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Lloyds faces £1.8B PPI charge; US probe finds faults in Deutsche's AML controls

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Lloyds faces £1.8B PPI charge; US probe finds faults in Deutsche's AML controls

The Daily Dose LIVE returns to the City of London on Tuesday, Oct. 1. Join us for a timely panel discussion on the vulnerabilities facing the banking sector and other parts of corporate Europe in a period of deep political, policy and economic uncertainty. Register today to secure your place at this popular breakfast event.

* The U.K. House of Lords approved on final reading legislation aimed at preventing a no-deal Brexit on Oct. 31, clearing the way for the bill to become law. The bill is expected to receive royal assent this week, before all parliamentary activity is temporarily suspended. London's High Court, meanwhile, ruled that U.K. Prime Minister Boris Johnson's plan to suspend Parliament for five weeks is lawful, after a Scottish court rejected a similar legal challenge to the plan earlier last week, the Financial Times and The Guardian reported. Johnson is pressing ahead with plans to ensure Brexit with or without a deal Oct. 31 amid threats of a string of Tory resignations, Bloomberg News reported. Work and Pensions Secretary Amber Rudd was the latest to resign, Reuters wrote. Therese Coffey will replace Rudd.

* French Foreign Minister Jean-Yves Le Drian said that with current conditions remaining as they are, the EU would not grant the U.K. another extension to work out a deal for its exit from the bloc, according to Reuters.

* Insured losses from Hurricane Dorian, which hit the Bahamas last week, are likely to reach several billions of U.S. dollars, according to Munich Re, Reuters wrote.

* Extratropical cyclone Dragi-Eberhard, which hit the British Isles and Western and Central Europe in March, could cost insurers approximately €772 million, according to the third loss estimate by catastrophe insurance data provider Perils. The figure is down from the previous estimate of €798 million.

UK AND IRELAND

* Lloyds Banking Group PLC said it will book an additional provision in the range of £1.2 billion to £1.8 billion in the third quarter to cover incremental charges related to mis-sold payment protection insurance claims. The group said the volume of payment protection insurance information requests that it received in August was higher than expected. Royal Bank of Scotland Group PLC, which also expects an additional PPI charge of up to £900 million, saw a record 200,000 payment protection insurance claims on the Aug. 29 deadline, The Sunday Times wrote.

* Woodford Investment Management Ltd.'s Woodford Patient Capital Trust PLC fund secured "greater flexibility" from U.S. lender Northern Trust Corp. around drawing money from its credit facility, Reuters reported. It comes as the fund is selling some unquoted assets.

* British private equity firm Fortress Investment Group LLC, through its managed funds, will acquire U.K.-based legal finance specialist Vannin Capital Holdings Ltd.

* The U.K. Financial Conduct Authority said former VTB Capital PLC banker Konstantin Vishnyak deleted the WhatsApp application on his phone before handing it over to the authority as part of an insider-trading investigation, the FT wrote. Vishnyak could face a maximum two-year prison sentence for the offence and up to seven years for insider trading.

* Financial.org, a U.K.-based unregulated company, has ended its operations, Reuters wrote. Four investors confirmed that their accounts had been frozen.

GERMANY, SWITZERLAND AND AUSTRIA

* An investigation by the U.S. House of Representatives Financial Services Committee into Deutsche Bank AG's business relations with Russian oligarchs has identified potential shortfalls in the lender's controls against money laundering, Reuters reported. The probe uncovered instances in which Deutsche Bank managers in the U.S. and elsewhere purportedly ignored concerns raised by staff about transactions involving new and existing Russian clients.

* German financial watchdog Bafin has expressed concern about the recent appointment of Jürg Zeltner, CEO of Luxembourg's KBL European Private Bankers SA, to Deutsche Bank's supervisory board due to a possible conflict of interest, Süddeutsche Zeitung reported. KBL, like Deutsche Bank, is involved in wealth management, which may overlap too closely with the German lender's activities. In addition, Bafin was not given the opportunity to review Zeltner's nomination before his appointment. KBL's shareholders include Qatar's Al-Thani ruling family, which is also a key Deutsche Bank shareholder.

* Malta-based DARAG Group Ltd. has agreed to acquire Zurich Insurance PLC's German architects and engineers professional indemnity insurance portfolio. Zurich Insurance will economically transfer the portfolio to DARAG, after which the two companies will apply for an Irish Section 13 Insurance Business Transfer for complete legal and operational finality.

* Banco do Brasil SA in talks with Swiss lender UBS Group AG for an investment banking joint venture, according to Reuters. The Brazilian state-owned bank and UBS could finalize a deal as soon as October, which would see Banco do Brasil's investment banking unit merged with UBS Brazil division.

* German online payment service Paydirekt is losing support among lenders, Handelsblatt wrote. Four of the 375 Sparkasse savings banks that offered Paydirekt will stop carrying the service, which was jointly launched in 2015 by the country's public, cooperative and commercial banks.

* The city canton of Basel's parliamentary control committee is looking into a decision by Basler Kantonalbank to integrate Bank Cler AG into its own group structure to determine whether or not the move was legal, finews.com wrote, citing a BZ report.

FRANCE AND BENELUX

* The French prudential authority is said to grant some French banks and fintech companies a four-month delay to implement the EU's revised Payment Services Directive, according to Les Echos.

* Crédit Mutuel Massif Central will leave Arkéa to join on Jan. 1, 2020, Crédit Mutuel Alliance Fédérale, the unit that gathers all the federations in East-Central Europe, L'Agefi wrote. This separation is said to be the consequence of the ambitions of independence of Arkéa that are slow to materialize.

SPAIN AND PORTUGAL

* Former UBS Group AG investment bank chief Andrea Orcel reportedly sought more power to make executive decisions at Banco Santander SA days before the Spanish lender withdrew its offer to hire him as CEO, the FT wrote, citing messages it has seen exchanged between Orcel and Santander Chairman Ana Botín. Orcel, who has sued the Spanish lender over announcing his appointment to the post in September 2018 and withdrawing it less than four months later, was purportedly demanding that either he be made CEO or given compensation of €112 million.

* Santander increased its ownership in unit Banco Santander México SA to 91.65% from 74.96%, with the remaining 8.35% to be held by minority shareholders or as treasury stock.

* Spain's Fund for Orderly Bank Restructuring raised its stakeholding in nationalized lender Bankia SA to 61.78%, with an additional 5.63 million shares compared to last year, Expansión reported.

* Minor shareholders of Banco BPI SA will try to block the sale of the 2% stake the institution holds in Banco de Fomento Angola to Unitel, Jornal de Negócios reported. The decision comes after a jury ruled in favor of the bank, despite the discontent of part of the investors.

ITALY AND GREECE

* The Malacalza family that owns 27.5% in Banca Carige SpA is unhappy with the bank's rescue plan and has asked lawyers to look at legal options for the family, said Il Sole 24 Ore. To gain the support of the Malacalza family for the Carige rescue plan, other shareholders could offer the family the possibility to appoint a board member, said Corriere della Sera.

* Italian prime minister Giuseppe Conte met with Economy Ministry Roberto Gualtieri and Paolo Savona, the head of market regulator Consob, as the new government prepares to get down to work on preparing the 2020 budget, wrote La Repubblica. The newspaper noted that Conte also met last month with Bank of Italy Governor Ignazio Visco, a sign of thawing relations after the previous government led by Conte had frequently attacked the central bank.

* The number of Italian bank branches fell by 11,500, or 37%, in the 2009-2018 period while the number of employees declined by over 112,000, or 26%, according to figures from KPMG cited by Il Sole 24 Ore.

NORDIC COUNTRIES

* Swedbank AB (publ) and payment solutions provider Payex are merging their payment solutions, Realtid reported. Payex is a fully owned subsidiary of Swedbank. The merged unit will be named Payex, and is to be led by Payex CEO Linus Singleman. It will have 750 employees in 7 countries in the Nordics and Baltics.

* The merger between Sparekassen Vendsyssel and Dronninglund Sparekasse has been unanimously approved by the representatives of both banks, Finanswatch reported.

EASTERN EUROPE

* Russia's central bank cut its key interest rate for the third time in the year, lowering it by 25 basis points to 7.0% amid lagging inflation and GDP growth amid heightened risk of a global economic slowdown.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: Japan's negative rates may continue; HKEx, Ping An to explore fintech

Middle East & Africa: Fawry eyes new markets; Shuaa to sell units; Access Bank H1 income up YOY

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Sheryl Obejera, Ed Meza, Danielle Rossingh, Esben Svendsen, Heather O'Brian, Brian McCulloch, Praxilla Trabattoni and Mariana Aldano contributed to this report.

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