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BoE outlines stress-test scenarios; OneSavings Bank stake sold; NN Group sued


Commercial Banking: June 22nd Edition


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Commercial Banking Newsletter June Edition - 2022


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BoE outlines stress-test scenarios; OneSavings Bank stake sold; NN Group sued

* ECB Chief Economist Peter Praet warned that the recent surge in inflation could stall or even reverse if the regulator's current extraordinary stimulus is removed too early, Reuters reports. Meanwhile, fellow ECB executive board member Sabine Lautenschläger said the central bank should end its aggressive stimulus policy as soon as the economy becomes sufficiently stable.

* The ECB warned that some EU states are engaging in a regulatory race to the bottom in order to attract U.K.-based firms looking to establish a foothold on the continent after Brexit. Lautenschläger said a number of EU countries are promising "fast delivery" of bank or broker-dealer licenses without requiring banks to establish risk management teams at a local level.

* Germany's finance ministry has raised concerns that a so-called hard Brexit could threaten the stability of financial markets and said the two-year Brexit negotiations may not be enough for the U.K. and the bloc to reach a free trade deal, Reuters reports.


* A number of Europe's biggest banks are paying a tax rate as low as 2% in Ireland, the Irish Independent writes, citing a report by Oxfam International. Five banks, including Royal Bank of Scotland Group Plc, UniCredit SpA and Banco Santander SA, have recorded profits in the country that were higher than their turnover, which the report said "potentially suggests that they are artificially shifting profits to Ireland."

* The Bank of England has asked banks to submit copies of their Brexit contingency plans to reassure the regulator that they are prepared for "a range of possible outcomes" should the country quit the EU in a disorderly way, Reuters reports.

* Brexit Secretary David Davis said the cost of Brexit for the U.K. will be "nothing like" the amount EU officials have suggested, Bloomberg News writes. Davis said the roughly £50 billion sum European Commission President Jean-Claude Juncker quoted had "no explanation" behind it.

* The Bank of England yesterday outlined two stress test scenarios for this year's health check of six British banks and one building society, one of which will incorporate a hypothetical rise in the central bank's key interest rate to up to 4%. Alongside its annual cyclical scenario, the BoE will run an additional, biennial exploratory scenario that will examine what would happen to lenders if the headwinds they have experienced since the financial crisis persist or intensify rather than abate in line with expectations for a medium-term recovery of profitability.

* The U.K. Prudential Regulation Authority will launch a review into consumer credit after the BoE's Financial Policy Committee has warned again of soaring household debt. The review will focus on specific sources of borrowing, including the increased usage of interest-free balance transfers on credit cards, Bloomberg News writes.

* Think-tank Z/Yen Group Ltd.'s latest Global Financial Centres Index showed that London has retained its position as the world's top financial center, even though its overall rating took a hit due to the uncertainty surrounding Brexit, Bloomberg News reports.

* Economists at the EY Item Club predict that the U.K.'s financial sector will continue to grow over the next two years and see a "pronounced pick-up" post-Brexit, City A.M. writes. British banks' business lending is forecast to reach £414 billion this year, up from £406 billion last year, and is expected to rise to £419 billion in 2019.

* U.S. private equity firm J.C. Flowers & Co. LLC has sold 24.3 million shares in OneSavings Bank Plc, representing about 10% of the latter's share capital. The shares were sold at 395 pence per share, equivalent to gross proceeds of approximately £96 million.

* The U.K. Financial Conduct Authority has requested information from a number of the U.K.'s biggest banks, including Royal Bank of Scotland Group, relating to an alleged multibillion-dollar global money-laundering operation, the Financial Times reports. The regulator has contacted up to 17 lenders linked to the Russian scheme dubbed "the Laundromat."

* Aviva Plc is seeking to off-load Friends Provident International Ltd., insiders tell The Wall Street Journal. The Isle of Man-based unit, which provides life assurance and investment products to high-net-worth clients in Asia and the Middle East, could fetch up to $750 million.

* HSBC Holdings Plc has cut 120 jobs in its IT department in Hong Kong as part of its cost-cutting effort, the South China Morning Post reports. Francis Fong Po-Kiu, honorary president of Hong Kong's Information Technology Federation, said a second round of job cuts may happen on April 1, but those claims were rejected by HSBC spokesman Gareth Hewett.


* Credit Suisse Group AG CEO Tidjane Thiam said the "massive progress" the bank has made in its restructuring plan has allowed it to consider alternative options to listing part of its Swiss bank unit in a bid to raise capital, Bloomberg News reports. Thiam said the group will decide on a plan to raise capital "as soon as possible," Reuters writes.

* Deutsche Bank AG is seeking ways to change property-loan contracts it has with U.S. President Donald Trump, which are worth around $300 million, Bloomberg News writes. The fact that the loans are secured by Trump's personal guarantee would allow the bank to foreclose the assets in case he defaults, which the bank would not want to do in the current political circumstances.

* Zurich Insurance Group Ltd. denied reports it is preparing a capital increase and clarified that there were no immediate plans to issue new shares, Handelsblatt writes. Instead, the insurer said it was seeking shareholder authorization to raise its capital to give the board the flexibility to fund acquisitions or manage unforeseen events.

* MERKUR BANK KGaA forecasts rising profit for this year, but not as much as the 10% increase achieved in 2016, Börsen-Zeitung notes.

* Vaudoise Assurances Holding SA took over the entire share capital of Berninvest AG und Dr. Meyer Asset Management AG.


* Dutch insurer NN Group NV is the subject of a €3.2 billion lawsuit filed by two consumer groups in the Netherlands for charging too much money on investment insurance, Het Financieele Dagblad reports.

* Workers seem to have overwhelmingly backed ING België NV's restructuring plan, according to L'Echo. Unions will be meeting later today to make their final decisions.

* Dirk Vanderschrick will become the new head of Belfius Insurance SA, L'Echo reports. He has been a member of Belfius Banque SA's management board and its head of commercial and retail banking since 2013. He will keep those roles and be in charge of bancassurance, the publication writes.

* Meanwhile, Belfius is not interested in taking over Ethias SA unless the latter "solves its governance issues," De Tijd reports, citing CEO Marc Raisière.

* Former Van Lanschot NV clients will go to court after the private bank sold their commercial real estate loans to Cerberus Capital Management LP unit Promontoria in 2015 without their consent, Het Financieele Dagblad reports.


* To conclude the sale of Novo Banco SA to U.S. private equity firm Lone Star, the Portuguese government accepted demands from the European Commission to give up its voting rights in the lender even if it keeps a 25% stake in the company, Jornal de Negócios notes. The deal is expected to be ratified on Thursday, but if adjustments have to be made after that, the deadline will be extended by two weeks.


* ECB supervisory board chair Daniele Nouy said European authorities will soon take a decision regarding a potential state rescue plan for Banca Monte dei Paschi di Siena SpA, Reuters reports.

* About 70% of Veneto Banca SpA and Banca Popolare di Vicenza SpA have taken up the lenders' settlement offers, with the official results set to be released later today and the settlement expected to go ahead even if the acceptance rate is below the 80% threshold set by the banks, MF says.

* National Bank of Greece SA will most likely receive tender offers for Ethniki Hellenic General Insurance Co. SA on Tuesday, with China's Fosun thought to be among the interested parties, reports. Sales consultants Goldman Sachs and Morgan Stanley put the company's value at 800 million to 1 billion. NBG is committed to selling 100% of Ethniki unless the investor requires the bank to maintain a 25% stake. The sale is expected to be concluded by the end of 2018.

* Banca IFIS SpA acquired two nonperforming loan portfolios with a combined nominal value of €573 million, Reuters reports.

* Meanwhile, Credito Valtellinese SpA sold an NPL portfolio with a gross nominal value of €50 million to an unnamed specialized investor, according to Reuters.


* Denmark's minister for business affairs, Brian Mikkelsen, said the Danish government is ready to welcome Nordea Bank AB (publ) to Denmark if the lender decides to move its headquarters out of Sweden in the event the Swedish government goes through with plans to introduce higher taxes for banks, adding that Denmark has no plans for higher bank taxes, FinansWatch reports.


* PAO Sberbank of Russia agreed to sell PJSC Sberbank to a consortium of investors that includes JSC Norvik Banka and a Belarusian company. The deal is expected to close in the first half of 2017. The value of the transaction was not disclosed.

* Vnesheconombank's Ukrainian unit PSC Prominvestbank plans to hold a shareholders meeting on April 27 to discuss a potential recapitalization, Ekonomichna Pravda reports.

* UniCredit is involved in negotiations regarding the sale of UniCredit Czech Republic and Slovakia, with MONETA Money Bank a.s. and Société Générale SA unit Komercní banka a.s. mentioned as potential buyers, Hospodarske Noviny reports. The Italian bank could get around 90 billion Czech koruna from the sale of its subsidiary, the newspaper notes.


Asia-Pacific: 3 firms shortlisted for ICICI Lombard stake; Singapore, France ink fintech deal

Middle East & Africa: Gordhan ordered home; Ghana rate cut; Gulf's 1st green bond

Latin America: Banco Indusval posts wider loss; Colombia cuts benchmark rate

North America: HNA bags Old Mutual deal; bankers launch credit card company

North America Insurance: Sanders proposes single-payer healthcare bill; Anthem grilled by appeals court


EU passporting for fintechs won't dim London's appeal: The EC has suggested that fintech companies might be granted European passporting rights, but this will not necessarily undercut London's appeal as a hub for fintech, industry insiders say.

ECB warns of 'race to the bottom' in EU to attract London firms after Brexit: Some EU countries are offering overly lenient regulatory supervision to U.K.-based financial companies that are looking for ways to trade in the single market after Brexit, ECB officials warned.

350,000 UK insurance, finance jobs to go by early-2030s, PwC predicts: Hundreds of thousands of jobs are under threat in finance and insurance in the U.K., but the outlook for employees is even more worrying on the other side of the Atlantic, PwC said.

David Hutter, Arno Maierbrugger, Danielle Rossingh, Esben Svendsen, Beata Fojcik, Thanasis Kakalis, Ali Kayalar, Heather O'Brian, Stephanie Salti, Praxilla Trabattoni and Mariana Aldano contributed to this report.

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