UBS to pay $1.44B to settle US fraud claims; Citi closes sale of Taiwan business

TOP NEWS IN GLOBAL FINANCIALS

– UBS Group AG agreed to pay nearly $1.44 billion in penalties to settle a civil action brought by the US Department of Justice (DOJ) for allegedly misselling residential mortgage-backed securities (RMBS) between 2006 and 2007. The case centers on allegations that units of the Swiss bank defrauded investors related to the sale of 40 RMBS during the period, knowingly making "false and misleading" statements to buyers. More than $36 billion of civil penalties have been collected from entities involved in similar cases, according to the DOJ. UBS said the penalty is already covered by provisions.

– Citigroup Inc. said it has completed the sale and migration of its consumer businesses in Taiwan to DBS Group Holdings Ltd. The sale includes retail banking, credit card, mortgage and unsecured lending businesses, along with the transfer of close to 3,000 employees. Citi's institutional client businesses in Taiwan are not part of the transaction, which will likely provide a regulatory capital benefit of about $1.2 billion.

➤ Blackstone's Schwarzman highest paid CEO in US financial services sector in 2022

Blackstone Inc. CEO Stephen Schwarzman was the highest-paid chief executive in the US financial services industry in 2022, with total adjusted compensation of $253.1 million.

➤ Global i-bank trading income contracts in Q2 as market normalization stings

Big US and European banks' trading businesses performed poorly in the second quarter relative to recent periods, which executives attributed to market environment normalization and lower volatility.

➤ Margin squeeze to haunt Chinese banks' H1 earnings

Industrial and Commercial Bank of China Ltd., Agricultural Bank of China Ltd. and Bank of China Ltd. are projected to achieve less than 1% earnings growth in 2023, according to estimates from external analysts on the S&P Capital IQ platform.

READ MORE about the liquidity crunch and the fallout for the financial sector in our new Issue in Focus.

AMERICAS

– Cryptocurrency custodian Prime Trust LLC filed for bankruptcy. The Las Vegas-based firm filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the District of Delaware. The company intends to file a number of motions with the Bankruptcy Court for the evaluation of strategic options, including a sale of its assets and operations as a going concern, according to a press release.

– Mastercard Inc. agreed to buy a minority stake in the financial technology business of African telecom company MTN Group Ltd. in a deal that values the entire fintech unit at $5.2 billion, Bloomberg News reported, citing MTN President and CEO Ralph Mupita on an investor call Aug. 14.

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EUROPE

– Jyske Bank A/S posted a second-quarter net profit of 1.20 billion Danish kroner, rising year over year from 840 million kroner thanks to stronger net interest income. The bank's first-half profit also grew to 2.49 billion kroner from 1.69 billion kroner a year ago. Core income for the full year is expected to increase substantially following Jyske Bank's acquisition of Sweden-based Svenska Handelsbanken AB (publ)'s Danish business, but core expenses will rise as well.

– The UK Financial Conduct Authority wrote to lawmakers asking if they have faced difficulties in accessing financial services, marking the beginning of an investigation into the so-called de-banking scandal in which banks closed client accounts for political reasons, media outlets including the Financial Times and Reuters reported. The investigation will also cover other "politically exposed persons," including senior civil servants and high-ranking members of the armed forces, according to the FT.

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MIDDLE EAST & AFRICA

– Top shareholders of Shuaa Capital PSC including the bank's managing director, Jassim Alseddiqi, are reportedly in early-stage discussions for the sale of their stakes in the investment bank, Bloomberg News reported, citing people familiar with the matter. Alseddiqi plans to cut his 25% stake in the Dubai-based investment bank and step down from his role to transition into a career in technology, research and academia, according to the report.

– The Central Bank of Kenya has issued licenses to 12 digital lenders, including Tala, M-Kopa, Tenakata and Zanifu, bringing the total of Kenya's digital credit providers to 22, Zawya.com reported. About 359 digital credit providers have not been licensed since March 2022, according to the report.

ASIA-PACIFIC

– National Australia Bank Ltd. reported an unaudited statutory net profit of A$1.75 billion and unaudited cash earnings of A$1.90 billion for the three months to June-end, reflecting cash earnings growth of 5.8% compared with the prior-year period. The Australian lender said it plans to buy back up to A$1.5 billion of its ordinary shares on-market to progress managing its common equity Tier 1 ratio toward its target range of 11.00% to 11.50%. Market conditions, prevailing share prices and other factors will determine the timing and number of shares purchased under the buyback.

– Chinese authorities raised concerns about potential contagion in the country's shadow banking sector as Zhongzhi Enterprise Group Co. Ltd., one of the country's largest private wealth managers, failed to make payments on several high-yield investment products, Bloomberg News reported. The situation prompted China's banking regulator to establish a task force to assess the risks associated with Zhongzhi.

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