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In This List

UBS Q3 profit falls 16%; Santander unit sells for $1B; BNP buys Allfunds stake

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Street Talk – Episode 69: Banks left with pockets full of cash and few places to go

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UBS Q3 profit falls 16%; Santander unit sells for $1B; BNP buys Allfunds stake

* Roughly 35% of banks globally that have flawed business models and suffer from operating in unfavorable markets may have no other options to survive an economic downturn other than merging with similar lenders or selling to a stronger buyer, according to a report by management consultancy McKinsey & Co.

UK AND IRELAND

* U.K. House of Commons Speaker John Bercow yesterday blocked a request by the government to hold a "meaningful vote" on its Brexit deal, saying the move was the same in substance as the one put forward to lawmakers Oct. 19. The U.K. government, meanwhile, believes Prime Minister Boris Johnson is set to secure a narrow victory when lawmakers vote on his Brexit deal, according to the Financial Times.

* M&G PLC has been valued at roughly £5.6 billion after the completion of its demerger from British insurer Prudential PLC, The Times of London reported.

* British insurer Watchstone settled a £637 million legal claim filed by Australian law firm Slater & Gordon over the sale of the group's professional services unit, The Telegraph wrote. The £11 million settlement is reportedly lower than expected and will be paid from £50 million Watchstone has already provisioned.

* London-based investment bankers Benjamin Taylor and Darina Windsor are facing U.S. charges of selling information related to pending M&A under an insider trading ring that allegedly generated tens of millions of dollars in profits, Bloomberg News wrote. Moelis & Co. confirmed that Taylor was a former junior employee at the bank, saying it has "cooperated fully with law enforcement authorities since being made aware of the allegations."

* Shares in Funding Circle Holdings PLC closed 16.89% higher yesterday after the British peer-to-peer lender said loans under management increased 31% year over year to £3.7 billion as of the end of September.

GERMANY, SWITZERLAND AND AUSTRIA

* UBS Group AG's third-quarter net profit attributable to shareholders declined to $1.05 billion from the year-ago $1.25 billion. The Swiss lender said it expects its investment bank to incur fourth-quarter expenses of roughly $100 million from a restructuring effort that will combine its equities, foreign exchange, rates and credit operations into a single global markets division, among other changes.

* UBS and Piper Jaffray Companies unit Simmons Energy have laid off employees in their oil and gas investment banking teams after M&A activity in the shale business dropped to the lowest level in a decade, insiders told Reuters.

* Germany Savings Banks Association federal chairman Walter Strohmaier is supporting the idea of creating a new central savings bank that he said could help reduce risks within the savings banks group in the country, adding that it was obvious to begin the implementation by integrating Landesbank Hessen-Thüringen Girozentrale and DekaBank Deutsche Girozentrale, Handelsblatt wrote.

* Deutsche Bank AG is considering laying off staff at its unit that trades interest rate securities and will likely cut a low double-digit percentage of jobs at the business, insiders told Bloomberg News.

* A U.S. judge rejected a request for dismissal made by two former Deutsche Bank employees accused of fraudulent and manipulative trading of precious metals, saying prosecutors properly used the wire-fraud statute to charge the two with spoofing, Bloomberg News reported.

* A number of insurance segments in Germany are on course to see "positive" premium development and conditions in 2020, according to Hannover Re unit E+S Rückversicherung AG.

* Hannover Re CEO Jean-Jacques Henchoz told Börsen-Zeitung that he plans to expand the reinsurer's business in Asia to 20% from 15% of total revenues, but solely through organic growth and without acquisitions.

* Chinese conglomerate Fosun International Ltd., the Netherlands-based ABN Amro Bank NV and Franco-German financial group Oddo BHF SCA are considering bidding for German private bank Bankhaus Lampe KG, insiders told Bloomberg. A sale could reportedly value Bankhaus Lampe at €200 million or more.

FRANCE AND BENELUX

* French banking group BNP Paribas SA, through units BNP Paribas Securities Services and BNP Paribas Asset Management Services Grouping, will acquire a 22.5% stake in Spanish lender Allfunds Bank SAU for an undisclosed sum. BNP Paribas Securities Services will also transfer its Banca Corrispondente local paying agency activities in Italy, as well as some Italian transfer agency services, to Allfunds, Les Echos and L'Agefi noted.

* ING Groep NV CEO Ralph Hamers warned that banks may be forced to cut ties with Facebook Inc. if the U.S. social media company fails to fully address regulators' concerns of money laundering prior to launching its Libra digital currency, the Financial Times wrote.

* Ageas SA/NV could lose its interest in a joint venture with leading U.K. supermarket Tesco, according to L'Echo. Tesco has decided to take over total control of the venture, which represents nearly 30% of Ageas' revenues in the U.K.

* Société Générale SA has sold part of its secured debt related to French retailer Casino, according to L'Agefi. Hedge funds Anchorage Capital Group and Angelo Gordon are said to be among the buyers.

SPAIN AND PORTUGAL

* Puerto Rico-based First BanCorp. has agreed to acquire Banco Santander SA unit Banco Santander Puerto Rico in an all-cash transaction for about $1.1 billion.

* Shares in Portuguese bank Millennium BCP rose after Angolan state oil company Sonangol EP, its second-largest shareholder, reaffirmed its interest in remaining a shareholder of the lender, Reuters wrote.

ITALY AND GREECE

* UniCredit SpA CEO Jean Pierre Mustier is set to announce on Dec. 3 that the Italian banking group will establish a new sub-holding company in Germany to house its foreign operations, insiders told Reuters. UniCredit reportedly aims to reduce its Italian identity and associated credit rating to make funding cheaper through the move. Meanwhile, Scope Ratings said UniCredit has sold €6.06 billion of bad loans to a securitization vehicle, Reuters reported.

* Italian lender Banca del Fucino SpA has securitized and sold €300 million of nonperforming loans to state-controlled bad loan manager AMCO as part the bank's rescue plan that will see it merged with Igea Banca SpA, Reuters reported, citing securitization specialist Zenith Service.

NORDIC COUNTRIES

* Another 64 institutional investors filed lawsuits before the Copenhagen City Court against Danske Bank A/S in connection with the Danish lender's involvement in a money laundering scandal, adding to a group of 168 claimants who sued it in March. U.S. shareholder law firms Grant & Eisenhofer and DRRT said investors are seeking nearly $800 million in claims against the bank for economic losses from the scandal.

* Polaris, the Copenhagen-based private equity group, is backing a management buyout of SSG, a Danish company that delivers damage control services and business risk models to insurance companies in Denmark and across Scandinavia. The Polaris-MBO group signed a letter of intent to acquire 100% of shares in SSG, FinansWatch reported.

EASTERN EUROPE

* Shares in Turkish lenders slid after Turkey's Capital Markets Board removed a depositary rule that restricted sales of shares in the country's seven largest banks to stocks investors own, as well as a requirement that only the brokerage holding the shares could execute sales, Bloomberg News reported.

* PKO Bank Polski SA will consider the possibility of purchasing mBank SA if Germany's Commerzbank AG officially puts it on the market, news agency PAP reported, citing PKO Bank CEO Zbigniew Jagiełło. The executive also said PKO could become involved in some takeover deals in 2020.

* Russian financial institutions, including banks and insurance companies, asked the country's central bank to eliminate 27 obsolete regulations against money laundering, including those relating to customer identification, RBC wrote. The proposals were put forward as part of the central bank's September initiative, which invited local market players to identify regulatory requirements that impede market development or are no longer relevant.

* Otkritie Financial Corp. Bank's former owner, Otkritie Holding JSC, owes 450 billion Russian rubles to Russian bad bank National Bank Trust PJSC, RBC reported, citing Trust.

* BNP Paribas unit BNP Paribas Bank Polska SA plans to set aside a 48.8 million Polish zloty provision in relation to a European Court of Justice ruling regarding the proportional reimbursement of fees in case of early loan repayment, Parkiet reported. Other Polish lenders with significant consumer loan portfolios are also expected to create similar provisions, the newspaper reported. The Polish Bank Association recently estimated that local banks may have to return to clients over 1 billion zlotys in fees linked to consumer loans that were repaid ahead of schedule.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: Temasek offering to raise Keppel stake to 51%; Japan to stress test banks

Middle East & Africa: KFH Q3 profit rises YOY; Visa to open new HQ in Dubai; Ghana aims to go cashless

Latin America: Election polls show outright win for Argentina's Fernandez; turmoil in Chile

North America: NY banks in $106.8M deal; Thomson Reuters responds to media report on CEO search

Global Insurance: Third Point Re review; Allianz UK reinsurance; Rothesay Life enters £3.8B buy-in

NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE

German banks' extreme vulnerability to low rates could force big change: Record low interest rates, high costs and fierce competition are putting extreme stress on Germany's banks, with some senior banking figures suggesting the traditional three-pillar model may begin to fracture.

Global shipping finance tanks, but Greek and French banks are buoyant: Shipping finance from France and Belgium rebounded to $32 billion compared with $31 billion in 2017, while Greek lending climbed to $8 billion after plateauing at the $7 billion mark over the previous two years.

Sheryl Obejera, Arno Maierbrugger, Meike Wijers, Esben Svendsen, Beata Fojcik, Heather O'Brian, Stephanie Salti, Sophie Davies and Mariana Aldano contributed to this report.

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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.