Article

Thursday, March 31, 2011 8:01 AM GMT Thursday, Financials edition

By Shreyasi Tambraparni and Xana Kakoty and David Hutter and Leticia Camargo von Wissell

UK and Ireland

Irish stress test: In what Reuters terms a "last-ditch bid to convince investors," Ireland will today detail its restructuring plan for the nation's distressed . With speculation mounting that a €20 billion capital shortfall will be exposed when stress-test results are declared at the close of market today, of Ireland and Plc followed Irish Life & Permanent Plc yesterday and suspended trading in their shares, the Financial Times reports. Meanwhile, Bloomberg News cites sources who believe that BoI, Irish Life & Permanent and EBS Building Society will together fall short by €9 billion, while it is uncertain how much capital AIB will require.

* In its annual report published yesterday, Lloyds Banking Group Plc revealed that it is offering CEO António Horta-Osório a remuneration package worth £9.7 million, with an annual salary of approximately £1.1 million, The Wall Street Journal reports. The new CEO also is being awarded shares worth about £4.5 million, and Lloyds is allocating £4.1 million in shares to pay off Horta-Osório's contract with his former employer, Santander UK Plc.

* Louis Vachon, CEO of National Bank of Canada, which holds 1.5 million shares in TMX Group Inc., said his bank is "strongly against" the London Stock Exchange Group Plc/TMX deal, the Journal reports. Vachon's comment follows statements made by Canadian Imperial Bank of Commerce's head of wholesale banking, Richard Nesbitt, who made it clear that CIBC would support the deal only subject to "significant conditions" being satisfied.

* News outlets are abuzz with rumors that Plc is considering moving its headquarters to New York, with the FT highlighting New York Mayor Michael Bloomberg's enthusiasm for the move. Bloomberg said: "I hope they move here. It'd be great for us." Reuters writes that the bank is contemplating the move "to escape … draconian U.K. and EU financial regulations," while The Times in London points out that the bank is waiting on the U.K. Independent Commission on Banking's report, as well as finalization of the Dodd-Frank legislation in the U.S., before making the call.

* Separately, The Independent reports that Barclays has overtaken Santander UK as the bank against which most complaints have been registered.

* After 15 months of negotiations, the Irish National Treasury Management Agency has rejected a consortium bid led by Cardinal for EBS Building Society, The Irish Times reports. Irish Finance Minister Michael Noonan decided to turn down the syndicate's offer after the government found that the bid was "not sufficiently commercially attractive" to the state.

* Even as the ECB looks to gradually withdraw from providing emergency liquidity to Irish banks, The Irish Times notes that ECB chief economist Jürgen Stark warned against the "populist move" of forcing bondholders to share the cost of failure.

* AIB's AIB Capital Markets is selling four collateralized loan obligations to Blackstone Group LP's GSO Capital Partners, Bloomberg News reports.

* In spite of various catastrophes, Lloyd's of London managed to book a £2.2 billion pretax profit for 2010. However, the FT notes, Lloyd's has still not provided estimates on costs arising from the Japan calamities. In a separate piece, the paper asks whether the recent spate of disasters will lull takeover activity in the market or rather encourage a more aggressive bidding process.

Germany, Switzerland and Austria

BHF-Bank sale delayed: The sale of AG unit BHF-Bank AG to Liechtenstein's LGT Group is being delayed after an agreement was not reached this week as planned, the Financial Times Deutschland says.

* Landesbank Baden-Württemberg is suing one of its traders over apparent irregularities in its securities trading operations over the past two years, the Handelsblatt reports.

* Even though Bayerische Landesbank recorded full-year 2010 pretax profit of €885 million, its CEO, Gerd Häusler, said yesterday that the landesbank's future lies in the hands of the EU, which can make further demands because of the bank's government bailout, the Handelsblatt says. Meanwhile, the FT Deutschland quotes Häusler as saying the bank is postponing its privatization because the EU is no longer insisting on it. Separately, the Handelsblatt also reports that the bank's CFO, Stefan Ermisch, is leaving in a few weeks' time.

Source: SNL Financial | Page 1 of 3 Article

* The chairman of Sparkassenverband Westfalen-Lippe has dismissed EU Competition Commissioner Joaquín Almunia's criticism of WestLB AG over the uncertainty surrounding its future, the FT Deutschland reports. The newspaper adds that the row appears to be escalating.

* The German insurance association is not revealing its growth expectations for 2011 because German insurers are worried about new capital rules, billions of euros of losses in the car insurance segment and the possibility of rising interest rates, according to the Handelsblatt.

* Moody's has lowered Bank AG's long-term senior debt rating to A1 from Aa3, the Handelsblatt says.

* Erste Bank and Weinviertler Sparkasse AG are likely to merge in September, the WirtschaftsBlatt reports, adding that Erste Bank already owns a 99.49% stake in the .

* Credit Suisse Group AG could be interested in Indonesia's PT Bank Metro Express and may already have made an offer for the unit, finews.ch reports.

France and Benelux

Insurers under the weather: Les Echos writes that insurers are seeking out alternatives to deal with the increase in weather-related events. It notes that Allianz Group's French unit is forming a partnership with weather forecasters Météo France to anticipate weather hazards and improve its management of large claims.

* Crédit Local SA CEO Alain Clot told La Tribune that the group wants to reduce its short-term funding to 14% by 2014 from 45% in 2008.

Southern Europe

Banco Base merger collapses: The general assemblies of Caja de Ahorros de Asturias, Caja de Extremadura and Caja Cantabria voted against transferring their assets to Banco Base, Cinco Días reports. However, the newspaper adds that the three cajas might still move forward as a group without Caja Mediterráneo — instead being led by Cajastur. La Vanguardia notes that all the institutions now have two weeks to present their "plan B" to the Spanish regulator.

* Now on its own, Caja Mediterráneo has asked for capital support from the Spanish government, El País and Expansión write, while El Mundo says the caja could be nationalized. Diario Público reports that the caja will now look for another merging partner, and El Confidencial says the Spanish government has "offered" the institution to Spain's five largest banks in its attempts to rescue it.

* In the past two days, Banco Financiero y de Ahorros SA, known as , has recorded €420 million in profits from asset sales, Cinco Días reports. The group's leading partner, Caja , issued €1.25 billion in government-guaranteed bonds, Expansión notes.

* Portuguese newspaper Diário Económico reports on the downgrade of Caixa Geral de Depósitos SA yesterday by Fitch Ratings, saying other banks in the country are also at risk.

* Details of a new tax on banks have been disclosed in Portugal, according to Diário Económico, which notes that the government could pocket another €150 million.

* Banca Popolare di Milano Scarl CEO Fiorenzo Dalu ruled out the possibility that the bank might resort to a capital increase, as rumored, MF says.

* Italian regulator Consob approved Banca IFIS SpA's takeover offer for Toscana Finanza, which has been set at €1.50 per share, according to MF.

* Fondazione Cariplo wants to buy a 10% stake in SpA unit Banca Prossima for up to €12 million, MF reports. According to Il Messaggero, two other fondazioni, Compagnia San Paolo and Cariparo, could also buy 10% stakes.

* Banco Popolare Società Cooperativa has issued a €1 billion two-year bond, Il Messaggero reports.

* Proton Bank SA announced its intention to undertake a capital share increase of €50 million and raise another €50 million through a convertible bond issue, with pre-emption rights for existing shareholders of the bank, Euro2day reports.

* T Bank is ready to move ahead with a merger with its main shareholder, TT Hellenic Postbank SA, Kerdos reports.

Source: SNL Financial | Page 2 of 3 Article

Nordic countries

Spar Nord abandons Amagerbanken talks: Bank A/S has abandoned plans to open talks to acquire any part of Amagerbanken A/S, Børsen reports. A/S is also eyeing some of the failed bank's assets, though CEO Karen Frøsig played down interest, reportedly saying, "We have not really decided, at this stage, whether we are interested in buying Amagerbanken or not."

* Denmark's state-run Financial Stability Co. is doubtful that the M&A activity needed to consolidate a fragmented financial sector will be realized anytime soon, Børsen reports.

* Denmark's 25 billion kroner bank bailout fund is quickly drying up, Politiken reports.

Eastern Europe

Russia may limit state banks: The Russian government may restrict the development of state banks by limiting their presence in regional markets or by blocking their acquisition of financial assets, Vedomosti reports. On March 1, state banks accounted for 59.7% of the banking sector, controlling 59% of capital.

* Insurance Group is leaving the Russian insurance market by selling its minority stake in Moscow Insurance Group and its subsidiaries, Vedomosti says.

* Bank Ochrony Srodowiska SA is still planning a 150 million Polish zloty share issue by the end of the year, Parkiet reports.

* Kommersant reports that the investigation department of Russia's interior ministry tried to suspend Bank of Moscow President Andrei Borodin and his deputy, Dmitri Akulinin, from performing their duties while the state authority conducts an investigation of a 12.76 billion Russian ruble unsecured loan issued by the bank to troubled Russian businesswoman Elena Baturina.

* Ceská sporitelna a.s. plans to invest 1 billion Czech koruny this year to develop its branch network, Czech news website E15 reports.

Now featured on SNL

Ubi Banca spooks Europe: A relatively small bank asking for a relatively small amount of money spooked markets about the outlook for Europe's banks.

Gabe LeDonne, Beata Fojcik, Esben Svendsen, Rose Griffin, Thanasis Kakalis, Mike Hatzidakis, Taylan Bilgic and Gerard O'Dwyer contributed to this report.

The Daily Dose is updated as of 7 a.m. London time. Some external links may require a subscription.

Source: SNL Financial | Page 3 of 3