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ECB prepares for Brexit; BoE details stress test; Swiss banks to Putin's aid


Banking Essentials Newsletter: January 11th Edition


Banking Essentials Newsletter December 21st Edition


The Road to Basel IV: Navigating the challenge facing European banks


Basel Framework- Utilizing data to analyze the capital position of European banks.

ECB prepares for Brexit; BoE details stress test; Swiss banks to Putin's aid

ECB assesses potential Brexit impact: TheECB is in contact with Irish banks to ensure that they are adequately assessingthe risks surrounding the planned referendum on the U.K.'s membership in the EUand are prepared for all possible outcomes, accordingto The Irish Times. The ECB is alsoexamining banks in Germany, France, Italy, Spain and the Netherlands as part ofa eurozone-wide assessment of the potential impact of a Brexit on bankingsystems highly exposed to the U.K. market.

* Meanwhile, has warned senioremployees against saying "Brexit" during conversations with clientsand banned managers from providing opinions and influencing referendum votersin an attempt to avoid wading into the debate regarding whether the U.K. shouldremain in the EU, the Financial Timesreports. The American bank also scrapped plans to donate money to the campaignfor Britain to stay in the union.

* ECB data showed that bank lendingto nonfinancial firms increased 0.9% last month, compared to 0.6% in Januaryand marking the fastest growth rate since December 2011, the Financial Times reports. Loans granted to households rose 1.6% in February, compared to 1.4% inJanuary, representing the fastest growth since November 2011.


BoE details 2016 stress tests: The Bank of England yesterday published key elements of the 2016 stress test in which seven banks and buildingsocieties will participate, noting that the stress being tested against will"generally be severe and broad" to assess major British banks'resilience to tail-risk events. The exercise contains a macroeconomic stressscenario spanning a five-year period until 2020-end, a traded risk stressscenario and a misconduct costs stress test. The 2016 stress test, results ofwhich will be published in the fourth quarter, will be the first to be rununder the new annual cyclical scenario framework.

* The BoE said yesterday that its Financial Policy Committee decided to raise the U.K.countercyclical capital buffer rate to 0.5% from zero percent of risk-weightedassets, consistent with its intention to gradually set the buffer rate in theregion of 1% in a standard risk environment. The new rate will be effectiveMarch 29, 2017, when the overlapping aspects of Pillar 2 supervisory capitalbuffers will be lifted.

* Separately, the FPC said the risks surrounding the referendum on the U.K.'s membership in the EUare the most significant near-term domestic risks to financial stability,warning that heightened and prolonged uncertainty could lead to a furtherdepreciation of the pound sterling and affect the cost and availability offinancing for many U.K. borrowers.

* The U.K. Prudential RegulationAuthority yesterday set out proposedstandards for buy-to-let mortgageunderwriting in an aim to prevent "a marked loosening in buy-to-letunderwriting standards and to curtail inappropriate lending and the potentialfor excessive credit losses." The PRA proposed that all firms engaged in buy-to-let lending use an affordability testwhen assessing a buy-to-let mortgage contract and take into account likelyfuture interest rate increases when assessing affordability in respect of apotential borrower.

* London Stock Exchange Group Plc CEO Xavier Rolet saidrival stock exchange operators must adapt to the changes in global financialmarkets, noting that that the rest of the industry is refusing to changebecause they feel "quite protected" in their current regulatoryenvironment, the Financial Times writes. Rolet said LSE Group's proposed merger with was driven by therapidly reshaping market.

* Aviva Plc CEO Mark Wilson received total remuneration of£5.7 million in 2015, up from £2.6 million a year ago, accordingto the company's 2015 annual report. Wilson's basicsalary did not change over the period, but he received a £2.6 million awardunder a long-term incentive plan. Aviva CFO Tom Stoddard received £2.9 millionin total remuneration in 2015, up from £1.2 million a year ago.

* U.K. Financial Reporting CouncilCEO Stephen Haddrill said in a Feb. 10 letter to Treasury Select Committee Chairman Andrew Tyrieit hopes to be able to report this spring its conclusions on a review of howKPMG audited HBOS Plcprior to the bank's collapse in 2008. Tyrie yesterday called the FRC's decision to publish a report in the spring "overdue, butwelcome." Reuters has a report.

* Saga Plc saidtoday that it signed a quota share arrangement to cover 75% of the risk ofmotor policies of its in-house underwriter AICL from Feb. 1. The sole reinsureragreement was reached with MunichRe subsidiary NewRe and the initial arrangement will run for threeyears, with the option to extend for a further three years.


Qatariinvestor stands behind Deutsche Bank chairman: Qatar's Sheikh Hamad BinJassim Bin Jaber Al Thani, one of the largest shareholders of , plans to issue astatement today in support of Chairman Paul Achleitner after rumors rose thatthe Qataris were not satisfied with the bank's performance, the FinancialTimes writes.

*The German federal cartel office approvedthe merger of DZ BankAG and WGZBank. However, WGZ Bank employees are critical of the merger asthey fear job and other cuts,  Handelsblatt reports.

*Landesbank Baden-Württembergis cutting 380 jobs at subsidiary Baden-Württembergische Bank AG in the wake of therestructuring of the latter's retail business, Börsen-Zeitung notes.

*Credit Suisse GroupAG plans to bundle mortgages of profitable properties held by its corporateand institutional clients unit and valued at up to CHF500 million in a fund andsell it to institutional investors, Finanz und Wirtschaft reports.

*Credit Suisse hired Jeffrey Cohen as vice chairman of global retail to help thebank expanding its investment banking business for consumers, Bloomberg News writes.

* hired JosephHershberger, formerly global head of asset management banking at Credit Suisse,to fill the role of vice chairman in its financial institutions group, Reuters writes.

*Immigon Portfolioabbau AG, the bad bank of Österreichische Volksbanken-AG, made 2015 IFRS netprofit of €196 million as a result of one-time special effects from assetsales, bond repurchases and swap deals, Der Standard reports.

*The annual survey "Bankbarometer 2016" of 106 Austrian bankingexecutives revealed that 90% of them, as opposed to 52% in the previous survey,believe that fintechs and online banking providers will"significantly" gain market share this year, Die Presse notes.In the insurance sector, increasing digitization and a growing number of onlinecomparison portals will have the effect that, in the medium term, 30% ofinsurance products will be sold over the Internet in Austria, Der StandardcitesReinhold Baudisch, CEO of online insurance broker, as saying.


Francelooks to bolster crowdfunding: French Economy Minister EmmanuelMacron announced a series of measures to boost crowdfunding, Les Echos reports.Measures include raising the amount to be funded before a formal prospectus isissued to €2.5 million from €1 million, increasing their sources of financing,easing the process of funding small businesses and allowing crowd-sourcingplatforms to use blockchain technology. LaTribune also covers.

* A new merger is being carried out in 's Banques Populaires network,with the mutual banks for Alpes, Loire et Lyonnais and the Massif Centralmerging to form one unit covering the central and eastern France, accordingto Les Echos.

* French Finance Minister Michel Sapin came out stronglyagainst the battle launched by Crédit Mutuel Arkéa against the reform of , saying thereforms would bring more "safety" to the bank and "were requiredby the ECB," Le Telegramme reports.

* Dutch Finance Minister Jeroen Dijsselbloem will notintervene at state-owned insurer ASR Nederland NV regarding claims by the Dutch consumersassociation that ASR secretly paid some customers more compensation thanthousands of others with the same insurance policy, reports.

* The Dutch public prosecutor is asking for four years inprison for a former SNS REAALNV manager who was brought to SNS in 2008 as restructuring directorto solve the problems of Property Finance, DeTelegraaf reports.While the executive could not stop the real estate segment from dragging theparent company down, he is accused of accepting bribes from Property Financeemployees to save their jobs in the company.


UniCreditseeks clarity on Popolare di Vicenza cash call:UniCredit SpA is intalks with Italian government officials regarding the terms of its underwritingagreement relating to BancaPopolare di Vicenza SpA's €2 billion capital increase amid concernsabout the potential effect of the cash call on UniCredit's capital buffers,insiders tell the Financial Times. Thetalks center on a legal loophole that UniCredit could use to back out as mainunderwriter in the event of a worsening market environment.

* It will be up to the board that will take charge ofBanca Carige SpAfollowing Thursday's shareholders' meeting to decide on the Apollo offer to buynonperforming loans from the lender and to subscribe to a reserved capitalincrease, all dailies including MF write.Reuters also covers.Apollo's offer to take over €3.5 billion of NPLs at an 80% discount and fillthe capital deficit with a €500 million capital hike is an offer that cannot berefused as it is backed by the ECB, accordingto La Repubblica, which adds,however, that major shareholder Vittorio Malacalza would like to have more timeto shore up the lender's accounts before entering any merger plans. Malacalzarisks losing €160 million to €170 million should the Apollo offer be accepted, Il Sole 24 Ore cites analysts as saying.

*Italian tax police seized €3.5 million in assets from the wife of MassimoBianconi, former director general of Banca delle Marche SpA, Il Sole 24 Ore writes.

*Beginning next month, BankinterSA will start to merge the life insurance business, retail, privateand corporate banking units purchased from Barclays Plc in Portugal in September 2015. The mergerwill cost €320 million, €120 million of which will be financed by negativegoodwill and the remaining €200 million through a bond issuance, Europa Press writes.

* MAPFRESA said that in accordance with the 2016-2018 business planpresented in mid-March, the group's Mexico business will represent one of itsmain growth areas until 2020, Cinco Días reports.


Swedbank chairman lacks support: Swedbank AB said thismorning that its nomination committee will not propose Anders Sundström forre-election as chairman due to lack of support. The committee will insteadpropose to elect Deputy Chair Lars Idermark as board chairman for the perioduntil the end of the annual general meeting in 2017.

* Skandinaviska Enskilda Banken AB said yesterday that its first-quarter results will include a "technical"impairment of goodwill amounting to 5.3 billion Swedish kronor following thegroup's new organization as of Jan. 1. The first-quarter results will alsoinclude about 600 million kronor in other one-off financial effects fromrestructuring activities in the Baltic and German businesses and write-down ofintangible IT assets that are no longer in use.

*Opponents of Nykredit RealkreditA/S' decision to raise the contribution rates for customers ofsubsidiary TotalkreditA/S are planning to take the bank to court, FinansWatch reports. Thegroup is working on a class action with help from law firm Clemens Advokaterand the Danish Consumer Council. Many Nykredit customers were moved toTotalkredit in connection with the refinancing of their loans, with criticsclaiming that customers were not informed that they could see theircontribution rates increase after the move.


Swiss banks want to help Putin privatize state firms: CreditSuisse and UBS Group are interested in taking on advisory roles in the plannedpart privatization of Russian state-owned companies, including , Reuters reports.UniCredit also sent a response to theRussian government's request for advisory roles on the sales.

* Russia's O1 Group is interested in theacquisition of non-state pension fund Russian Standard from businessman RoustamTariko, Vedomosti writes. The potentialdeal, the value of which is estimated at around 1 billion Russian rubles, wouldallow O1 Group to sell its pension funds via the branch network of ,controlled by Tariko.

* Vnesheconombank will obtain 150 billion rubles from thestate budget in 2016 to bolster its capital, Kommersant reports, citing RussianPrime Minister Dmitry Medvedev. Vedomosti adds that VEB's management also proposed a plan toimprove the financial stability of the bank that would involve, among otherthings, the placement of a 55 billion rubles Federal Treasury deposit in the bank and thesale of AOGazprombank shares owned by the lender.

* The loan portfolio of PAO Credit Bank of Moscow expanded 60% in 2015, withmost of the loans going to the lender's 20 largest borrowers and shareholders, Kommersant writes. Fitch Ratings points outthat the sharp lending growth is risky and could prompt the agency to lower thebank's ratings if its profit should be insufficient to cover potential loanlosses, Vedomosti notes.RBK Daily also has a report.

* Poland's FSA allowed Bank Handlowy w Warszawie SA to earmark up to 100% ofits 2015 profit for dividend payments, Rzeczpospolitareports.The FSA requested Getin NobleBank SA, Idea BankSA and Bank BGZ BNPParibas SA to bolster own funds by retaining their 2015 profits.

* The Czech central bank will expand cooperation with the ChinaBanking Regulatory Commission to efficiently respond to and prevent possiblefinancial crises, E15 reports.

* Nova Kreditna bankaMaribor dd expects its purchase by Apollo Global Management andthe European Bank forReconstruction & Development to be finalized in the firstquarter, SEENews reports.

* IMF representative NikolayGueorguiev expressed concerns that strategic investors will not be interestedin buying Nova Ljubljanska Bankadd due to conditions prohibiting an investor from holding a stakelarger than Slovenia's 25% shareholding, Bloomberg News reports.

* Pension fund Sekerbank Turk Anonim Sirket Personel Vakficompleted the sale of its Sekerbank TAS shares. The fund, which had a 9.57% stakein the Turkish lender, had said recently that it would sell its shares inSekerbank, The Lira writes.


* Federal Reserve Chair Janet Yellen said yesterday thatsignificant changesin oil prices, interest rates and stock values since December "have notmaterially altered the [Federal Open Market Committee's] baseline, or most likely,outlook for economic activity and inflation over the medium term."

* ASXLtd. is set to lose its monopoly on share clearing as the Australian governmentrevealed reforms that would open the door for competition in the clearing ofcash equities. The Australian government plans to relax ownership restrictionson ASX, allowing investors to exceed the 15% ownership limit on the bourse.

* Huang Yiping, a member of the monetary policy committee atthe People's Bank of China, said the country's GDP growth rate for the firstquarter may be slower than the previous quarter and the first quarter of 2015,Reuters reports.

* Israel's parliament passed a law to the compensation of bank andinsurance executives in an attempt to narrow a wide gap between bosses' andworkers' pay, Reuters reports.


Data DispatchEurope: I-bank woes drag down ROE at Europe's lenders: Ultra-lowinterest rates, tightening regulations and the difficulty of adapting operatingmodels to changing conditions have eroded returns for many European banks.

BoE takes aimat credit growth, eying buy-to-let and boosting buffer: The Bank ofEngland's Prudential Regulation Authority said it was thinking of tighteninglending requirements for buy-to-let loans, widely blamed for fueling houseprice inflation. The central bank's Financial Policy Committee, meanwhile, saidit would raise banks' countercyclical buffer from zero.

CréditAgricole outlines bullish growth plans for insurance business:Crédit Agricole's new plan relies on an expansion of its insurance businessinto unit-linked products.

Xana Kakoty, ArnoMaierbrugger, Brian McCulloch, Kees Pijnappels, Yael Schrage, PraxillaTrabattoni, Mike Hatzidakis, Esben Svendsen, Beata Fojcik and Ali Kayalarcontributed to this report.

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