with anestimated £17 billion of costs from a decade of uncertainty if the U.K. were tovote to leave the EU, Reuters reports,citing research from think tank JWG. Rather than reduced red tape, businessesin the U.K. could be "stuck with a rule book that could change by 60%,"the think tank said.

* Several top 30 Royal Bank of Scotland Group Plc shareholders called onthe U.K. government to review the bank's drawn-out sale of Williams & Glyn,arguing that the disposal, a condition of the bank's 2008 state bailout, may nolonger be necessary, accordingto Reuters.

* HSBCHoldings Plc appointed Franck Lacour head of equities for Europe,the Middle East and Africa in addition to his current responsibilities asglobal head of trading, IFR reports.Lacour will succeed David Long, who vacated the post last summer.

* StandardChartered Plc expects improvement in its South Asia operations'revenue and profit from 2017, as it recovers from a record $1.34 billion ofimpairment losses on loans to troubled companies in India in 2015, BloombergNews reports.

* Experts expect Britain's new Insurance Act to"re-engineer the foundations on which policies are built," accordingto the Financial Times. The act,which takes effect in August, paves the way for the industry's biggest shakeupin 110 years.


RBI eyes RZBtie-up as Q1 profit rises YOY: Raiffeisen Bank International AG yesterday first-quarterconsolidated profit of €114 million, compared to €83 million in the year-agoperiod. RBI and parent RaiffeisenZentralbank Österreich AG will look into whether they should mergeto simplify the group structure and adapt the group more closely to increasedregulatory requirement.

* AllianzGroup reportedan increase in first-quarter net income attributable to shareholders to €2.19billion from €1.82 billion in the same period a year ago. CFO Dieter Wemmersaid the company is on track to achieve its full-year 2016 operating profittarget in the range of €10.5 billion, plus or minus €500 million.

* Meanwhile, Allianz Taiwan Life Insurance Co. Ltd. agreedto sell a traditional life insurance portfolio to Taipei-based , citing"the constraints placed on European insurers presented by SolvencyII." The deal includes an Allianz Taiwan Life portfolio with IFRS policyreserve liabilities of €1.2 billion as of Dec. 31, 2015.

* A district court in Munich ruled that Andreas Pichler, aformer management board member of Deutsche Bank AG subsidiary Deutsche Oppenheim FamilyOffice AG, was unfairly sacked last year, Handelsblattreports.The court ordered the company to pay his salary up to the end of his originalcontract, which would have expired in April. Deutsche Oppenheim fired Pichler inJune 2015 in the wake of an investigation by German prosecutors and taxauthorities into alleged aiding of tax evasion.

* German financial watchdog Bafin yesterday praised DeutscheBank's restructuring efforts under Co-CEO John Cryan, the Frankfurter Allgemeine Zeitung reports."We see the bank on a fully correct path," said Raimund Röseler,Bafin's chief executive director of banking supervision, at the authority'sannual press conference in Frankfurt.

* Meanwhile, Bafin is close to completing its review ofChinese investment group Fosun's planned acquisition of , Handelsblatt writes.Whether Bafin greenlights the €210 million deal remains open, with a sourcesaying Fosun's debt ratio remains a key factor.

* UBS GroupAG CEO Sergio Ermotti said at yesterday's annual general meetingthat the bank may begin charging negative interest for wealthy clients, Handelsblatt reports.Bloomberg News also covers.

* CreditSuisse Group AG appointedEric Varvel global head of asset management, effective June 1. The bank saidVarvel, who will be based in New York, would spend a significant portion of histime in various emerging markets, including the Asia-Pacific region.

* CEO Byron Haynes said BAWAG P.S.K. hopes to announce one or two acquisitionsover the next weeks or months, Reuters reports.Haynes cited "a number of interesting opportunities both domestically andinternationally."

* EFG InternationalAG priced its offering of new shares to finance the purchase ofBSI SA at CHF6.12apiece. Existing shareholders took up approximately 56.9% of the shares onoffer, totaling 46,465,975 new shares, and investors in the internationaloffering purchased a further 1.7 million shares. BTG Pactual Group will end upwith the maximum possible stake of 30.0% in EFG International.


ABN AMRO Q1profit drops YOY: ABN AMROGroup NV posteda first-quarter net profit of €475 million, down 13% from the same period ayear ago. Net interest income was flat at €1.55 billion while net fee andcommission income fell 7% year over year to €435 million. Managing BoardChairman Gerrit Zalm saidthe group got off to a "challenging start" to 2016 because of turmoilin the financial markets.

* Het FinancieeleDagblad writesthat ING Groep NV'sshares rose yesterday, despite a year-over-year fall in first-quarter profit.Investors were cheered as interest income rose despite the low-rateenvironment. CEO Ralph Hamers said ING can maintain its net interest margin at140 to 150 basis points in the coming quarters.

* CNPAssurances SA reporteda first-quarter net attributable profit of €281 million, compared to €280million a year earlier.

* French insurer Malakoff Médéric namedThomas Saunier CEO, Les Echos writes.It also announcedthat it will not merge with La Mutuelle Générale. The companies have beennegotiating a merger since January 2015, but the situation became more tenselast autumn and ended up with the departure of Malakoff Médéric CEO GuillaumeSarkozy, L'Agefi adds.

* Natixis will present a new efficiency plan linked todigitization this fall, Les Echos writes.


Chineseinvestors eyeing Novo Banco: Chinese investors are interested in buyingNovo Banco SA, whichthe Portuguese central bank is attempting to sell for a second time, Jornalde Negócios and DiárioEconómico report. The Shanghai Business Association reportedly plans toinvest €10 billion in Portugal, including the banking sector. "Novo Bancowill be bought by a Chinese investor," the association's president, ZhengYonggang, was quoted as saying ahead of a scheduled meeting with Prime MinisterAntónio Costa.

* Portuguese banks have proposed to the government a seriesof legal and fiscal reforms to help banks recover bad loans more quickly, oneof the biggest challenges still facing lenders since the nation's debt crisis, Jornal de Negócios writes.Several leading banks have expressed a lack of interest in the creation of abad bank, as suggested by Costa, the report notes.

* Banco BilbaoVizcaya Argentaria SA's Banco Bilbao Vizcaya Argentaria (Portugal) SA, which nowhas only 12 branches left after a restructuring program, reported a full-year2015 profit of €2.8 million, its first profit since 2009, Jornal de Negócios notes.

* LiberbankSA is planning a workforce cut that could affect some 600 workers,15% of its 4,000 employees, Europa Press writes.Together with the measures adopted in 2015, a total of 1,100 employees willdepart.

* MutuaMadrileña Automovilista closed the purchase of a 40% stake inChilean insurance group Bci Seguros for €208 million, ABC notes.The agreement includes the possibility for the Spanish insurer to increase itsshareholding in the company to up to 60% in the coming four years.

* MAPFRESA placed €1 billion in 10-year bonds at a price equal to 115 basispoints over midswaps, Expansión reports.


UniCreditassures on capital as Q1 profit drops YOY: first-quarter net profitattributable to the group of €406 million, down on a yearly basis from €512million. In presenting results, UniCredit denied that it requires a capitalincrease and said its 2018 capital objectives are within reach, LaRepubblica, BloombergNews and Reutersreport. CEO Federico Ghizzoni confirmed a target to sell €2 billion ofnonperforming loans per year, tellingIl Sole 24 Ore that the figure couldgrow. He also tells Class-CNBC in an interview publishedby MF that he does not perceiveparticular tension with the board and shareholders and that he is focused onhis job.

* BancoPopolare Società Cooperativa posted a first-quarter loss of €313.6 million, comparedto the €208.8 million adjusted profit a year earlier, as net adjustments onloans to customers leapt to €684.4 million from €181.4 million. Corriere della Sera writes that Banco Popolare has startedraising the average level of deteriorated credit coverage and has begunprocedures to identify portfolios that could be sold in the near future.

* Meanwhile Banco Popolare's planned merger partner,Banca Popolare di MilanoScarl, reportedfirst-quarter group net profit of €48.3 million, down from €67.6 million in theyear-ago period. The bank also completed due diligence for the Banco Popolaremerger, Il Sole 24 Ore notes.

* Banca CarigeSpA reporteda first-quarter loss attributable to the parent company of €41.0 million,narrowing slightly from a year-ago loss of €45.5 million. Net impairment losseson loans rose to €92.4 million from €78.5 million. Il Sole 24 Ore notes thatthe bank obtained a one-month extension to present its updated business plan,to June 30, while by the end of May it will have to present to the ECB theguidelines of its medium-term targets and an update on the funding planpresented at the end of March.

* MediobancaSpA reporteda net profit of €121.3 million for its fiscal third quarter ended March 31,down from €205.0 million in the year-ago period. Net profit for the nine monthsto March 31 was €442.4 million, compared to €465.6 million in the year-agoperiod.

* The board of Banca Popolare di Vicenza SpA mandated a legal adviserto examine the liabilities of the former management and to gauge thefeasibility of suing them, MF writes.

* Members of the Per Veneto Banca association, whichrepresents the major shareholders of Veneto Banca SCpA, could be willing to back the bank's€1 billion capital increase if its industrial plan were reviewed to give a signof discontinuity with former management, MFreports.

* Sabina Dziurman, director for Greece and Cyprus at theEuropean Bank for Reconstructionand Development, tellsReuters that the institution is preparing for its first transactions involvingGreek nonperforming loans.

* Alpha BankAE completed the sale of Macedonian unit Alpha Bank AD Skopje to Silk Road Capital, owned by aprivate Swiss investor, following the receipt of regulatory approvals, Kerdos notes.


Nordea nabsLloyds compliance chief: Nordea Bank AB (publ) named Matthew Elderfield to head up its compliancedepartment. Elderfield, who will join Nordea by November from a similar role atLloyds Banking GroupPlc, was previously deputy governor and head of financialregulation at the Central Bank of Ireland, HelsinginSanomat notes.

* Meanwhile, CEO Casper von Koskull said Nordea still needsto tackle its cost base, which will require further workforce reductions, accordingto Dagens Industri. Nordea isalso maintaining a tight lid on its long-term plans for its banking operationsin the Baltic states, Svenska Dagbladetwrites.Von Koskull maintains that the Baltic division will remain part of the bank'score business, despite speculation that Nordea would be willing to divest theunit at the right price.

* SampoOyj reportedfirst-quarter group profit of €362 million, down from €435 million in theyear-ago period.

* TopdanmarkA/S reported a decline in first-quarter net profit to 164 millionDanish kroner from 286 million kroner in the year-ago period. The companyrevised its overall post-tax profit forecast for 2016 to between 900 millionkroner and 1 billion kroner from between 800 million kroner and 900 millionkroner, excluding run-off profits/losses in the remaining three quarters of theyear.

* The Danish Economic Crime Bureau has appealed a rulingclearing two former AmagerbankenA/S executives of insider trading and fraud, Børsen writes.


Hungarianlenders plan NPL sales: Large Hungarian banks are planning the sale ofnonperforming mortgages following the end of a foreclosure moratorium and asurge in real estate prices, Reuters writes.Lenders interested in selling NPLs include the Hungarian units of andUniCredit, with the value of portfolios to be potentially sold estimated at€250 million to €300 million.

* CEO Luigi Lovaglio said Bank Pekao SA will continue with the sale of NPLportfolios in the second quarter, but on a lower scale than in the firstquarter, PAP writes.In the first quarter, the UniCredit unit booked a 149.9 million zlotys pretaxprofit from the sale of NPLs worth 1.9 billion zlotys.

* Investment funds controlled by Baring Vostok did notmanage to find an investor for PJSC Orient Express Bank and will have to increase thelender's capital on their own, Vedomostiwrites,adding that the planned capital boost will amount to 3 billion Russian rubles.

* Mehmet Ali Akben, the head of Turkey's Banking Regulationand Supervision Agency, told reporters that the Savings Deposit Insurance Fundis in talks with "one or maybe more parties" over the potential saleof Asya Katilim BankasiAS, accordingto Hurriyet. If the lender is notsold by the end of May, however, its license will be canceled and the bankliquidated.

* S&P Global Ratings revised to stable from negative theoutlooks on Türkiye GarantiBankasi AS, Yapi veKredi Bankasi AS and Export Credit Bank of Turkey, following asimilar action on Turkey's outlook.

* Türkiye IsBankasi AS signeda 367-day syndicated loan agreement totaling €836 million and $462 million.


* The IMF said that the Monetary Authority ofSingapore should be prepared to make more adjustments in case deflation takesroot, Bloomberg News reports. Singapore'scentral bank softened policy last month, announcing it will not seek currencyappreciation.

* CitigroupInc. appointed Dan Keegan and Murray Roos co-heads of globalequities, effective immediately, Reuters reports. They succeed head of equities Derek Bandeen.

* Meanwhile, Citigroup is in negotiations with for thepossible sale of Automated Trading Desk, the bank's market-making subsidiary,sources tellBloomberg News.


DataDispatch Europe: Nearly a decade after the crisis, UK banks struggleon: Benign economic conditions have thus far failed to help theU.K.'s banks break out of their long post-crisis malaise.

Asian growthdoubts persist as Credit Suisse loss less than expected: CreditSuisse lost less money than expected in the first quarter, as its downsizinginvestment bank negotiated choppy markets. Now it needs to grow in Asia andwealth management.

Newgovernment, new competition to challenge Irish banks on mortgages:Ireland's new minority government is being supported by a party that hascampaigned to crack down on banks over variable rates and other mortgageissues. Fresh competition from nonbank lenders poses another challenge for thecountry's lenders.

Innovate tostay relevant, Lloyd's of London's Beale warns UK insurance market:Ahead of a potentially disruptive "Brexit" referendum, Lloyd's ofLondon CEO Inga Beale has warned that the London market risks losing itsprivileged position as new insurance centers grab market share.

Hannover ReCFO warns on Ecuador quake loss: Hannover Re CFO Roland Vogelexpects the company to suffer a larger loss than peers as a result of theearthquake that struck the coast of Ecuador on April 16.

Rich Lovie, Ed Meza,Stephanie Salti, Praxilla Trabattoni, Chantal Groothengel, Beata Fojcik, HelenPopper, Mike Hatzidakis, Gerard O'Dwyer, Yael Schrage and Ali Kayalarcontributed to this report.

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