RETAIL BANKING | Staff Reporter, Europe

Weekly Global News Wrap: Full pandemic impact on Europe banks unclear til 2021; England mulls new capital rules for small banks

And Spain's BBVA sells US business to PNC Financial Services for $11.6b.


The full extent of the pandemic’s impact on European banks won’t fully manifest until 2021, according to a senior European banking official, and there may be one or two casualties in the sector.

Elke König, chair of the Single Resolution Board of the Single Resolution Mechanism, which oversees the restructuring of failing banks in the EU, said she expected a rise in the number of non-performing loans (NPLs) in the region, which in turn would hit bank balance sheets.

However, König highlighted that some government support implemented at the start of the crisis was starting to expire, and as such, further damage to Europe’s banking sector could become apparent later in 2021.

From Reuters

The Bank of England is looking at whether it could introduce a graduated system of “strong and simple” capital rules for smaller lenders and building societies, deputy governor Sam Woods said.

Britain’s departure from the European Union gives regulators an opportunity to better tailor rules to UK financial firms, though it would be “mad” for this to translate into weaker standards, Woods added.

Britain would also move to a more “hybrid” style of regulating banks, using a mix of principles and supervisory statements rather than continuing with the EU approach of having detailed rules enshrined in law, he said.

From Reuters

Spain's BBVA will sell its US business to PNC Financial Services Group for $11.6b in cash in one of the biggest global bank deals this year.

The sale will further consolidate the US banking sector and prompted speculation BBVA could use the cash to buy up a rival bank in its domestic market.

PNC and BBVA had been in talks about a deal for the last few weeks, and decided to press on after the US elections because they believe the regulatory environment will not change with Democrat Joe Biden as president and the Republicans likely controlling the Senate, sources familiar with the matter said.


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