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EC's CRD IV warning; DAS pulls RBS down; Romania's controversial mortgage law

Banking Essentials Newsletter - November Edition

Online Brokerage Space Should Remain Rich Source Of M&A

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery


EC's CRD IV warning; DAS pulls RBS down; Romania's controversial mortgage law

EC issues CRD IV ultimatum: The European Commissionyesterday requested Belgium, Latvia, theNetherlands and Slovakia to fully implement the new Capital RequirementsDirective or CRD IV, which sets out rules on risk management and capitalbuffers, among others. The EC also asked Belgium and Slovenia to fullyimplement the Bank Recovery and Resolution Directive, which provide for a"bail-in" mechanism where shareholders and creditors of banks on theverge of insolvency pay their share of the costs. The commission gave thesecountries a deadline of two months, or they may be referred to the EU Court ofJustice.

*The European Parliament yesterday voted to pass a law which aims toclean up the benchmark-setting process, improve transparency and preventconflicts of interest like those that resulted in LIBOR-rigging scandals inrecent years. Thelaw requires all benchmark administrators to be authorized by a competentauthority or registered.

*The ECB is hikingits 2016 supervisory fee for eurozone banks to €404 million, up 23.9% from lastyear, to accommodate costs for 160 new staff and the modification of itsbiennial stress tests. The 129 banks under direct ECB supervision will shoulder88.4% of the bill, while the remaining 3,200 "less significant"lenders will shoulder the rest.

*European Commissioner for Economic and Financial Affairs Pierre Moscovici saidGreece and its international creditors are nearing a full agreement on a reformpackage agreed under the country's bailout program, although the contingencyreform package requested by eurozone ministers last Friday still needs furtherwork, Reuters reports.

* entered a strategic alliance with Samsung Asset Management Co. to help Koreansstrengthen their footprint in European capital markets, Handelszeitung writes.

UKAND IRELAND

DASpayment widens RBS Q1 loss: Royal Bank of Scotland Group Plc today reported a first-quarter lossattributable to ordinary shareholders of £968 million, compared to the year-agorestated loss of £459 million. Litigation and conduct costs declined on ayearly basis to £31 million from £856 million. The result also includes thepayment of the final Dividend Access Share dividend to the British governmentof £1.19 billion.

* RBS' planned disposal of Williams & Glyn'snetwork will likely take more time and have a greater overall financialimpact on RBS thanpreviously estimated. The bank said it is exploring other means to achieve thenetwork's separation, adding that the timetable of the separation anddivestment of the network, which was previously scheduled to be achieved by2017-end, is now uncertain.

*The British Bankers' Association will establish a working group to look intothe implications of the lifting of international sanctions on Iran, insiders tell Sky News.

* BarclaysPlc agreed to sell its Barclaycard consumer payments business inPortugal and Spain to Bancopopular-e SAU, 49%-held by , as part ofits strategy to focus on scale businesses in core territories.

*Barclays shareholders yesterday voted to approve any disposal ofordinary shares in Barclays Africa Group Ltd.

*Separately, Barclays Chairman John McFarlane said the bank will appoint a newhead of corporate and investment banking to replace Tom King from outside thebank, Bloomberg News writes.

*Bank of Ireland willrepay at July-end €1 billion in contingent convertible bonds, which were soldby the Irish government to private investors in 2013, the Irish Independent reports. Chairman Archie Kane saidthe lender plans to pay a dividend in 2017, but its decision could be affectedby external factors, including Britain's vote on its membership in the EU;although he said the bank is prepared for the result on the Brexit referendum.

GERMANY,SWITZERLAND AND AUSTRIA

SwissRe Q1 result boosted by 'solid' underwriting result: this morning reported first-quarter net incomeattributable to common shareholders of $1.23 billion, compared to $1.44 billiona year earlier, supported by "solid" underwriting and"strong" investment results.

*EFG International AGsaid today that its board will seek shareholder approval for its proposedordinary-share capital increase by way of a rights offering of up to 81,687,345newly issued registered shares, a reduction of 12,002 shares from the maximumsize previously announced, at an offer price of at least CHF6.12. The bank willalso seek shareholder approval for the creation of new authorized sharecapital, authorizing its board to issue up to 75,958,871 registered shares toBTG Pactual as consideration for its proposed acquisition of , to be delivered at theclosing of the transaction.

*Deutsche Bank AG saidsupervisory board member Georg Thoma, who leads the integrity committee of thebank that oversees investigations into possible misconduct by executives andboard members, will step down by May 28 after criticism that he went "toofar" in probingpotential wrongdoing at the company.

*UBS Group AG plans torevamp its wealth management business by restructuring the back- andmiddle-office functions of the unit, a move that would result in significantsavings, but also in hundreds of jobs being lost, the Financial Times reports.

*Credit Suisse GroupAG commenced taking orders for a two-tranche insurance-linked,five-year bond of up to CHF630 million, insiders tell Bloomberg News. The salewill close May 6.

*Landesbank Hessen-ThüringenGirozentrale CEO Herbert Hans Grüntker criticized the ECB's plannedmassive purchases of corporate bonds, arguing that the ECB is "capturinganother large business segment" from German lenders, Handelsblatt reports."Profitability in the banking sector will decline inevitably," theCEO said.

* Singapore charged a former wealth manager at Swiss privatebank BSI with receiving illegitimate funds and obstructing justice in a moneylaundering case related to Malaysian investment fund 1Malaysia DevelopmentBhd., or 1MDB, Reuters reports.Another former BSI employee is facing a criminal investigation.

*Rudolf Scholten, director general of Oesterreichische Kontrollbank AG, will leave his post byJuly after 19 years at the helm of the bank, Der Standard reports.He will be succeeded by Helmut Bernkopf, currently member of the managementboard and head of commercial banking of UniCredit Bank Austria AG.

FRANCEAND BENELUX

AXAoffloads Isle of Man wealthmanagement biz: AXAsold itsinternational wealth management unit in the Isle of Man to Life CompanyConsolidation Group for an undisclosed sum. Sources tellLes Echos the sale price was £200million.

* Belgium enlarged the scope of its capital gains tax such thatfrom July 1 it will cover funds investing in nonquoted businesses, futures,other derivatives or contracts based on market indexes, L'Echo reports.

* Belfius BanqueSA wants all the functions of a physical branch to be available onclients' smartphones by 2020, L'Echo reports.The bank is investing €100 million in the digitization of its activities, De Standaard adds.

* RabobankGroup is teaming up with crowdfunding platforms Collin Crowdfundand Oneplanetcrowd, Het FinancieeleDagblad writes.The bank will guide entrepreneurs to the two crowdfunding platforms.

SOUTHERNEUROPE

Courtwants Novo Banco bond transfer reversed: A Portuguese court granted a provisional injunctionsuspending the Portuguese central bank's decision to transfer nearly €2 billionin senior bonds from Novo BancoSA to Banco EspíritoSanto SA, the Financial Times reports. The transfer would not be fully reversed until the courtmakes a definitive decision on the case. The central bank said it wouldimmediately ask the court to lift the injunction. Reuters also covers

*Well-known lawyer Diogo Lacerda Machado was appointed by the government of Portugalto negotiate with Novo Banco and try to find a solution for investors hit bythe collapse of BES. Almost 2,000 investors lost about 180 million, Jornal deNegócios writes.

*  yesterday reported consolidatednet income of €45.8 million in the first quarter, compared to €30.9 million inthe year-ago period. Net interest income rose year over year to €167.8 millionfrom €154.2 million, while loan provisions and impairments declined to €30.7million from €36.6 million.

 * Meanwhile, Banco BPI shareholders rejected proposals to allowthe Banco BPI SA ofCEO Fernando Ulrich and to approve authorization for the board to decide onpotential capital increases of up to €500 million, Reuters writes. ChairmanArtur Santos Silva said he was "extremely calm" about the rejections,given that a Portuguese law removing caps on shareholder voting rights takeseffect July 1. A fresh vote will be held after the law takes effect, Silvasaid. The vote from Santoro, representing Angolan investor Isabel dos Santos,was decisive, Observador says.

* CaixaBankSA CEO Gonzalo Gortázar believes adeal with Banco BPI will be reached inthe second quarter. He set September as a desired deadline for the takeover ofthe Portuguese lender, accordingtoPúblico.

*Italian Prime Minister Matteo Renzi's cabinet will today introduce fresh rulesto accelerate banks' recovery of collateral and to repay bondholders of thefour lenders bailed out last year, an insider tells Reuters. The country'scentral bank calculatedthat the draft law could speed up the credit recovery process to between sevenand eight months from 3.5 years.

* Veneto Banca SCpA plans to launch its €1 billion capitalincrease without guarantees from the Atlante fund to which it will resort fornonperforming loans, MF reports. Reuters and Il Sole 24 Ore also cover.

* BancaPopolare di Vicenza SpA is expected to meet its target of listingon the market, but with a free float of less than the 25% objective, MF writes. Reuters adds that the cash call has seen a cold response, with thesubscription period ending today.

* Italy's Interbank Deposit Protection Fund wrote down thevalue of the four lenders it bailed out by €393 million to €1.56 billion, MF writes. Il Messaggeroalso covers.

* Shareholders of Generali voted in favor of the list presented byMediobanca SpA,allowing it to name 11 of the 13 seats on the board. Assogestioni will name theremaining two seats, La Repubblica writes.

* MediolanumSpA says there are high chances of confirming the dividend paid outlast year, despite a drop in first-quarter net profit to €73.2 million due tolower commissions, Il Sole 24 Ore writes.

*Bankia SA today reported first-quarter profitattributable to the group of €237 million, compared to €244 million in theyear-ago period. Total provisions, including IPO contingency, reached €128million, down from €219 million in the first quarter of 2015.

* CaixaBank shareholders yesterday resolved to reduce theentity's capital by €584.8 million through the amortization of an equal numberof own shares, each with a nominal value of €1. The transaction will take placewithin the framework of the sale by CaixaBank to its largest shareholder,Criteria, of a 17.24% holding in Bank of East Asia and a 9.01% stake in GrupoFinanciero Inbursa, for €2.65 billion. Criteria will pay the purchase pricethrough the delivery of 9.9% shares held in CaixaBank, valued at €2.01 billion,and €642 million in cash. On its part, CaixaBank will amortize a number of ownshares representing at least the number of shares purchased from Criteria underthe exchange, Expansión writes.

* Expansiónalso reportsthat CaixaBank this year will pay a cash dividend amounting to more than 50% ofconsolidated net profits. The entity will increase from two to three the cashdividend payouts, leaving shareholders the choice of a scrip dividend payout onthe fourth yearly dividend disbursement.

* Also, Banco Bilbao Vizcaya Argentaria SA said that in 2017 itwill increase the number of cash dividend payouts. At present, the bank paysshareholders two cash and two scrip dividends per year, whereas from 2017 — inline with competitor BancoSantander SA's dividend policy — stakeholders will receive threecash and one scrip dividend per year,Europa Press writes.

* BankinterSA and Banco deSabadell SA are turning to the markets with new debt issuances.Bankinter raised €200 million in contingent convertible bonds and BancoSabadell plans to issue 10-year bonds in the coming days, Expansión reports.

NORDICCOUNTRIES

Danske Bank books Q1 netreversals on loan losses:Danske Bank A/S thismorning reported first-quarter net profitattributable to shareholders of 4.78 billion Danish kroner, compared to 4.83billion kroner in the year-ago period. The group recorded net reversals of 130million kroner, compared to loan impairment charges of 502 million kroner inthe first quarter of 2015.

*Swedbank AB(publ) named Elisabeth Beskow andOla Laurin co-heads of its large corporates and institutions division,effective May 1. Beskow has served as the bank's head of investmentbanking and Laurin has served as head of financial institutions. 

*Danish banks helping customers evade taxes may be punished under current rules,Børsen reports.Taxation Minister Karsten Lauritzen and Business and Growth Minister TroelsLund Poulsen said banks will be held responsible if it can be proven that theyfacilitated tax evasion.

*The Swedish FSA is critical of government plans to prohibit tax deductions onsubordinated loans issued by banks, Realtidreports.Removing the deduction would increase the banks' tax bills by approximately 1.4billion kronor. The FSA said the consequences of the proposal on financialstability have not been sufficiently investigated.

EASTERNEUROPE

Romaniaputs in place controversial mortgage law: RomanianPresident Klaus Iohannis signed a bill that will allow property owners to walkaway from their mortgage loans, Reuters reports.The bill has been criticized as contravening EU rules and posing risks to theRomanian economy and banking sector.

* Nova LjubljanskaBanka dd is close to reaching a deal to sell an €800 million badloan portfolio, SEENews reports,citing Slovenian papers. A sale agreement is expected to be signed withfinancial advisory company KF Finance and its unnamed U.K. partner, whichoffered around €160 million for the portfolio.

*The Russian finance ministry intends to propose a law that would penalize usersof digital currencies, such as the bitcoin, with fines of up to 2.5 millionrubles and imprisonment for up to seven years as anonymous transactions aidkidnappers and money launderers, Bloomberg News reports.

* The Russian Deposit Insurance Agency put up for salePoidem Bank and National Savings Bank, which used to form Russian financialgroup Life, Vedomosti and Kommersantreport. The starting price was set at 771.9 million rubles for Poidem Bank and306.7 million rubles for National Savings Bank. Rossiysky Capital is interestedin acquiring Poidem Bank.

* The Russian Agency for Housing Mortgage Lending, which is in theprocess of discussing the introduction of a new type of MBS with the Russiancentral bank, wants a preferential 20% risk-weighing ratio to be applied onthose instruments, Vedomosti writes.The Russian regulator is now consulting with Basel on whether this would be inline with its regulatory standards.

* Most measures launched by the Russian central bank in 2014 tosupport the country's banking system have been withdrawn or expired, while reliance onsupport measures is easing, as operating conditions in the banking sector havestabilized, Fitch ratings says.The agency also noted that following their recapitalization in 2015, Russia's topstate banks will be able to withstand two to three years of current stresslevels before requiring further support.

INOTHER PARTS OF THE WORLD

* CitigroupInc. is still slimming down, and its Asia payment processingbusiness is now up for sale, Reuters reports.

* Pacific LifeInsurance Co.-owned Pacific Asset Advisors LLC agreed to Boston-based boutique investmentfirm Cadence Capital ManagementLLC.

* Ecuador asked the IMF to open a credit line following therecent earthquakethat caused widespread destruction in the country and killed more than 600people, Reuters reports.

* The Indian central bank said banks are not required toreport the status of compliance with recommendations to prevent fraud andmalpractice, the Press Trust of India reports.

NOWFEATURED ON SNL

BBVA expectsto struggle to meet Spanish NII guidance after Q1 earnings miss:BBVA said reaching targets for 2016 Spanish NII will be "challenging"after it reported first-quarter earnings below analysts' expectations.

Oil firmsfacing restricted financial market access, DNB says: The Norwegianbank recorded individual impairments of 610 million kroner in its shipping,offshore and logistics division, compared to 382 million kroner in the fourthquarter of 2015 and 242 million kroner a year ago.

Lloydsconfident on NIM target despite low interest rates: CFO GeorgeCulmer said that despite fierce competition, low interest rates and lowprospects for growth, the bank's margins are not in danger thanks to itsability to manage the balance sheet between subsidiaries and the parentcompany.

Capitalworries continue at Deutsche Bank: Deutsche Bank's first-quarterfigures reflect difficult markets and weaker capital as well as lighterlitigation costs.

Net interestincome to improve, fee income gains uncertain, CaixaBank execs say:Net interest income was in line with consensus estimates, but fee income camein weaker than expected, according to Haitong Research.

XanaKakoty, Arno Maierbrugger, Brian McCulloch, Kees Pijnappels, Yael Schrage,Praxilla Trabattoni, Mariana Aldano, Mike Hatzidakis, Esben Svendsen, BeataFojcik and Ali Kayalar contributed to this report.

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