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EU, UK reach Brexit transition deal; Deutsche shares hit on revenue warning

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EU, UK reach Brexit transition deal; Deutsche shares hit on revenue warning

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

Macro news

* The European Union and the U.K. agreed on a draft 21-month transition deal to phase in Brexit, cutting the chances of a cliff-edge British departure from the bloc.

* The European Central Bank will start buying bonds from seven more government-owned German banks as part of its stimulus program in order to avoid running out of debt to buy after three years of hefty purchases.

* Changes to global rules detailed by the Basel Committee on Banking Supervision are set to cut capital requirements for banks' exposures to foreign exchange, equity and interest rate-based securities, with the largest global banks likely to benefit most.

Deutsche Bank, Barclays

* Deutsche Bank AG's share price plunged to its lowest level since November 2016 on March 21, after CFO James von Moltke warned investors that revenues in the German banking group's key corporate and investment banking unit will incur a €450 million negative effect in the first quarter from the strong euro and higher refinancing costs.

* Deutsche's asset management unit, DWS Group GmbH & Co. KGaA, said the placement price for shares offered in its IPO was set at €32.50 per share, valuing the business at €6.5 billion.

* Barclays PLC CEO Jes Staley is unlikely to bend to pressure from an activist investor to scrap or radically scale back its investment banking business, analysts say. Funds managed by activist investor Edward Bramson's Sherborne Investors Management LP acquired a 5.16% stake in Barclays' issued share capital March 16.

Earnings

* Alpha Bank AE reported a fourth-quarter 2017 loss after tax attributable to shareholders of €64.0 million, compared to a profit of €35.5 million in the previous quarter. The Greece-based bank is closer to its cleanup targets for 2018 following the sale of a bad loan portfolio with a face value of €3.7 billion.

* Bayerische Landesbank, or BayernLB, reported a 24.4% year-over-year increase in its 2017 full-year consolidated profit, to €677 million from €545 million. The Germany-based bank expects "stable" profitability at lower levels over the next few years as it faces tough domestic competition in all its main business segments and sees the cost of risk likely to offset revenue growth.

* Sparkassen- und Giroverband Hessen-Thüringen unit Landesbank Hessen-Thüringen Girozentrale, known as Helaba, reported consolidated net profit under International Financial Reporting Standards of €256 million for full year 2017, down 24.7% from €340 million a year earlier.

Cryptocurrencies, fintech

* U.K. Chancellor Philip Hammond unveiled a task force to study the potential risks and benefits of cryptocurrencies. Meanwhile the Bank of England has set up a fintech hub to explore the potential benefits of the technologies that underpin crypto-assets, as part of its efforts to support the U.K. fintech sector.

* Royal Bank of Scotland Group Plc is working to create a stand-alone digital challenger bank as as it looks to compete more effectively in the financial technology sector.

* France is planning to develop a legal framework for companies seeking to raise funds using digital currencies.

Legal, regulatory developments

* New York-based UBS Securities LLC and UBS Real Estate Securities Inc., units of UBS Group AG, have reached a $230 million settlement with the New York Attorney General over claims of misconduct leading up to the financial crisis. The case relates to the sale of mortgage-backed securities.

* Société Générale SA has entered into a phase of "more active" discussions with U.S. regulators regarding their probes into interbank offered rate submissions and transactions involving Libyan counterparties, with a view to resolving the probes within weeks.

Other news

* Standard Chartered PLC CEO Bill Winters said the U.K. bank does not have "a compliance-related problem," days after the lender put its compliance chief on leave.

* HSBC Holdings PLC plans to issue perpetual subordinated contingent convertible securities worth $4.00 billion divided into two tranches.

* Swedish bank Nordea Bank AB (publ) will not let its sustainable funds unit buy additional stock in Facebook Inc.

Featured during the week on S&P Global Market Intelligence

Wealth managers anxious about rich millennials as demands, regulations shift: The wealth management industry is changing the way it operates to adapt to demands from younger clients and tougher regulations.

DBRS: German shipping banks can continue deleveraging in 2018: The global economic recovery coupled with fewer new vessel orders gives German shipping banks the opportunity to continue the cleanup of their shipping books and even accelerate deleveraging efforts in 2018.

Barclays CEO unlikely to bend to pressure to scrap investment banking: Barclays CEO Jes Staley is unlikely to bend to pressure from activist shareholder Sherborne Investors to scrap its investment banking business.

Fintech could fix lagging productivity in financial services, BoE says: Financial technology could spark competition and an uptick in productivity in the U.K. financial services sector.

UK digital lender OakNorth reports 1st profit, aims to grow loans by £1B in '18: British digital bank OakNorth Bank Ltd. is eyeing a further £1 billion of lending in 2018 after having turned its first profit.