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Santander raises key profit target; Lloyds to acquire Zurich's UK pensions biz


Banks’ Response to Rising Rates & Liquidity Concerns


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Banking Essentials Newsletter: 23rd August edition


Banking Essentials Newsletter: 9th August Edition

Santander raises key profit target; Lloyds to acquire Zurich's UK pensions biz

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

Earnings and guidance

* Hargreaves Lansdown Plc reported assets under administration of £82.0 billion for the first fiscal quarter ended Sept. 30, up 4% from £79.2 billion in the fiscal quarter ended June 30. The company reported net new business of £1.54 billion for the same period. Total net revenue amounted to £104.1 million, compared to the £90.5 million reported a year ago.

* Man Group Plc reported funds under management of $103.5 billion as of Sept. 30, up from $95.9 billion at the end of June and $80.7 billion a year ago. The group said it will absorb research costs for the majority of its business following the implementation in Europe of the revised MiFID II directive, while adding that it intends to repurchase up to $100 million of shares, and that it will continue to review further potential acquisition opportunities.

* Banco Santander SA increased its targeted return on tangible equity ratio to more than 11.5% for 2018 from a previous target of 11%. The bank also reiterated its 2018 target for double-digit earnings per share growth and said it was on track to have a fully loaded common equity Tier 1 ratio of 11% for 2018.


* Some European Central Bank officials are considering extending the quantitative-easing program but cutting bond purchases by at least to €30 billion per month for nine months, starting January 2018, Bloomberg News reported, citing "officials familiar with the debate."

* European Union lawmakers broadly supported a proposed law on stricter supervision of foreign clearing houses operating in the bloc, which could damage London, Reuters reported.

* The European Commission approved under EU state aid rules Portuguese aid for the sale of Novo Banco SA, saying the measures will allow its new owner, U.S. private equity firm Lone Star Funds, to carry out its restructuring plan, which the commission said will ensure the bank's long-term viability while limiting distortions to competition.

Catalan crisis

* Spanish Prime Minister Mariano Rajoy told parliament that the Catalan government had until Oct. 16 to confirm whether it will declare independence from Spain, Reuters reported. Earlier, Catalan President Carles Puigdemont said the region had voted to secede from Spain but will delay putting independence into effect while it seeks dialogue with the Spanish government. The turmoil in Catalonia may eventually impact bank funding, rating agency DBRS warned. Spanish bank shares have taken a hit and there are concerns the tensions may complicate Liberbank SA plans for a rights issue and the government's plans to sell a stake in Bankia SA.

Brexit briefing

* EU's chief Brexit negotiator, Michel Barnier, said talks are deadlocked over what the U.K. will pay to the EU when it leaves the bloc, Bloomberg News reported. Barnier said the onus is on the U.K. to resume the negotiations.

* Prime Minister Theresa May said the U.K. is preparing "for every eventuality" while hoping for the success of the Brexit negotiations as she unveiled new papers on future trade and customs arrangements that could still function after Brexit even if the U.K. fails to reach a deal with the EU.

* Germany said it wants the EU to let member governments offer U.K. banks access to the union's single market on a reciprocal basis during a transition period, Bloomberg News reported, citing a government strategy proposal from the country's finance ministry.

Executive appointments

* HSBC Holdings Plc appointed John Flint group CEO to succeed Stuart Gulliver, effective Feb. 21, 2018. Flint serves as CEO of retail banking and wealth management.

* Lloyds Banking Group Plc made several management changes in its commercial banking division, Reuters reported. Ed Thurman will be managing director of global transaction banking, replacing Adrian Walker when he becomes investment management director in the group transformation unit, the newswire wrote. Robina Bennett, who is commercial banking audit director, will replace Thurman as managing director for the division's financial institutions business. All appointments take effect Nov. 1.

* Allianz Group named Carsten Quitter chief investment officer and managing director and co-lead of Allianz Investment Management SE alongside Claus Stickler, effective Jan. 1, 2018. Quitter, who succeeds Andreas Gruber, was the group's chief investment officer for Italy until recently.

* ABN AMRO Group NV named Arjan van Rijn and Dominik Felsmann global head of leveraged finance and head of leveraged finance in Germany, respectively. While van Rijn was head of corporate banking in Asia, Felsmann joins from IKB Deutsche Industriebank AG, where he was an executive director.

* Schroders Plc named Frank Thormann portfolio manager in its global equities team. He was formerly global portfolio manager at Frankfurt-based Union Investment. He will report to global equities head Alex Tedder.

* Vasily Titov is set to resign as first deputy president and first deputy chairman of the management board at JSC VTB Bank effective Oct. 17, news agency RBK reported. However, Titov will continue to serve as an adviser to CEO Andrey Kostin, the report noted, citing the bank's press office.

On the deal table

* Aldermore Group Plc received an indicative proposal from FirstRand Ltd. to acquire its entire issued and to be issued ordinary share capital for 313 pence per share in cash. The British group said its board "is likely to recommend a firm offer at this level."

* Lloyds Banking Group Plc agreed to acquire Zurich Insurance Group AG's U.K. workplace pensions and savings business with AUM of £19 billion. Financial terms of the transaction were not disclosed. The deal is expected to partially close in the first quarter of 2018.

* Cembra Money Bank AG signed an agreement to acquire Winterthur, Switzerland-based EFL Autoleasing for an undisclosed amount.
The transaction, which Cembra Money Bank expects to be EPS accretive as of 2018, is expected to close in the fourth quarter, with a merger of the auto leasing firm into Cembra expected to take place in the first half of 2018.

* PayPoint Plc acquired the entire share capital of Romania-based Payzone SA for an initial consideration of €1.6 million in cash. The transaction also includes €500,000 in deferred consideration, depending on the collection of specific debts over a two-year period following completion of the deal. PayPoint will combine Payzone with its existing Romanian retail network.

* Crédit Agricole SA CEO Philippe Brassac said the French lender would be interested in Germany's Commerzbank AG should it be put up for sale, Reuters reported, citing an interview with German newspaper Handelsblatt.

In other news

* Deutsche Bank AG CEO John Cryan is said to be losing the support of some of the lender's investors amid increasing frustration about the slow progress of his turnaround plans, Bloomberg News reported, citing three of the bank's 10 largest stakeholders.

* Otkritie Financial Corp. Bank revealed a 350 billion Russian ruble hole in its balance sheet, the Financial Times reported the same day. As of Oct. 1, the Russian lender's balance sheet showed negative capital of 189 billion rubles, up from 158 billion rubles in September.

* The European Commission unveiled a package of new measures aimed at addressing European banks' existing stock of nonperforming loans, or NPLs, and preventing future build-up of bad loans to be adopted in the spring of 2018, including legislative measures to further develop secondary markets for NPLs and enable them to recover value from secured loans.

* Italy's banks saw a fall in NPLs to €172.85 billion in August from €173.58 billion in July, Reuters reported, citing the Bank of Italy. An improving Italian economy and the passage of a new securitization law in June have made it easier for banks to sell NPLs.

* HSBC Holdings Plc, Deutsche Bank AG and Citigroup Inc. have agreed to settle for a combined $132 million a U.S. class-action lawsuit brought by futures traders accusing the banks of rigging the London Interbank Offered Rate, Reuters reported, citing a U.S. court filing.

Featured during the week on S&P Global Market Intelligence

Schäuble optimistic Merkel can assemble governing coalition before Christmas: The departing German finance minister says the country will stay on course following its elections and is hopeful the U.K. will pursue a soft Brexit.

European bank lobbyists pour scorn on rumored Basel deal: As reports emerge of a compromise over the controversial issue of an output floor as part of the Basel III set of banking rules, industry advocates warn that European banks will face higher capital requirements.

Deutsche Börse 'fighting uphill battle' with new clearing platform: Despite its new business model and the benefits it might reap from Brexit, there is no easy way for Deutsche Börse to gain euro-clearing market share from London Stock Exchange, analysts said.