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Home » Daily Briefing » Daily briefing - 27 January 2017

Daily briefing - 27 January 2017

coffee, drink, cafe, food

Earlier this week Banco Santander was able to report a rise of four percent in net profit for 2016; Spanish rival Banco Sabadell has been unable to replicate the feat, with net profit up by a mere 0.3 percent. A key factor in this performance has been the impact of the ruling by the European Court of Justice late in the fourth quarter which sees higher provisions needed for the repayment of mortgage customers who had signed up for what are now deemed "unfair clauses". The bank plans to cut 11 percent of branches this year. Elsewhere in Europe, profits at Swiss universal bank UBS surpassed analyst expectations, although net profit for 2016 was nearly half that of the year before.

Chinese e-commerce billionaire Jack Ma seems to be going by Warren Buffet's admonition to act resolutely when others are afraid: as multinationals East and West bide their time, awaiting clarification on international relations and trade in the era of Trump and Brexit, Ant Financial is taking over MoneyGram International and its extensive agent network for $880 million. "The combination is a powerful one: leading-edge technology with global reach and a significant physical footprint. Innovation and trust in one bundle," Warren Mead, KPMG's global co-head of fintech, told Fortune. "I expect to see the ever increasing convergence of fintech and the more traditional financial services sector."

The Irish government may sell off around 25 percent of Allied Irish Banks as soon as May, the country's finance minister has revealed. AIB was effectively nationalised after the republic's banking system crashed: the people of Ireland, mired in a retail banking market with little choice and less than perfect customer service, currently hold a 99 percent stake. Barclays meanwhile is preparing to grow its office in Dublin on foot of Brexit. Transplanted bankers will certainly find that Liffeyside nightlife is more convivial than that of Frankfurt (to go by the social scene described in the German city earlier this week in Lafferty News).

Finally, agreement on the latest iteration of Basel Committee rules for banking worldwide remains elusive, with the Eurogroup chairman saying that a new target date could be set "once the dust settles". It had been hoped to finalise an agreement by the end of 2016, but that proved impossible. Now, with international uncertainty on the rise, revisions to regulations that determine loan risks remain undetermined. The Financial Times described the impasse before Christmas, as talks in Chile failed to find agreement: "At issue is how banks can use internal models to determine the riskiness of their loans — a subject on which US and European policymakers have publicly clashed. So-called 'output floors' are meant to be part of the package, a senior Basel Committee official said....These floors, which are backed by the US, restrict banks' use of models to assess their loan books. Analysts at Morgan Stanley have previously warned that the adoption of a floor would hit lenders across the Netherlands, Denmark and Sweden the hardest."

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