Bank consolidations look likely, ECB's Enria says

Former Wirecard CEO arrested in Germany | ECB's Enria deems bank consolidation likely | Bidding war possible for LSEG stake in Italian exchange

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24 June 2020

News on the global financial markets

Morning Bell

Former Wirecard CEO arrested in Germany

German authorities have arrested Markus Braun, who resigned last week as CEO of payment company Wirecard, on suspicion of falsifying the company's revenue and balance sheet. He has been released on bail of €5 million.

Full Story: Deutsche Welle (Germany)/The Associated Press/Reuters (23 Jun.)

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Industry News

ECB's Enria deems bank consolidation likely

Falling profitability as a result of the coronavirus pandemic has increased the likelihood of consolidation in the eurozone banking sector, European Central Bank supervisor Andrea Enria says. A clearer view of the pandemic's impact will appear next month when the ECB releases results of a vulnerability analysis, he says.

Full Story: Reuters (23 Jun.)

Bidding war possible for LSEG stake in Italian exchange

Several European exchanges are interested in acquiring Milan-based Borsa Italiana if its owner, the London Stock Exchange Group, has to offload it due to an EU antitrust inquiry into its bid for Refinitiv. The Italian exchange could attract offers as high as €3.5 billion, sources say.

Full Story: Bloomberg (tiered subscription model) (23 Jun.)

BoE falling short on diversity, Bailey says

The Bank of England faces challenges to reach its gender and race diversity goals, says governor Andrew Bailey. Some 32% of senior management roles are currently filled by women against a target of 35% by the end of this year, while ethnic minorities remain underrepresented among its senior ranks.

Full Story: Bloomberg (tiered subscription model) (23 Jun.)

Banks release details of plans for office returns

Investment banks are implementing a range of measures to ease the return of their staff to office working, from phased returns to free antibody testing.

Full Story: Financial Times (subscription required) (23 Jun.)

PIMCO chief: Virus to create distressed credit openings

The coronavirus pandemic and ensuing depressed outlook for the US economy will create openings in distressed credit for investors, says PIMCO chief executive Emmanuel Roman. He predicts US GDP will not return to last year's levels until the end of 2021.

Full Story: Reuters (23 Jun.)

BofA analysts: Brexit has devastated pound's status

Brexit's effect on the UK economy has prompted an irreversible shift in investor attitude toward sterling, which is increasingly likened to an emerging-market currency, Bank of America analysts say.

Full Story: Financial Times (subscription required) (23 Jun.)

Regulatory Roundup

EU to study UK's post-Brexit financial rules

The British Treasury has released the government's post-Brexit financial regulation update plans for banks, asset managers and derivatives traders, saying they reflect international Basel standards. The EU now has to determine if the UK rules will meet its equivalence criteria.

Full Story: Reuters (23 Jun.), Financial Times (subscription required) (23 Jun.)

Analysis: Rathi's post as FCA head will be challenging

London Stock Exchange CEO Nikhil Rathi's new job as the next head of the UK's Financial Conduct Authority comes at a time when the FCA is dealing with coronavirus disruptions, domestic post-Brexit financial regulations and EU equivalence discussions. Rathi's prior government and political experience gives a good indication that he will be able to handle the pressure.

Full Story: Politico Pro (subscription required) (23 Jun.)

Spotlight on China

US sends mixed messages on trade with China

White House officials have made contradictory statements since President Donald Trump raised the possibility of "decoupling" the US and Chinese economies. Trade adviser Peter Navarro declared the US-Chinese trade deal over, then withdrew the statement, while National Economic Council Director Larry Kudlow has commented positively on Beijing as Chinese imports from the US rise.

Full Story: Reuters (23 Jun.)