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HSBC, UniCredit post Q2; KBC to sell Irish bad loans; criminal probe of Danske

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HSBC, UniCredit post Q2; KBC to sell Irish bad loans; criminal probe of Danske

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

Macro news

* Interest rates in the U.K. are likely to stay low for at least another 20 years, outgoing Bank of England policymaker Ian McCafferty said in an interview.

* Italy's economy minister, Giovanni Tria, said slower growth in 2019 would increase the country's deficit and slow down the reduction of public debt. Tria said the government is committed to reducing Italy's debt partly by privatizing public companies and that the country plans to sell its holding in Banca Monte dei Paschi di Siena SpA.

* A draft law recently put forward by a group of U.S. Democratic and Republican senators to introduce additional sanctions against Russia includes provisions targeting the country's state-owned lenders.

Earnings

* UniCredit SpA reported second-quarter net profit attributable to the group of €1.02 billion, up from €945 million a year earlier. The Italian lender will continue to speed up its sell-off of bad debts for the remainder of 2018, aided by "supportive" economic conditions in Italy.

* HSBC Holdings PLC's second-quarter profit attributable to ordinary shareholders of the parent company stood at $4.09 billion, up from $3.87 billion in the prior-year period. The largest bank in Europe by assets saw revenues plummet in its so-called corporate center during the first half, weighing on the performance of the whole group and causing takings to fall behind costs.

* Raiffeisen Bank International AG reported second-quarter consolidated profit of €357 million, down from €367 million a year earlier. The Austria-based bank would be interested in new acquisitions after it completes the sale of its Polish business towards the end of the year, and will keep some capital ready if "the right target comes at the right price."

* ABN AMRO Group NV's second-quarter profit attributable to owners of the parent company totaled €664 million, down from €938 million in the prior-year period. A restructuring of the group's corporate and institutional bank over the next three years is aimed at preparing the Dutch lender for the implementation of the latest Basel III capital requirements.

* Nationwide Building Society reported a year-over-year decline in its statutory after-tax profit for the quarter ended June 30 to £210 million from £240 million.

* Commerzbank AG reported second-quarter consolidated profit attributable to shareholders of €272 million, compared to a loss of €640 million in the prior-year period. The bank will need more time to demonstrate the full effect of its restructuring efforts and will face higher than previously projected costs and lower revenues in its corporate clients division in 2018.

* Credito Valtellinese SpA reported a reclassified consolidated profit of €824,000 for the first half, compared to a loss of €194.8 million a year earlier, while BPER Banca SpA reported second-quarter consolidated net profit pertaining to the parent company of €56.9 million. OTP Bank Nyrt. reported second-quarter unaudited consolidated net comprehensive income attributable to equity holders of 115.37 billion Hungarian forints, and Credito Emiliano SpA's second-quarter net profit stood at €40.4 million.

Deal table

* KBC Bank Ireland PLC agreed to sell part of its legacy loan portfolio, amounting to roughly €1.9 billion, to Goldman Sachs Group Inc. KBC Group NV had reported second-quarter profit attributable to equity holders of the parent of €692 million under IFRS 9, down from €855 million under IAS 39 a year earlier, and is raising its guidance for full-year net interest income on the back of a series of interest rate hikes in one of its key markets, the Czech Republic.

* VTB Bank (PJSC) sold Serbian unit VTB Banka a.d. Beograd for around 900 million rubles, as the group reported second-quarter net profit of 43.0 billion Russian rubles under International Financial Reporting Standards, up 41.9% from the year-ago period. Separately, the London High Court unfroze assets owned by Russian businessmen Dmitry and Aleksey Ananiev, including a stake in Vozrozhdenie Bank, opening the way for VTB to finalize the acquisition of the lender.

* Piraeus Bank SA agreed to sell its 98.83% stake in Tirana Bank sh.a. to Balfin Group and Komercijalna Banka AD Skopje for a total consideration of about €57.3 million.

* Bank Pekao SA is withdrawing from merger talks with fellow Polish lender Alior Bank SA after failing to reach an agreement over the terms of a deal.

Legal matters

* The Danish State Prosecutor for Serious Economic and International Crime said it has launched a criminal investigation into Danske Bank A/S in connection with allegations of money laundering at its Estonian branch.

* PAO Promsvyazbank's former management board chairman and co-owner, Dmitry Ananiev, filed an appeal with the Moscow Arbitration Court against an earlier court ruling regarding the 2017 bailout of the lender.

In other news

* TSB Banking Group PLC's IT meltdown will cost the Banco de Sabadell SA unit as much as £229 million.

* UniCredit CEO Jean Pierre Mustier said the Italian lender has stopped advertising and marketing on Facebook Inc. as the social media giant had acted improperly.

* HSBC transferred ownership control of its Irish and Polish subsidiaries to HSBC France SA from London-based entity HSBC Bank PLC "as political and regulatory change in Europe continues."

Featured during the week on S&P Global Market Intelligence

Deutsche made 'oral' deal with rogue bank as 2 rivals also skirted rules: files: Deutsche Bank had a deal with money laundering Cypriot lender FBME to keep risky client names off the paperwork for money transfers, leaked files show, with Commerzbank and RBI also ignoring missing data crucial to financial crime prevention.

UPDATE: EU bank resolution body will not pay compensation to Popular investors: The Single Resolution Board says it will likely not pay compensation to investors who lost money on troubled Banco Popular's resolution, based on the findings of a long-awaited valuation report.

New securitization law brings Cyprus closer to reducing toxic loan pile: A recently passed securitization framework is likely to help banks in Cyprus clean up the mountain of bad loans still weighing down their balance sheets, credit analysts said. Cyprus has the second-highest nonperforming loan ratio in the EU.