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UK to test banks for climate risks; potential Co-op sale; Nordea in €575M deal

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UK to test banks for climate risks; potential Co-op sale; Nordea in €575M deal

* The European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority yesterday published reports on potential undue short-term pressures from financial markets on corporates. The EBA identified some limited concrete evidence of short-termism in the banking sector, while the EIOPA said it found no clear evidence of undue short-termism in insurance and institutions for occupational retirement provision. Both regulators called on companies within their remit to consider long-term horizons in their strategies. The ESMA, meanwhile, recommended action on key areas including the disclosure of environmental, social and governance factors, among other things.

UK AND IRELAND

* The Bank of England said it will stress-test the balance sheets of the U.K.'s biggest banks and insurers to see how they would cope with the effects of different climate change scenarios.

* British banks' overall loss-absorbing capacity is set to remain unchanged despite the BoE raising the countercyclical buffer, now that the biggest lenders have passed the annual stress tests.

* Moody's revised the outlook on HSBC Holdings PLC and some of its units to negative from stable, reflecting the agency's expectation of additional risks and costs arising from the group's planned repositioning of its operations in Europe, particularly in France, and its businesses in the U.S.

* The U.S. hedge fund investors of Co-operative Bank PLC have mandated Goldman Sachs Group to launch discussions with potential buyers for the U.K.-based lender, sources told Sky News. Barclays PLC, Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC are understood to be among the banks approached for a possible deal, although a formal sale process is yet to begin.

* Chris Marks and Richard Place resigned as CEO and CFO, respectively, of RBS unit NatWest Markets PLC. Robert Begbie and Robert Horrocks will replace Marks and Place, respectively, as CEO and CFO on an interim basis, subject to regulatory approval.

* British insurer MS Amlin Ltd. will stop underwriting corporate property, casualty and package binders via its U.K. property and casualty business, effective Jan. 31, 2020.

GERMANY, SWITZERLAND AND AUSTRIA

* Deutsche Bank AG plans to cut up to 6,000 jobs in the retail banking division, in the headquarters and in the infrastructure and IT units, Handelsblatt reported, referring to Deutsche Bank's new retail banking head Manfred Knof, who increased his initial savings target to €1 billion from initially €600 million. Knof also plans to cut up to 300 branches until 2022, Manager Magazin wrote.

* Germany's financial supervisory authority BaFin in the course of a comprehensive audit of the IT systems of the cooperative financial group of Volksbanken found "considerable deficiencies" that could result in a risk profile downgrading for the banks, Handelsblatt reported.

* Ulf Johannemann, former partner and co-head of global tax at law firm Freshfields Bruckhaus Deringer LLP who was a key figure in the German cum-ex dividend scandal and has been imprisoned on remand in November because of danger of absconding, has been released on €4 million bail and his passport has been seized, Handelsblatt wrote.

* Sparkasse KölnBonn is closing 17 of its 82 branches and will instead extend its mobile banking offerings using adapted buses, as well as its telephone and online banking services, Kölner Rundschau wrote.

FRANCE AND BENELUX

* La Banque Postale SA, the banking subsidiary of La Poste, is evaluating a potential offer for HSBC's French retail business as part of its diversification plans, insiders told Reuters. La Banque Postale is understood to be conducting preliminary work on the business with Barclays ahead of an auction process, which is expected to launch in 2020.

* Degroof Petercam said it is no longer working with COO Pascal Nyckees following "differences of opinion." Xavier De Pauw, head of strategic innovation, is also leaving the private bank, L'Echo reported.

* Wilfried Neven was replaced as CEO of Allianz Belgium by Kathleen Van den Eynde, De Tijd reported, citing a workers' council meeting.

SPAIN AND PORTUGAL

* Spain's Supreme Court ruled that borrowers can still make claims against abusive interest rate caps on mortgages even if they have sold their property, Expansión reported.

* Banco Bilbao Vizcaya Argentaria SA reached a deal to sell a mega-portfolio of failed loans worth €2.5 billion to credit and asset management company Intrum, one of the largest unsecured credit portfolios ever sold in Spain and the largest BBVA has done to date, reported Europa Press.

* Bankinter SA will propose at its next shareholders meeting to take insurance subsidiary Línea Directa to the stock exchange and distribute its shares as a dividend, wrote El País.

* Arrow Global launched a pan-European fund targeting nonperforming assets, Jornal de Negócios reported.

ITALY AND GREECE

* Italian tax police seized documents on the ousting of former Società Cattolica di Assicurazione SC CEO Alberto Minali in October, a source close to the case told Reuters. Cattolica said it would cooperate with authorities and the process leading to Minali's departure followed the rules and was transparent.

* The Italian government has begun talks with the European Commission on the bailout of Banca Popolare di Bari SCpA, said MF. The interbank deposit fund FITD agreed to back extraordinary administrators' request for emergency funds, estimated at about €250 million, to immediately boost the bank's capital ratios, said Il Messsaggero, noting that the bank's total capital needs could reach about €1.3 billion.

* Piergiorgio Peluso, a former Telecom Italia CFO, and former UniCredit Chief Risk Officer Alessandro Decio are the top candidates to become CEO of Banca Carige SpA, two sources told Reuters.

* Italian bad loan servicer doValue is expected to about to sign a deal to acquire Eurobank Financial Planning Services that will value the loan recovery unit of Greek lender Eurobank about €300 million, said MF.

* The ECB's Single Supervisory Mechanism is expected to lift the ceiling on Greek lenders' holdings of local sovereign debt in February 2020, sources told Bloomberg News.

NORDIC COUNTRIES

* Nordea Bank Abp agreed to acquire all the shares in Norway-based SG Finans AS from Société Générale SA for €575 million, subject to customary regulatory approvals. The deal is expected to have positive impact of roughly €140 million on Nordea's total annual income and consume about 35 basis points to 40 basis points of the group's common equity Tier 1 ratio.

* Nordea, meanwhile, signed a synthetic risk sharing deal referencing €5.1 billion of the Nordic lender's loan portfolio, which consists of corporate and SME loans from over 2,000 borrowers across the Nordic markets.

* Finland's Financial Supervisory Authority fined local lender S-Pankki Oy €980,000 for shortcomings in its customer due diligence systems and failing to sufficiently meet anti-money laundering and terrorist financing regulations. The regulator noted that it did not suspect the bank of undertaking any money laundering activities.

* The Swedish central bank is expected to increase interest rates to zero percent for the first time since 2015 when the regulator publishes its monetary policy today, according to the Financial Times.

* Danish financial regulator Finanstilsynet has presented the final capital requirements for Denmark's systemically important banks, Berlingske Business reported. For Danske Bank A/S, the requirement is set at 11.6% of the bank's total liabilities and capital base, which is equivalent to 237 billion Danish kroner, or 37% of the bank's risk-weighted exposures.

EASTERN EUROPE

* Russia's Deposit Insurance Agency filed a lawsuit with a local court to retrieve over 141 billion rubles from 11 former top managers of Public Joint Stock Co. Tatfondbank, whose license was revoked in 2017, Vedomosti said.

* The Russian central bank conducts an insufficient number of on-site infections to combat anti-money laundering and terrorist financing transactions in local banks, RBC reported, citing the Financial Action Task Force's report evaluating the Russian anti-money laundering system.

* The Russian central bank said that JSC Bank DOM.RF completed its financial recovery program, having stabilized its financial position and improved the quality of assets.

* Poland's Bank Guarantee Fund set the minimum requirement for own funds and eligible liabilities, or MREL, for Bank Pekao SA, which the lender will have to meet by the end of 2022, Parkiet reported. Pekao will have to issue around 7 billion zlotys worth of MREL-eligible bonds within the next three years to reach the target.

* The Slovenian financial system remains stable, but systemic risks for the system are growing due to economic slowdown and uncertainty in the international environment, the country's central bank said in its latest financial stability report. The Slovenian regulator also noted that credit risk in the banking system remains low, mainly due to the successful reduction of nonperforming loans in the past.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: HK bourse enhances ESG focus; Westpac served with shareholder litigation

Middle East & Africa: S&P cuts Lebanese banks; Dubai Islamic Bank shareholders OKs Noor Bank takeover

Latin America: Argentina's Q3 GDP down 1.7%; BICE may shift to development banking

North America: Bank deals in Maine, Texas; firms settle GSE bond rigging case for $250M

Global Insurance: New York Life/Cigna deal progress; Voya divestment; new AIG president

NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE

Markets' continued use of Libor is financial stability risk, global monitor says: The Financial Stability Board has called for a sustained effort to move away from the sullied Libor benchmark interest rate and warned of increased scrutiny of firms as Libor's phase-out date approaches.

EU regulator: Stress test shows pension funds have much more to do on ESG risks: EIOPA Chairman Gabriel Bernardino said pension funds need to tackle the exposure to carbon-intensive industries in their investments, but that it should be done gradually.

European i-banks shine amid fixed-income surge in Q3 but 2020 outlook more muted: Helped by a surge in fixed income, Credit Suisse, BNP Paribas and Barclays booked the highest year-over-year rise in third-quarter trading revenues, outpacing global peers. The trend continued in late 2019 but is expected to moderate in 2020.

Sheryl Obejera, Arno Maierbrugger, Danielle Rossingh, Esben Svendsen, Beata Fojcik, Heather O'Brian, Stephanie Salti, Sophie Davies and Helen Popper contributed to this report.

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This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.