Scandinavian CoCos, China Parts, U.K. Banks: Compliance

Scandinavian banks are set to increase the issuance of contingent convertible debt as soon as regulators in Sweden and Norway set guidelines for the securities, Standard and Poor’s said.

Banks have until 2021 to replace convertible debt that no longer meets regulatory requirements. European regulators tightened standards for hybrid capital -- which pays a coupon, like debt, but can also absorb losses, like equity -- after older securities failed to protect lenders from insolvency during the financial crisis.

Denmark has already set triggers that tell investors when their CoCos convert or get written down. Sweden, the region’s biggest banking market and home to Nordea Bank AB, may see trigger requirements approved as early as next month as part of wider capital discussions, according to Swedbank AB. Norway will decide “later this year,” said Emil Steffensen, deputy director general of the Financial Supervisory Authority in Oslo.

China Said to Be Probing Foreign Automakers Over Spare Parts

China is examining whether foreign auto manufacturers are preventing component makers from selling spare parts to any dealers besides those authorized by the car companies, people familiar with the matter said.

The National Development and Reform Commission, China’s economic planning body, is probing practices at Stuttgart, Germany-based Daimler AG’s Mercedes-Benz, Volkswagen AG’s Audi, Munich-based Bayerische Motoren Werke AG and Japanese carmakers to see whether prices of spare parts are being artificially boosted, the people said, asking not to be identified because the probe hasn’t been made public.

Chinese state media have criticized car producers from abroad for overcharging consumers for spare parts.

BMW and Wolfsburg, Germany-based Volkswagen declined to comment, while representatives at Mercedes said they weren’t aware of an investigation of the company. The NDRC didn’t reply to a fax seeking comment.

Compliance Action

U.K.’s Big Banks Face Probe Into Checking Accounts, Lending

Britain’s largest banks face a full investigation into small-business lending and checking accounts as antitrust regulators said the industry lacks effective competition.

The four largest lenders control more than three-fourths of the U.K. consumer banking industry, and there are significant barriers to new banks, the Competition and Markets Authority said July 18 in a statement. The regulator said it would review whether to start an in-depth investigation.

British lawmakers are seeking to loosen the grip of Britain’s four biggest lenders -- Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc -- which control more than 90 percent of the market for small-business lending and have been hit by scandals.

The British Bankers Association said lenders will cooperate with the probe.

Credit Suisse Poised for Biggest Loss Since 2008 After Tax Fine

Credit Suisse Group AG is poised to report its biggest quarterly loss since the collapse of Lehman Brothers Holdings Inc. after being fined $2.6 billion for helping American clients evade taxes.

The bank tomorrow will post a loss of 701 million Swiss francs ($780 million), hurt by a 1.6 billion-franc charge linked to the fine, according to the average estimate of seven analysts surveyed by Bloomberg. By contrast, larger competitor UBS AG may log an 812 million-franc quarterly profit next week.

Credit Suisse’s loss would be the biggest since the fourth quarter of 2008. Uncertainty surrounding the outcome of the litigation and the bank’s guilty plea to criminal charges slowed the flow of client money into the wealth management unit.

Credit Suisse Chief Executive Officer Brady Dougan said in May he expected “very little impact” on the bank’s business after its main Swiss unit became the first global lender in a decade to admit to a crime in the U.S.


RBS Chief Says Currency-Rigging Scandal May Top Libor Costs

Royal Bank of Scotland Group Plc Chief Executive Officer Ross McEwan said in a radio interview July 18 that the foreign-exchange market scandal may be more expensive to the banking industry than Libor or improperly sold loan insurance.

U.S. and U.K. authorities are investigating potential manipulation in the $5.3 trillion-a-day global currency market by banks around the world.

“The difference this time is that we haven’t sat back and denied it,” said McEwan who succeeded Stephen Hester as CEO in October. “We’ve gone into it and doing the investigation hand-in-hand with the authorities. And again, I’d like to see it cleaned up as quickly as we can.”

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