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Home » Retail Banking 2020 Insights » Morning Briefing

Morning Briefing

Regulators on the back foot

Are we approaching the end of a golden age of regulation? The Guardian this morning speculates that cosying up between major banks and the UK's Tory government could spell the end of the much heralded ring-fence for retail banks and a report from the London School of Economics has warned that tighter bank regulation could destabilise financial markets and trigger a crisis even bigger than the one experienced in 2008.

The LSE's Systemic Risk Centre (SRC) said that forcing banks to adopt the same models to forecast risk could effectively create blind spots. "If the authorities pick one modelling approach over another, they may just as easily be backing the wrong horse, a model that is less accurate," the report said.

US banks face further capital requirements

In the US, meanwhile, the country's eight biggest banks have been told they must set aside an extra $200 billion in capital buffers against the possibility of a future crisis. Most of the banks are on track to meet the target, but JPMorgan still has some work to do to raise more capital — as the biggest bank, it requires the most capital, a figure of $12.5 billion, amounting to 4.5pc of its balance sheet, adjusted for risk.

Handelsbanken posts rise in net profit

Swedish lender Handelsbanken posted a small rise in net profit for the second quarter thanks to higher business volumes and lower funding costs. said it continued its expansion in the U.K. during the second quarter as it posted a small rise in net profit, helped by higher business volumes and lower funding costs. Net profit was 4.17 billion kronor ($483.2 million), up from 4.03 billion kronor in the second quarter last year. The bank said it opened seven new branches in the U.K. during the period.

Irish banks begin to emerge from the abyss

Bank of Ireland has been raised to investment grade by Standard & Poor's ratings agency, the first of the Irish banks to achieve such a rating since they imploded during the financial crisis.

All of the main Irish banks were upgraded by the ratings agency, which cited net interest margins as the key factor in the banks' favour.

Bradesco in talks to buy HSBC Brasil

Citing a source "with direct knowledge of the transaction", Reuters says Banco Bradesco, began exclusive talks on Monday to buy HSBC's Brazilian unit. If the talks are successful, a deal could be announced by within the month. The bid values the unit, HSBC Bank Brasil Banco Múltiplo, at about 12 billion reais ($3.75 billion), or 1.2 times book value, the source said.

QE feeding European house price bubble — Moody's

The ECB's quantitative easing programme risks fuelling house price bubbles in a number of European countries, according to a report by Moody's analytics. The report says Germany, Norway and the UK, which have been subject to rapid growth in house prices, are at particular risk

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