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TP Icap sues NEX; BAWAG to buy BFL Leasing; Novo Banco sells NPLs


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Navigating Industry Level Credit and Market Risks in the Light of Slow Growth and Interest Rate Hikes

TP Icap sues NEX; BAWAG to buy BFL Leasing; Novo Banco sells NPLs

* The European Banking Authority's latest risk assessment of the European banking sector found that banks' asset quality improved, profitability remained largely stable, solvency ratios increased and operational risks grew.

* The tensions in financial markets in the last quarter of 2018 are the first of several "bumps in the road" expected as central banks move toward their pre-crisis monetary policy settings, the Bank for International Settlements said in its quarterly review. The BIS said the source of tension in the euro area was, once again, the darkening outlook around Italy's already delicate fiscal condition, while worries about a hard Brexit have shaken markets in the U.K.

* The ECB will take over direct supervision of the Irish subsidiaries of Barclays PLC and Bank of America Merrill Lynch beginning in 2019, after classifying them as significant in anticipation of the increases in their sizes following Brexit. Meanwhile, the regulator said it will no longer directly supervise Dublin-based Permanent TSB Group Holdings PLC, which has not been deemed significant for three consecutive years.

* ECB supervisor Sabine Lautenschläger said banks in the eurozone should not be allowed to utilize contingent convertible bonds, or AT1 bonds, to meet regulatory capital requirements, saying doing so would encourage banks and markets to come up with undesirable financial innovations with regard to the bonds, Reuters reported.


* U.K. trading and broking firm TP Icap PLC has taken legal action against London-based trading firm NEX Group Ltd. over claims that it breached a warranty of their £1.3 billion deal, The Sunday Times reported. TP Icap, the entity created after Tullett Prebon took over Icap's voice-broking business, accused Nex — the business formed from the remainder of Icap — of breaking a warranty that ensured the voice-broking business was not exposed to any significant litigation, claiming staff had "actual or potential legal claims" against it in relation to their incapacity benefits.

* London Stock Exchange Group PLC named Donald Robert as its new chairman to replace Donald Brydon, who is stepping down following a controversial boardroom dispute over the tenure of former CEO Xavier Rolet. Robert, currently chairman of Irish credit data company Experian PLC, will initially join LSE as a nonexecutive director and will become chairman in May 2019.

* Separately, LSE said it increased its stake in clearing house LCH Group Holdings Ltd. to 82.6% after acquiring an additional 14.6% from certain minority shareholders for an aggregate amount of €424.5 million.

* AIB Group PLC named Colin Hunt as its new CEO. Hunt, who joined the group in 2016 as managing director of wholesale and institutional banking, will succeed Bernard Byrne, who is leaving in early 2019.

* Meanwhile, the European Insurance and Occupational Pensions Authority's 2018 stress test of 42 European insurers and reinsurers found that six insurance companies' capital would fall below requirements if there were a shock upward movement in interest rates, while seven companies would fall short if there were a protracted period of extremely low interest rates.

* Fitch Ratings upgraded several ratings of Royal Bank of Scotland Group PLC and certain units, citing the British banking group's improved risk profile after making progress on its ongoing restructuring and resolving major legacy matters.

* Bank of England Governor Mark Carney told the Financial Times that the regulator is weighing plans to incorporate the impact of climate change in its stress tests of U.K. banks as early as next year under its exploratory scenario.

* U.S. asset manager Legg Mason has launched an office in Dublin to ensure continuity of its services to continental European clients after Brexit, Reuters reported.

* The EBA said U.K.-based payment firms are not doing enough to prepare for a potential cliff-edge Brexit, and said the large volumes of payments business they offer through their cross-border passporting activities may face disruption, Reuters wrote.


* Austria's BAWAG Group AG will acquire 100% of Germany-based BFL Leasing GmbH from Bfl Gesellschaft Des Bürofachhandels Mit Beschränkter Haftung & Co. Kg for an undisclosed amount.

* Qatar may increase its stake in Deutsche Bank AG, Handelsblatt reported. The head of the state-owned Qatar Financial Center said it will invest in a large German financial institution; the Qatari royal family already holds a 6.1% stake in Deutsche Bank and the Qatar Investment Authority could now buy a further stake.

* Michael Baer, the great-grandson of Swiss bank founder and namesake Julius Baer, has launched his own new bank in Zurich, reported. MBaer Merchant Bank AG has received regulatory approval to operate.

* Zurich Insurance Group AG unit Zurich Insurance Plc has reached a deal with Catalina Holdings (Bermuda) Ltd. and certain of its subsidiaries to transfer its pre-2007 UK legacy employers' liability policies to Catalina, subject to approvals.


* Dutch online brokerage BinckBank NV confirmed that it is reviewing an offer by Saxo Bank A/S to acquire all of its shares for €6.35 apiece. The Danish lender's offer values the potential deal at approximately €429 million, Bloomberg News noted. The talks are at an advanced stage, and sources told Bloomberg that a deal could be announced within weeks.

* Insurers face a total bill of between €100 million and €200 million as a result of damage insurance claims after "yellow vest" protests in France, according to Les Echos.


* Portugal's Novo Banco SA has sold a large portion of its nonperforming loans to U.S. private equity firm KKR. The group is said to have paid €1.75 billion, after winning the bid against others including Deutsche Bank and Cerberus Capital Management, Economia Online wrote. The transaction set a record as the most expensive nonperforming loan portfolio ever sold in Portugal.

* Spanish insurer Mutua Madrileña Automovilista Sociedad de Seguros a Prima Fija has acquired 50.01% of Alantra Wealth Management, the private banking division of financial services firm Alantra Partners S.A., for €23.7 million, wrote Europa Press.

* Spanish bank Bankia SA is close to clinching a deal to sell bad loans and repossessed property valued €3 billion to U.S. buyout group Lone Star, a source told Reuters. The state-owned lender's assets could fetch a purchase price of roughly €1 billion and a deal could be reached by the end of the year, the newswire noted, citing an El Confidencial report.

* The former finance director of collapsed lender Banco Espírito Santo SA is taking legal action against the Bank of Portugal and auditing firm KPMG, accusing them of having imposed "inflated losses" on the lender prior to its collapse in 2014 and demanding they pay the state €4.3 billion, Reuters reported.


* Unione di Banche Italiane SpA sold €416.2 million of unsecured bad debt. Following the sale, which resulted in a gross profit of about €9 million, the bank's ratio of gross NPLs fell to 10.8% from 11.1%.


* Finland-based Nordea Bank Abp has launched a new open banking service dubbed Instant Reporting that will allow its corporate clients to access their own accounts and incorporate real-time data with their own systems. The bank said the offering is its first that moves beyond requirements in PSD2.


* BNP Paribas SA's Polish unit will slash its staff numbers by up to 2,200 employees in the next two years. Bank BGŻ BNP Paribas SA, which recently acquired the core banking operations of Raiffeisen Bank International AG's Polish unit for roughly €775 million, said it will create a 128.5 million Polish zloty reserve in the fourth quarter of 2018 to cover costs associated with the cuts.

* The Czech National Bank said it will increase the countercyclical capital buffer for banks to 1.75% with effect from Jan. 1, 2020, adding that it is prepared to increase the rate further. The buffer currently stands at 1.0%, but previous central bank decisions have already raised it to 1.50% by July 2019, Reuters noted.

* Russia's central bank raised its key rate to 7.75% from 7.50% in what it called a "proactive" move aimed at curbing elevated inflation risks.

* S&P Global Ratings revised its ratings outlook on Serbia to positive from stable, citing the country's strong economic growth that is expected to continue through 2021 as well as steps taken by its central bank to make its monetary policy more credible and effective.

* PAO Sberbank of Russia has set up a new division, SberX, to develop its digital ecosystem, news agency RBC reported. The new division will replace the current digital business development division.

* The Russian central bank revoked the license of local lender Joint-stock company Runetbank after the lender decided to terminate its activities via a voluntary liquidation.

* Moneta Money Bank a.s. CEO Tomáš Spurný accused fellow Czech lender Česká spořitelna a.s. of using unfair practices to lure Moneta's specialists to go to work for Ceska sporitelna ahead of Moneta's potential purchase of Air Bank and other local businesses owned by Home Credit BV, Hospodarske Noviny reported. Spurný was also cited as saying that the planned transaction will not affect thousands of Moneta employees working in the lender's 200 branches.

* The Czech central bank issued a banking license for the Czech Republic's largest credit union Moravský peněžní ústav, Hospodarske Noviny reported. The financial institution could start operating as a bank from January 2019 if it manages to complete all required formalities, including changing its legal status to a joint stock company.


Asia-Pacific: China to share investor identities with Hong Kong; Sri Lanka reinstates PM

Middle East & Africa: Access Bank said to acquire Diamond Bank; Moza Banco agrees to buy Banco Terra

Latin America: XP to sue BTG over alleged confidentiality breach; Peru maintains key rate

North America: BNY Mellon shelves new London HQ plan; Delmar Bancorp, Virginia bank to merge


Libor administrator may continue use of tainted benchmark after 2021: Finance companies that use the benchmark interest rate Libor to underpin contracts are being asked for information which could see the controversial measure remain in use after its supposed 2021 cut-off date.

Lloyd's moves to reassure European reinsurance buyers after report of Covéa snub: Lloyd's of London has insisted that European insurers can "safely" continue to buy reinsurance from the market's syndicates following a report that French mutual insurer SGAM Covéa has taken some business elsewhere because of Brexit concerns.

Ben Meggeson, Ed Meza, Danielle Rossingh, Esben Svendsen, Beata Fojcik, Heather O'Brian, Brian McCulloch, Praxilla Trabattoni 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.