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ECB, BoE hold rates; UniCredit, Sberbank outline new game plans


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ECB, BoE hold rates; UniCredit, Sberbank outline new game plans

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

Rates watch

* The ECB, the Bank of England and the Swiss central bank all left their key rates unchanged. The ECB also decided to maintain net asset purchases at a monthly pace of €30 billion from January 2018 until the end of September 2018, or beyond if necessary, while the Swiss central bank said it would continue to intervene in the foreign exchange market as it seeks to limit the value of the franc, which it said remained overvalued against the U.S. dollar.

* The central banks of Norway, Iceland and Turkey also left their key rates unchanged, while the Central Bank of the Russian Federation cut its key rate to 7.75% from 8.25%. The National Bank of Ukraine implemented a second consecutive increase to its key policy rate, raising it by 100 basis points to 14.5%, while the National Bank of Georgia raised its key refinancing rate by 25 basis points to 7.25%.

Game plan

* UniCredit SpA confirmed its key targets for 2019, including a return on tangible equity of more than 9% and a common equity Tier 1 ratio of above 12.5%, and said it would increase its dividend payout ratio for the financial year 2019 to 30% from 20%, and to 50% afterward once upcoming regulatory impacts have been confirmed.

* PAO Sberbank of Russia prepared a new dividend policy under which it will raise dividend payments to 50% of its IFRS net profit, with the increase to first apply in 2020 on payments made from the 2019 financial result. The bank, whose net income is projected to rise by more than 40% by the end of 2019, wants to focus on internet-based activity as it eyes competition with tech giants, its top executives have said.

M&A buzz

* BFA Sociedad Tenedora de Acciones SAU, wholly owned by the Spanish government's Fondo de Reestructuración Ordenada Bancaria, has sold a 7.0% stake in Bankia SA, reducing BFA's holding in the bank to 60.63%. The government is reportedly planning a subsequent sale of between 15% and 20% of Bankia following the successful sale, with the next deal to potentially take place in February 2018.

* Skandinaviska Enskilda Banken AB agreed to sell all shares in Danish pension units SEB Pensionsforsikring A/S and SEB Administration A/S to Danske Bank A/S unit Danica Pension Livsforsikrings A/S for a total consideration of 6.5 billion Danish kroner.

* The Russian central bank became the owner of 99.9% of Otkritie Financial Corp. Bank's ordinary shares as part of the lender's financial recovery and the 456.2 billion Russian ruble recapitalization plan for the group.

* Banco Santander SA and Polish subsidiary Bank Zachodni WBK SA agreed to acquire Deutsche Bank AG unit Deutsche Bank Polska SA's retail and private banking businesses, excluding its foreign-currency mortgage portfolio, for an estimated total consideration of €305 million.

* Aldermore Group Plc said most of its shareholders voted at a court and general meeting to approve South Africa-based FirstRand Ltd.'s offer to acquire the British challenger bank.


* UBS Group AG named former Commerzbank AG CEO Martin Blessing president of its wealth management division, replacing Jürg Zeltner. UBS Group COO Axel Lehmann will take over Blessing's current role as president of personal and corporate banking and president of UBS Switzerland AG, while Sabine Keller-Busse will replace Lehmann as group COO.

* Sberbank appointed David Rafalovsky senior vice president and chief technology officer, as well as co-head of its technology block.

* Aldermore Group appointed Pat Butler as a nonexecutive director and as chairman-designate. Butler will also be appointed as a nonexecutive director and chairman-designate of Aldermore Bank Plc.

* SKB Banka d.d. Ljubljana named Andre Gardella as its new CEO, replacing François Turcot, who is slated to take on a new role in parent company Société Générale SA.

Regulatory developments

* HSBC Holdings Plc said its five-year deferred prosecution agreement with the U.S. Department of Justice has expired, adding that the DOJ will file a motion with the U.S. District Court for the Eastern District of New York to dismiss charges deferred by the agreement.

* The Russian central bank launched a rescue procedure for PAO Promsvyazbank, one of Russia's systemically important banks and its ninth largest lender in terms of assets, and placed the bank into the provisional administration of its banking sector consolidation fund.

* UBS Group and Credit Suisse Group AG are both on track to meet rules aimed at ensuring their resilience but need to bolster their ability to absorb losses, according to Swiss National Bank Vice Chairman Fritz Zurbrügg.

* Banco Bilbao Vizcaya Argentaria SA, CaixaBank SA, Unicaja Banco SA, Bankia and BFA Sociedad Tenedora de Acciones have disclosed their capital requirements for 2018 under the ECB's annual supervisory review and evaluation process.

* Valdis Dombrovskis, the European Commission's vice president for the euro, has suggested that the EU's executive body could lower capital charges for banks making eco-friendly investments. Such a push would encourage banks to take a larger role in the financing of a green economy, but could come up against opposition from regulators, market participants have said.

In other news

* U.K. Prime Minister Theresa May suffered a defeat as members of parliament voted 309 to 305 in favor of an amendment to the EU withdrawal bill requiring passage of a separate measure before any Brexit agreement is implemented.

* The Qatar Investment Authority, which owns 10.37% of London Stock Exchange Group Plc, reportedly plans to vote against the motion by U.K.-based TCI Fund Management Ltd. to remove Donald Brydon over his handling of the departure of LSE CEO Xavier Rolet. Brydon is also poised to win support from U.S.-based BlackRock Inc., which owns 7.41% of LSE. Trevor Green, head of U.K. equities at Aviva Plc unit Aviva Investors, has also said that he would back Brydon.

* Investec Group unit Investec Bank Ltd. said it has derivative exposures linked to retail firm Steinhoff International Holdings NV's share price, which could have a potential impact of up to 3% on the group's post-tax operating profit.

* Nordea Bank AB (publ) raised its estimate of the net present value of savings arising from its decision to redomicile the group's parent company to Finland from Sweden. The bank said it expects the net present value of the savings related to resolution fees, deposit guarantees and other transitional effects to be approximately €1.1 billion to €1.3 billion, up from an estimated €1.0 billion to €1.1 billion when the move was announced in September.

* Royal Bank of Scotland Group Plc will probably not reduce its bonus pool for 2017, with a final decision on payouts to be made in January, insiders told Reuters.

Featured during the week on S&P Global Market Intelligence

BBVA capital boost from recent sales may fuel Spanish bank acquisitions: The bank could take advantage of its improved capital position to buy a smaller bank in Spain, such as Liberbank and Ibercaja Banco, BPI Online analyst Carlos Peixoto said.

Deutsche Bank leverage in spotlight after Basel capital deal: The German lender, which currently has a 2% risk-weighted higher loss absorbency requirement, would need to have a leverage ratio of at least 4.0% if the recently finalized Basel III regulations were implemented today.

UK must improve green finance credentials post-Brexit, industry group says: The U.K. must ensure it can compete as a global hub for green finance after its exit from the EU, the City of London Corp. said in a report.

Basel III recognition of covered bonds to drive non-EU bank investor appetite: The recognition will convince regulators that covered bonds are "a valid addition to the funding toolkit of banks," Karlo Stefan Fuchs, head of covered bonds ratings at Scope Ratings, said.

Credit in the crosshairs as European banks face refinancing CoCos in 2018: Several pioneering Additional Tier 1 bonds, or so-called contingent convertible or "CoCo" debt, are set to be refinanced in 2018, and there are concerns that weaker banks could be hurt by a credit correction that many argue is increasingly likely.