Raphael Stevens

Gastech, a recent gas-industry jamboree in Houston, was full of enthusiasm. Amid a blizzard of deals by energy ministers and fossil-fuel giants, delegates cheered: their product is set for a starring role in the green transition. Yet there was uncertainty, too. Opprobrium was heaped on President Joe Biden, who has paused permits for American export terminals of liquefied natural gas (LNG). Insiders also worry that the global lng market, which became vital to Europe and Asia after the war in Ukraine began, could soon face its first true test. With demand rising and supply failing to come on stream, a new scramble for gas could be in the offing. More

Egypt is gearing up to return to international debt markets for the first time in three years. Last week Ahmed Kouchouk, the country’s finance minister, is reported to have told investors that his government is hoping to raise around $3bn in external debt over the coming months. Much of this borrowing will take the form of so-called Eurobonds, one of the world’s worst-named financial instruments. More

BNP Paribas Chief Financial Officer Lars Machenil on Thursday voiced his support for greater integration in Europe’s banking sector.
His comments come as Italy’s UniCredit ups the ante on its apparent takeover attempt of Germany’s Commerzbank, while Spain’s BBVA continues to actively pursue its domestic rival, Banco Sabadell.
“If I would ask you, how many banks are there in Europe, your right answer would be too many,” Machenil said.

A sign on the exterior of a BNP Paribas SA bank branch in Paris, France, on Friday, Aug. 2, 2024.
Bloomberg | Bloomberg | Getty Images

France’s BNP Paribas on Thursday said there are simply too many European lenders for the region to be able to compete with rivals from the U.S. and Asia, calling for the creation of more homegrown heavyweight banking champions.
Speaking to CNBC’s Charlotte Reed at the Bank of America Financials CEO Conference, BNP Paribas Chief Financial Officer Lars Machenil voiced his support for greater integration in Europe’s banking sector.

His comments come as Italy’s UniCredit ups the ante on its apparent takeover attempt of Germany’s Commerzbank, while Spain’s BBVA continues to actively pursue its domestic rival, Banco Sabadell.
“If I would ask you, how many banks are there in Europe, your right answer would be too many,” Machenil said.
“If we are very fragmented in activity, therefore the competition is not the same thing as what you might see in other regions. So … you basically should get that consolidation and get that going,” he added.

Milan-based UniCredit has ratcheted up the pressure on Frankfurt-based Commerzbank in recent weeks as it seeks to become the biggest investor in Germany’s second-largest lender with a 21% stake.
UniCredit, which took a 9% stake in Commerzbank earlier this month, appears to have caught German authorities off guard with the potential multibillion-euro merger.

German Chancellor Olaf Scholz, who has previously called for greater integration in Europe’s banking sector, is firmly opposed to the apparent takeover attempt. Scholz has reportedly described UniCredit’s move as an “unfriendly” and “hostile” attack.
Germany’s position on UniCredit’s swoop has prompted some to accuse Berlin of favoring European banking integration only on its own terms.

Domestic consolidation

BNP Paribas’s Machenil said that while domestic consolidation would help to stabilize uncertainty in Europe’s banking environment, cross-border integration was “still a bit further away,” citing differing systems and products.
Asked whether this meant he believed cross-border banking mergers in Europe appeared to something of a farfetched reality, Machenil replied: “It’s two different things.”
“I think the ones which are in a nation, economically, they make sense, and they should, economically, happen,” he continued. “When you look at really cross border. So, a bank that is based in one country only and based in another country only, that economically doesn’t make sense because there are no synergies.”
Earlier in the year, Spanish bank BBVA shocked markets when it launched an all-share takeover offer for domestic rival Banco Sabadell.
The head of Banco Sabadell said earlier this month that it is highly unlikely BBVA will succeed with its multi-billion-euro hostile bid, Reuters reported. And yet, BBVA CEO Onur Genç told CNBC on Wednesday that the takeover was “moving according to plan.”
Spanish authorities, which have the power to block any merger or acquisition of a bank, have voiced their opposition to BBVA’s hostile takeover bid, citing potentially harmful effects on the county’s financial system. More

Klarna said Thursday that it had entered into an agreement with Adyen to add its buy now, pay later (BNPL) products to physical payment terminals.
Klarna will be included as an option across more than 450,000 Adyen payment terminals in brick-and-mortar locations as a result of the deal.
BNPL is mostly associated with online shopping, however, firms in the space are seeking to target consumers in-store, too, as they expand.

“Buy-now, pay-later” firm Klarna aims to return to profit by summer 2023.
Jakub Porzycki | NurPhoto | Getty Images

Swedish firm Klarna is partnering up with Dutch payments fintech Adyen to bring its popular buy now, pay later service into physical retail stores.
The company said Thursday that it had entered into an agreement with Adyen to add its payments products as an option at physical payment machines used by the Amsterdam-based fintech’s merchant partners.

Klarna will be included as an option across more than 450,000 Adyen payment terminals in brick-and-mortar locations as a result of the deal, according to the companies. The partnership will initially launch in Europe, North America and Australia with a wider rollout planned later down the line.
Klarna’s buy now, pay later, or BNPL, service allows users to spread the cost of their purchases over a period of interest-free installments. The service is mostly associated with online shopping, which currently accounts for about 5% of the global e-commerce market, according to Klarna.

Targeting consumers in-store has become an increasingly important priority as Klarna and other firms in the sector such as Block’s Afterpay, Affirm, Zip, Sezzle, and Zilch seek to expand their reach.
The move expands on a previous arrangement Klarna had in place with Adyen on e-commerce payments.
“We want consumers to be able to pay with Klarna at any checkout, anywhere,” David Sykes, chief commercial officer at Klarna, said in a statement Thursday.

“Our strong partnership with Adyen gives a massive boost to our ambition to bring flexible payments to the high street in a new way.”
Adyen’s head of EMEA, Alexa von Bismarck, said the deal was about giving consumers flexibility at checkout, adding that “consumers care deeply about the in-store touch point and value brands which can allow them to pay how they want.”
Earlier this year, Klarna sold Klarna Checkout, the company’s online checkout solution for merchants. This saw the firm compete less directly with payment gateways including the likes of Adyen, Stripe, and Checkout.com.

Klarna’s deal with Adyen comes as the Swedish tech giant is exploring a much-anticipated initial public offering.
Klarna hasn’t yet set a fixed timeline on when it expects to go public, however the firm’s CEO Sebastian Siemiatkowski told CNBC earlier this year that a 2024 IPO for the business wouldn’t be “impossible.”
In August, Klarna began rolling out a checking account-like product, called Klarna balance, as well as cashback rewards in a bid to convince consumers to move more of their financial lives over to its platform.
BNPL has faced criticisms from consumer rights campaigners, however, over fears it promotes the idea of consumers spending more than they can afford. Regulators are pushing for rules to bring the nascent — but fast-growing — payment method into regulation.
The recently elected U.K. Labour government is expected to set out plans for buy now, pay later regulation soon.
City Minister Tulip Siddiq said in July that the government would establish new proposals “shortly” after multiples delays to the previous Conservative government’s regulation plans for BNPL. More

European banking’s latest takeover battle is widely regarded as a potential turning point for the region — particularly the bloc’s incomplete banking union
Italy’s UniCredit has ratcheted up the pressure on Frankfurt-based Commerzbank in recent weeks as it seeks to become the biggest investor in Germany’s second-largest lender with a 21% stake.
The Milan-based bank, which took a 9% stake in Commerzbank earlier this month, appears to have caught German authorities off guard.

A man shelters from the rain under an umbrella as he walks past the Euro currency sign in front of the former European Central Bank (ECB) building in Frankfurt am Main, western Germany.
Kirill Kudryavtsev | Afp | Getty Images

European banking’s latest takeover battle is widely regarded as a potential turning point for the region — particularly the bloc’s incomplete banking union.
Italy’s UniCredit has ratcheted up the pressure on Frankfurt-based Commerzbank in recent weeks as it seeks to become the biggest investor in Germany’s second-largest lender with a 21% stake.

The Milan-based bank, which took a 9% stake in Commerzbank earlier this month, appears to have caught German authorities off guard with the potential multibillion-euro merger.
“The long-discussed move by UniCredit, Italy’s number one bank, to seek control of Germany’s Commerzbank is a watershed for Germany and Europe,” David Marsh, chairman of London-based OMFIF, an organization that tracks central banking and economic policy, said Tuesday in a written commentary.
Whatever the outcome of UniCredit’s swoop on Commerzbank, Marsh said the episode marks “another huge test” for German Chancellor Olaf Scholz.

The embattled German leader is firmly opposed to the apparent takeover attempt and has reportedly described UniCredit’s move as an “unfriendly” and “hostile” attack.
“The dispute between Germany and Italy over UniCredit’s takeover manoeuvres – branded by Scholz an unfriendly act – threatens to inflame relations between two of the Big Three member states of the European Union,” Marsh said.

“A compromise could still be found,” he continued. “But the hostility developing in Italy and Germany could scupper any meaningful steps towards completing banking union and capital markets integration, which all sides say is necessary to drag Europe out of its malaise.”

What is Europe’s banking union?

Designed in the wake of the 2008 global financial crisis, the European Union’s executive arm in 2012 announced plans to create a banking union to make sure that lenders across the region were stronger and better supervised.
The project, which became a reality in 2014 when the European Central Bank assumed its role as a banking supervisor, is widely considered to be incomplete. For instance, the lack of a European deposit insurance scheme (EDIS) is one of a number of factors that has been cited as a barrier to progress.
European leaders, including Germany’s Scholz, have repeatedly called for greater integration in Europe’s banking sector.
OMFIF’s Marsh said Germany’s opposition to UniCredit’s move on Commerzbank means Berlin “now stands accused of favouring European banking integration only on its own terms.”
A spokesperson for Germany’s government did not immediately respond when contacted by CNBC for comment.

The logo of German bank Commerzbank seen on a branch office near The Commerzbank Tower in Frankfurt.
Daniel Roland | Afp | Getty Images

Hostile takeover bids are not common in the European banking sector, although Spanish bank BBVA shocked markets in May when it launched an all-share takeover offer for domestic rival Banco Sabadell.
The head of Banco Sabadell said earlier this month that it is highly unlikely BBVA will succeed with its multi-billion-euro hostile bid, Reuters reported. And yet, BBVA CEO Onur Genç told CNBC on Wednesday that the takeover was “moving according to plan.”
Spanish authorities, which have the power to block any merger or acquisition of a bank, have voiced their opposition to BBVA’s hostile takeover bid, citing potentially harmful effects on the county’s financial system.
Mario Centeno, a member of the European Central Bank’s Governing Council, told CNBC’s “Street Signs Europe” on Tuesday that European policymakers have been working for more than a decade to establish a “true banking union” — and continue to do so.
The unfinished project means that the intervention framework for banking crises continues to be “an awkward mix” of national and EU authorities and instruments, according to Brussels-based think tank Bruegel.

Asked whether comments opposing banking consolidation from leading politicians in both Germany and Spain were a source of frustration, the ECB’s Centeno replied, “We have been working very hard in Europe to bring [the] banking union to completion. There are still some issues on the table, that we all know.”

What happens next?

Thomas Schweppe, founder of Frankfurt-based advisory firm 7Square and a former Goldman mergers and acquisitions banker, said Germany’s decision — intentional or otherwise — to sell a small 4.5% stake to UniCredit earlier this month meant the bank was now “in play” for a potential takeover.
“I think we are, you know, proposing a European banking landscape and also in Germany, they are a proponent of strong European banks that have a good capital base and are managed well,” Schweppe told CNBC’s “Squawk Box Europe” on Wednesday.
“If we mean this seriously, I think we need to accept that European consolidation also means that a German bank becomes the acquired party,” he added.
Asked for a timeline on how long the UniCredit-Commerzbank saga was likely to drag on, Schweppe said it could run for months, “if not a year or more.” He cited a lengthy regulatory process and the need for talks between all stakeholders to find a “palatable” solution. More

The U.S. Securities and Exchange Commission charged Harvest Volatility Management and Merrill Lynch on Wednesday for exceeding clients’ predesignated investment limits over a two-year period.
The two companies settled separately and will pay a combined $9.3 million to resolve the claims.
The SEC found Harvest exposed investors to greater financial risks and Merrill connected clients to Harvest while aware that accounts were exceeding designated limits.

A logo for financial service company Merrill Lynch is seen in New York.
Emmanuel Dunand | Afp | Getty Images

The U.S. Securities and Exchange Commission charged Harvest Volatility Management and Merrill Lynch on Wednesday for exceeding clients’ predesignated investment limits over a two-year period.
Merrill, owned by Bank of America, and Harvest have agreed in separate settlements to pay a combined $9.3 million in penalties to resolve the claims.

Harvest was the primary investment advisor and portfolio manager for the Collateral Yield Enhancement Strategy, which traded options in a volatility index aimed at incremental returns. Beginning in 2016, Harvest allowed a plethora of accounts to exceed the exposure levels that investors had already designated when they signed up for the enhancement strategy, with dozens passing the limit by 50% or more, according to the SEC’s orders.
The SEC said Merrill connected its clients to Harvest while it knew that investors’ accounts were exceeding the set exposure levels under Harvest’s management. Merrill also received a cut of Harvest’s trading commissions and management and incentive fees, according to the agency.
Both Merrill and Harvest received larger management fees while investors were exposed to greater financial risks, the SEC said. Both companies were found to neglect policies and procedures that could have been adopted to alert investors of exposure exceeding the designated limits.
“In this case, two investment advisers allegedly sold a complex options trading strategy to their clients, but failed to abide by basic client instructions or implement and adhere to appropriate policies and procedures,” said Mark Cave, associate director of the SEC’s enforcement division. “Today’s action holds Merrill and Harvest accountable for dropping the ball in executing these basic duties to their clients, even as their clients’ financial exposure grew well beyond predetermined limits.”
A representative from Bank of America said the company “ended all new enrollments with Harvest in 2019 and recommended that existing clients unwind their positions.”

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