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UK PM warns of snap elections; Lloyds, Tesco in £3.8B deal; Rabobank sells CoCos

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UK PM warns of snap elections; Lloyds, Tesco in £3.8B deal; Rabobank sells CoCos

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 European Securities and Markets Authority released final guidelines for the liquidity stress tests of investment funds, including Alternative Investment Fund, or AIF, managers and Undertakings for the Collective Investment in Transferable Securities, or UCITS. Beginning Sept. 30, 2020, fund managers will be required to stress test the assets and liabilities of their funds using a comprehensive set of rules when designing scenarios, policies and frequency of liquidity stress tests for the funds they manage.

* European Parliament member and German politician Sven Giegold called the potential appointment of Adam Farkas, executive director of the European Banking Authority, as CEO of the Association for Financial Markets in Europe as "damaging" for the banking industry. The politician said such a move should have a binding 24-month cooling-off period as crucial inside information could flow to the banking lobby from the EBA.

* China granted Deutsche Bank AG and BNP Paribas SA type A licenses, which allow them to act as lead underwriters for corporate bond issues by nonfinancial firms, Reuters reported, citing an industry body under the central bank.

UK AND IRELAND

* U.K. Prime Minister Boris Johnson said he would call for snap elections slated for Oct. 14 if Parliament backs a measure seeking to stop a no-deal Brexit and further delay the country's departure from the EU, according to various reports. Parliament is expected to return today and tackle a bill requiring the government to either reach a new Brexit deal at an Oct. 17-18 meeting of the European Council or seek the approval of U.K. lawmakers to proceed with a no-deal Brexit.

* Lloyds Banking Group PLC agreed to buy a £3.7 billion prime U.K. residential mortgage portfolio from Tesco Personal Finance PLC, or Tesco Bank, for a cash consideration of roughly £3.8 billion. The mortgage book consists of 23,000 customers that will be transferred to Halifax, a division of Lloyds unit Bank of Scotland PLC. Lloyds said the purchase price represents a 2.5% premium on the loans' gross book value, adding that it will have minimal impact on its capital. Meanwhile, Tesco Bank said the deal forms part of its efforts to focus on a reduced number of products and cut operating and funding costs.

* British online banks are projected to take on 35 million new clients globally in the next 12 months, City A.M. wrote, citing an analysis by Accenture. In the first half, online banks booked about 5 million new accounts despite concerns over their long-term profitability.

* HSBC Holdings PLC closed the first yuan-denominated letter of credit transaction through blockchain, signaling progress in the use of the Voltron trade finance platform, which the bank developed in partnership with seven other peers, Reuters reported.

* Michael D'Arcy, Irish junior finance minister, said the government will not change the €500,000 pay cap on the banking industry, telling Bloomberg TV that bankers are "well paid." His comments come as Ireland considers a report by consultancy firm Korn/Ferry International on the future of the limits.

GERMANY, SWITZERLAND AND AUSTRIA

* Deutsche Bank CEO Christian Sewing has begun investing 15% of his monthly net salary in the lender's shares, Reuters reported, citing a regulatory filing. It confirms a pledge Sewing made in July to invest a "substantial amount" of his fixed salary in the bank as part of its major restructuring. Sewing is expected to spend some €850,000 in total on company shares by 2022-end.

* Aventicum Capital Management, the Doha-based joint venture between Credit Suisse Group AG and shareholder Qatar Investment Authority, has agreed to buy the management of selected funds and mandates from Qatari wealth manager Amwal LLC, finews.com reported. The deal is seen as a further sign of increasingly close ties between Credit Suisse and QIA, which owns 5.21% of the Swiss lender.

* In an effort to expand operations in China's digital banking market, UBS Group AG is teaming up with Shenzhen-based state-owned rival Qianhai Financial Holdings, finews.com wrote, citing a Sonntagszeitung report. UBS and Qianhai are developing a digital wealth management venture but have run into delays as they await a necessary license to be issued.

* Hans-Walter Peters, president of the Association of German Banks, is planning to nominate Carola Gräfin von Schmettow, CEO of HSBC Trinkaus & Burkhardt AG, to its board of directors, Handelsblatt reported. Von Schmettow would be the second woman on the 12-member board after Dorothee Blessing, regional head of J.P. Morgan Securities PLC Frankfurt Branch. She will replace Südwestbank AG CEO Wolfgang Kuhn, who is retiring. Constantin von Oesterreich will succeed Kuhn at Südwestbank.

* Wirecard AG and U.S.-based mobile technology group Brightstar Corp. signed a memorandum of understanding on digital consumer lending, payment acceptance processing and card issuing, in which the German payments firm would handle digital financial services on Brightstar's platform as the preferred payment service provider.

FRANCE AND BENELUX

* Dutch lender Rabobank sold the cheapest contingent convertible bond ever yesterday, Het Financieele Dagblad reported. The €1.25 billion Additional Tier 1 capital comes with a coupon of 3.25%. Rabobank's CoCo bond, which is the riskiest form of bank debt, attracted €4 billion in orders.

* Foreign-based no fee stockbrokers should not be allowed to trade in the Netherlands because they distort the market, BinckBank NV CEO Vincent Germyns told Het Financieele Dagblad. Germyns called for the Dutch financial markets regulator, AFM, to act on what he called "unfair competition."

* Two years after being rescued by U.S. investor Eli Global, Dutch insurance company Conservatrix is back on the market as Eli's founder, Greg Lindberg, finds himself at the centre of federal bribery allegations in North Carolina, Het Financieele Dagblad reported, citing anonymous sources. There is reportedly little interest in the market in buying Conservatrix because its financial buffers have worsened in recent months amid low interest rates.

* BNP Paribas SA units B*Capital and Portzamparc, both part of the BNP Paribas Banque Privée division, are to merge to become a specialist stock market unit for private banking clients, fund managers and small or medium-sized businesses, Les Echos reported. The merged unit will take the B*Capital name, have 180 employees and have sales of €50 million from 15,000 clients.

* La Poste has been given a four-month timeline to integrate La Poste, La Banque Postale SA and CNP Assurances SA into Caisse des Dépots et Consignations, Les Echos wrote, adding that the big uncertainty over the project is getting the green light from the ECB, which will define the reserves needed by La Banque Postale, likely to be high because of CNP's Brazilian activities.

SPAIN AND PORTUGAL

* Spain's largest insurance group, Mapfre SA, appointed José Manuel Inchausti president of Santander Mapfre Seguros, its bancassurance joint venture with Banco Santander SA. Inchausti, currently CEO of Mapfre España, was named after the top manager designated by Banco Santander to the role for the creation of the alliance, Francisco Giménez Bosh, stepped down, Expansión reported.

* A committee representing employees at Portugal's Novo Banco SA has questioned plans by the state-rescued bank to negotiate another 310 job cuts, saying the number exceeds that agreed as part of a restructuring plan, the official Lusa news agency reported. The CNT workers' committee said Novo Banco only needed to shed another 84 jobs to meet the target for staff reduction stipulated in a plan agreed between the government and the European Competition.

ITALY AND GREECE

* Kairos Investment Management SpA, the Italy-based asset and wealth management unit of Swiss lender Julius Bär Gruppe AG will explore possible acquisitions in Italy and increase its headcount to 200 from 150 at present, Reuters wrote, citing Yves Robert-Charrue, Julius Bär's European head.

* Cerved Group SpA is working with Mediobanca - Banca di Credito Finanziario SpA to finalize a mandate to put on the market its debt management division and nonperforming loans, Il Sole 24 Ore reported, noting that the business unit manages €53.3 billion of loans, of which €43.8 billion are nonperforming.

NORDIC COUNTRIES

* Lars Rohde, Danish central bank governor, said he had no intention of granting the request from bankers' association Finans Danmark to help ease the effects of negative interest rates by expanding its current account facility, which sets a lower limit of 0% on the reserve deposits it accepts from commercial banks, Bloomberg News reported. Rohde noted that to expand the facility would mean cutting the benchmark rate on the deposit facility from negative 0.65% at present.

* Swedish state pension fund Första AP-fonden, or AP1, fired Johan Magnusson as its CEO, effective immediately, after he allegedly "violated internal regulations on the holding and trading of financial instruments." The fund board has named Teresa Isele, its legal counsel, acting CEO.

* Swedish investment firm EQT intends to be listed on Nasdaq Stockholm, Affärsvärlden reported. In connection with the listing, EQT plans a share issue of at least €500 million, and will also sell existing shares. EQT manages about €40 billion in 19 active funds.

EASTERN EUROPE

* A Russian court ordered the seizure of a stake held by private equity group Baring Vostok Capital Partners Ltd. in Public Stock Co. Orient Express Bank, or Vostochny Bank, after the lender requested the seizure of over 334 billion shares held in it by a Baring-controlled firm, Reuters reported. Baring said it would appeal the decision, adding that the case is being used against it in a corporate battle for Orient Express Bank.

* The Russian central bank established minimum credit rating requirements for banks holding assets of stock market players, Banki.ru wrote.

* Mamuka Bakhtadze has stepped down as Georgia's prime minister after claiming to have accomplished his mission, Bloomberg News reported. An announcement on a candidate to replace Bakhtadze is due today, with reports suggesting that Georgi Gakharia, the interior minister, could take over.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: UK approves PSC Insurance deal; IFC names Singapore head

Middle East & Africa: Emirates NBD hikes foreign ownership cap; Old Mutual plans share buybacks

Latin America: Currency controls return to Argentina; Dominican Republic cuts benchmark rate

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Sheryl Obejera, Ed Meza, Danielle Rossingh, Gerard O'Dwyer, Roman Savinov, Yael Schrage, Brian McCulloch, Praxilla Trabattoni and Helen Popper contributed to this report.

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