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EU offers Brexit delay; European banks need €39B more capital by 2027

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

All things Brexit

* The European Union offered to postpone the U.K.'s departure from the bloc until May 22, if the U.K. Parliament hammers out a Brexit deal in the week beginning March 25. The bloc also offered a new brake against a no-deal Brexit, giving London until April 12 to decide on its course of action if its lawmakers again fail to reach an accord.

* The U.K.'s two main financial regulators signed a memorandum of understanding with the European Union's banking watchdog for supervisory cooperation and information sharing in the event of a no-deal Brexit.

* Britain also reached an agreement with Norway and Iceland to maintain streamlined trade relations in the event the U.K. crashes out of the EU without the withdrawal agreement.

* U.S.-based derivatives marketplace CME Group Inc. moved its euro-denominated government bond, repurchase agreement and foreign exchange trading to Amsterdam, the Netherlands, from London, according to Reuters.

Industry news

* The world's largest banks will need to plug a larger total capital shortfall to meet final regulatory requirements fully taking effect starting 2027, according to the Basel Committee on Banking Supervision.

* The European Banking Authority said Europe's banks will need €39.0 billion of additional total capital, of which €24.2 billion will be Tier 1 capital, to comply with the Basel committee's final regulatory requirements.

* Italy plans to renew its state guarantee scheme for up to three years, in a bid to help local banks reduce their nonperforming loans, Reuters reported, citing a draft law decree.

* Deutsche Bank, Commerzbank confirm merger talks

* Deutsche Bank AG and Commerzbank AG mandated U.S. banks to advise them on their potential merger, after Germany's two highest profile lenders confirmed last weekend that they are holding discussions on the matter. A possible tie-up between the two giants could create an entity with an equity market value of more than €25.6 billion.

* Meanwhile, Deutsche Bank said it expects 2019 revenues to be "slightly higher" compared to a year ago, adding that it aims to boost revenue through investments in several growth areas.

Regulatory boulevard

* Italy's central bank instructed the local branch of Dutch lender ING Groep NV to refrain from conducting any business with new clients, citing shortcomings in its anti-money laundering processes. Italian prosecutors also launched a formal probe into ING's operations in the country, insiders told Reuters.

* The U.K. Financial Conduct Authority imposed a £27.6 million fine on UBS Group AG unit UBS AG for misreporting millions of transactions for nearly a decade.

* Senior figures at the FCA are reportedly seeking to block Metro Bank PLC's appointment of Ben Gunn as its new deputy chairman and are pushing for a wider overhaul of the lender's board.

* The U.K. Treasury Select Committee urged the FCA to look into complaints by London Capital & Finance PLC investors who face losing most of the £236 million they invested into the firm. The U.K. Serious Fraud Office also launched a probe into individuals linked to London Capital & Finance, which previously entered into administration after its practice of marketing mini-bonds as fixed-rate individual savings accounts was revealed

* France said its banks will have to hold a countercyclical capital buffer of 0.5% of their risk-weighted assets, up from 0.25% in June 2018.

Money laundering clouds still hovering over Nordic banks

* Swedbank AB (publ) CEO Birgitte Bonnesen unveiled plans to form a new specialized financial crime intelligence unit in a bid to improve the Swedish lender's anti-money laundering control system. The bank also released a preliminary update on a third-party review it commissioned into its alleged involvement in the dirty money transactions in the Baltic region.

* Two U.S. law firms filed a case against Danske Bank A/S before the Copenhagen City Court on behalf of international investors over the Danish lender's alleged ties to a massive Russian money-laundering scheme.

* Danske Bank's shareholders rejected a proposal to split up the troubled Danish lender amid an ongoing multibillion-euro money-laundering scandal. Meanwhile, Chairman Karsten Dybvad said the bank is still seeking a permanent successor for former CEO Thomas Borgen.

In other news

* An arbitration tribunal ruled that Lloyds Banking Group PLC and unit Scottish Widows Group Ltd. were not entitled to give notice in February 2018 to terminate their asset management arrangements with Standard Life Aberdeen PLC.

* UBS CEO Sergio Ermotti warned that the Swiss lender expects first-quarter revenues from its investment banking division to drop by about a third amid "one of the worst first-quarter environments in recent history."

* Wirecard AG's executives were aware of and oversaw transactions that are at the center of a fraud probe at the German payment company, according to the Financial Times.

* Spain's High Court ruled Banco Santander SA can be held liable in a criminal investigation into the fall of Banco Popular Español SA, even though the latter no longer exists following its acquisition by Santander in 2017.

* The General Court of the EU annulled the European Commission's decision that support measures granted to Italy's Banca Tercas SpA in 2014 by the country's deposit guarantee fund constituted incompatible state aid.

* Italian payments services company Nexi SpA filed an application with the Italian stock exchange to list its ordinary shares on the bourse in April.

Featured during the week on S&P Global Market Intelligence

Ireland moves ahead as top post-Brexit destination for global financial firms: Some 24 global financial firms, including Bank of America, Axa and Mizuho, have selected or are thinking of selecting Ireland as a base from which to conduct their EU operations after Britain leaves the bloc.

JPMorgan tops 2018 global i-bank ranking; Deutsche stable; Credit Suisse down: The return of market volatility in 2018 played out well for JPMorgan which remained the leader in global investment banking, according to a Coalition league table. Deutsche Bank also kept its sixth place while Credit Suisse dropped a spot to eighth.

Banks' fossil fuel funding rises, environmental groups warn: The Banking on Climate Change 2019 report says 33 global banks financed fossil fuel companies to the tune of $1.912 trillion between 2016 and 2018.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.