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London set for financial exodus; Credit Suisse, RBS face lawsuit charges

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

UK to opt out of single market

* Banks warned that thousands of jobs are likely to move out of London, after U.K. Prime Minister Theresa May said Britain will leave the EU single market. UBS Group AG is set to move some investment bankers to Madrid and HSBC Holdings Plc is looking to transfer jobs to Paris. Goldman Sachs Group Inc. is reportedly thinking of cutting its London workforce in half to 3,000.

* Barclays Plc Chairman John McFarlane said he believes the British government supports a three-year transition period for financial institutions after Brexit, Reuters reported. However, Brexit Secretary David Davis said there will only be a maximum of a two-year transitional deal, while May said the time period of any such deal may vary for different industries.

Deutsche Bank in the headlines again

* Deutsche Bank AG confirmed that it would clamp down bonus payouts this year, and also said job cuts would continue. A source told Bloomberg News that certain investment banking managers were asked to identify the bottom 20% of performers, while a third person added that front-office cuts in the global markets business will be made in the weeks of Jan. 16 and Jan. 23.

* The bank finalized its $7.2 billion deal with the U.S. to settle claims that the German bank missold MBS. Meanwhile CEO John Cryan said the bank is planning to sell a number of small businesses over the next 12 months or so, in a bid to make the lender simpler and more focused. In an interview with CNBC at the World Economic Forum in Davos, Cryan said Deutsche Bank would prefer not to raise new capital, but did not rule it out.

* A Jewish trust sued Deutsche Bank in the U.S., alleging that it wrongly withheld as much as $3 billion from the heirs to the wealthy Wertheim family, Bloomberg reported. The suit claims the bank refuses to return funds that were initially deposited by the family at what is now Credit Suisse, before the Nazis came to power. The money was later transferred to Deutsche Bank.

LSE-Deutsche Börse tie-up

* EU regulators warned that the merger between London Stock Exchange Group Plc and Deutsche Börse AG might phase out competition in the clearing services industry as it involves two direct rivals joining forces.

* LSE dismissed an academic report commissioned by Deutsche Börse that highlighted the benefits of moving the LSE's clearing business to Frankfurt. LSE said it does not intend to relocate certain businesses following the completion of the merger.

In other news

* Credit Suisse Group AG agreed a $5.28 billion settlement with U.S. authorities over the sale of MBS, and expects to book a $2 billion pretax charge, in addition to existing provisions, in the fourth quarter of 2016.

* JSC VTB Bank CEO Andrey Kostin said U.S. President Donald Trump should lift sanctions on the country's lenders, Reuters reported. Separately, TASS reported that Kostin is confident the U.S. will soften Russian sanctions by the end of 2017, after which the EU will also change its approach because of reduced pressure from its Western partner.

* Royal Bank of Scotland Group Plc might book a multibillion-dollar charge in the fourth quarter related to a case brought by the U.S. Department of Justice over the misselling of mortgage-backed securities, Bloomberg News reported.

Featured during the week on S&P Global Market Intelligence

Data Dispatch Europe: Nonperforming exposures still weigh on Greek banks: Nonperforming exposures continue to eat up space on balance sheets of the "big four" Greek banks. But meaningful sales of loan portfolios are unlikely to happen until 2018 or 2019, analysts say.

Hedge funds, failing to shine, are forced to lower fees: Hedge funds, facing their largest outflows since the financial crisis, have largely abandoned their traditional "2 and 20" fee structure.