Author: JanMusschoot

If banks are no longer active, why do they still have a banking license?

During my research on banks in Europe, I came across some strange things. Here’s an example. Some banks have a banking license in a country, while the banks themselves say they are no longer active there:

LBBW has a banking license in Luxembourg according to the ECB.

LBBW doesn’t mention Luxembourg on its global locations site. A 2012 article says LBBW pulled out of Luxembourg.

Credit Europe has a banking license in Belgium according to the ECB.

But Credit Europe says it has stopped its activities in Belgium in 2016.

Bank of Scotland has a banking license in France and in the Netherlands, according to the ECB. But the bank says it does not operate internationally.

What’s going on here?

International bank divestments

From the 1990s until the global financial crisis, there was a wave of consolidation and international expansion by Western European banks. Over the past decade, M&A activity has been a fraction of what it used to be. International banks have sold part of their foreign subsidiaries, either voluntarily or because regulators forced them to slim down.

Who did they sell to? Often to local or regional banks.

Examples (note that this is a work in progress! – most recent update 24 August 2024):

Africa

Barclays (UK) sells its controlling stake in Absa (South Africa and 9 other African countries) to investors (2017)

BNP Paribas (France) sells its holdings in Gabon, Mali and the Comoros to Ivorian Atlantic Financial Group (2020)

BNP Paribas (France) sells its subsidiaries in Burkina Faso and Guinea to Guinean Vista Bank (2021)

BNP Paribas (France) sells most of its stake in UBCI (Tunisia) to Tunisian Carte (2021)

Standard Chartered (UK) exits seven countries, 5 in Africa and 2 in the Middle East (2022)

BNP Paribas (France) sells its majority stake in BICIS (Senegal) to pan-African SUNU (2022)

Société Générale (France) sells its subsidiaries in Congo Brazzaville and Equatorial Guinea to Guinean Vista Bank (2023)

Société Générale (France) sells its subsidiaries in Mauritania and Chad to Burkinabe Coris Group (2023)

Société Générale (France) sells its subsidiaries in Burkina Faso and Mozambique to Guinean Vista Bank (2023)

Société Générale (France) sells its subsidiary in Morocco to Moroccan Saham Finances (2024)

Société Générale (France) sells its subsidiary in Benin to the state of Benin (2024)

Société Générale (France) sells its stake in Société Générale Madagasikara (Madagascar) to French BRED Banque Populaire (BPCE) (2024)

Americas

BBVA (Spain) sells BBVA USA to American PNC Financial Services Group (2020)

HSBC (UK) sells it retail business in the USA to American Cathay Bank and Citizens Bank (2021)

MUFG (Japan) sells MUFG Union Bank (USA) to American U.S. Bancorp (2021)

BNP Paribas (France) sells Bank of the West (USA) to Canadian BMO (2021)

HSBC (UK) sells its subsidiary in Canada to Canadian RBC (2023)

Asia and the Middle East

Dexia (Belgium) sells Denizbank (Turkey) to Russian Sberbank (2012)

National Bank of Greece (Greece) sells Finansbank (Turkey) to Qatari QNB (2016)

Sberbank (Russia) sells Denizbank (Turkey) to (United Arab) Emirates NBD (2019)

ABN AMRO (Netherlands) winds down its corporate banking activities in Asia, Australia, Brazil and the US (2020)

UniCredit (Italy) sells most of its stake in Yapi Kredi (Turkey) (2020)

HSBC (UK) wants to exit Turkey (2020)

Citigroup (US) sells its retail banking activities in 13 markets, mainly in Asia (2021)

HSBC (UK) sells HSBC Oman to Omani Sohar International Bank (2022)

Central and Eastern Europe

AIB (Ireland) sells its stake in Bank Zachodni (Poland) to Spanish Santander (2010)

Barclays (UK) sells Expobank (Russia) to Russian financier Igor Kim (2011)

KBC (Belgium) sells Kredytbank (Poland) to Spanish Santander (2012)

KBC (Belgium) sells its minority stake in Nova Ljubljanska Banka (Slovenia) to Slovenia (2012)

KBC (Belgium) sells Absolut Bank (Russia) to Russian investors (2012)

Erste (Austria) sells its subsidiary in Ukraine to Fidobank (2012)

KBC (Belgium) sells KBC Banka (Serbia) to French Société Générale and Norwegian Telenor (2013)

National Bank of Greece (Greece) sells UBB (Bulgaria) to Belgian KBC (2016)

UniCredit (Italy) sells its controlling stake in Pekao (Poland) to local investors (2016)

RBI (Austria) sells its bank in Slovenia to Biser Bidco (2016)

Alpha Bank (Greece) sells Alpha Bank Srbija (Serbia) to Serbian AIK Banka (2017)

Cyprus Popular Bank (Cyprus) sells Marfin Bank (Serbia) to Expobank CZ (Czech Republic) (2017)

Eurobank (Greece) sells Bancpost (Romania) to Romanian Banca Transilvania (2017)

National Bank of Greece (Greece) sells its subsidiaries in Serbia to Hungarian OTP (2017)

Piraeus Bank (Greece) sells its unit in Serbia to Serbian Direktna Banka (2017)

Société Générale (France) sells most of its Central and Eastern European subsidiaries to Hungarian OTP (2017-2019)

Société Générale (France) sells Euro Bank (Poland) to Portuguese Millennium bcp (2018)

Bausparkasse Schwäbisch Hall (Germany) sells its stake in CMSS (Czech Republic) to Belgian KBC (2019)

Piraeus Bank (Greece) sells PBB (Bulgaria) to Greek Eurobank (2019)

National Bank of Greece (Greece) sells Banca Românească (Romania) to Romanian Eximbank (2020)

Danske Bank (Denmark) sells its unit in Estonia to Estonian LHV Pank (2020)

Danske Bank (Denmark) sells its business in Latvia to Latvian Citadele Bank (2020)

Handelsbanken (Sweden) closes its branches in Germany and Poland (2020)

ING (Netherlands) exits retail banking in the Czech Republic (2021)

Crédit Agricole (France) sells its subsidiary in Serbia to Austrian RBI (2021)

Crédit Agricole (France) sells its subsidiary in Romania to Romanian Vista Bank (2021)

RBI (Austria) sells its subsidiary in Bulgaria to Belgian KBC (2021)

Apollo (USA) sells NKBM (Slovenia) to Hungarian OTP (2021)

AnaCap (UK) sells Equa bank (Czech Republic) to Austrian RBI (2021)

Commerzbank (Germany) sells its subsidiary in Hungary to Austrian Erste (2021)

Sberbank (Russia) planned to sell its subsidiaries in 5 CEE countries to local banks (2021), but Sberbank Europe was closed by the ECB in 2022

Igor Kim (Russia) sells AS Expobank (Latvia) to Latvian Signet Bank (2022)

Société Générale (France) sells Rosbank (Russia) to Russian Interros (2022)

JC Flowers (USA) sells First Bank (Romania) to Italian Intesa Sanpaolo (2023)

Alpha Bank (Greece) sells its operations in Romania to Italian UniCredit (2023)

Eurobank (Greece) sells Eurobank Direktna (Serbia) to Serbian AIK Banka (2023)

HSBC (UK) sells its unit in Russia to Russian Expobank (2024)

HSBC (UK) sells its unit in Armenia to Armenian Ardshinbank (2024)

OTP (Hungary) sells OTP Bank Romania to Romanian Banca Transylvania (2024)

Société Générale (France) sells its private banking subsidiaries in the UK and Switzerland to Swiss Union Bancaire Privée (2024)

For more on bank consolidation in Central and Eastern Europe, see this report by Deloitte.

Western Europe

Citigroup (US) sells its retail banking activities in Belgium to French Crédit Mutuel Nord Europe (2012)

Crédit Agricole (France) sells Emporiki (Greece) to Greek Alpha Bank (2012)

Barclays (UK) sells its retail branches in Italy to Italian Mediobanca (2015)

HSBC (UK) wants to sell its retail banking operation in France (2020) Update: sold to French My Money Group (2021)

Degroof Petercam (Belgium) sells its private banking activities in Spain to Andorran Andbank (2020)

Rabobank (Netherlands) shuts down its online savings bank in Belgium (2021)

ING (Netherlands) sells its retail banking activities in Austria to Austrian bank99 (2021)

KBC (Belgium) sells its subsidiary in Ireland to Bank of Ireland (2021)

Crédit Agricole (France) sells Bankoa (Spain) to Spanish Abanca (2021)

Handelsbanken (Sweden) will exit Denmark and Finland (2021)

Degroof Petercam (Belgium) sells its private bank in Switzerland to Swiss Gonet & Cie (2022)

RBC (Canada) sells RBC Investor Services (Luxembourg) to Franco-Spanish1 Caceis (2022)

HSBC (UK) sells its retail bank in Greece to Greek Pancreta Bank (2022)

Crédit Mutuel (France) sells Targobank Spain to Spanish ABANCA (2023)

Fosun International (China) sells private Hauck Aufhäuser Lampe (Germany) to Dutch ABN AMRO (2024)

Exceptions

Caixabank (Spain) increases its stake in Banco BPI (Portugal) to 84.5% (2017)

BNP Paribas (France) buys Raiffeisen Bank Polska (Poland) from Austrian RBI (2018)

Crédit Agricole (France) buys three small banks in Italy (2017) and another one in 2020.

KBC (Belgium) buys OTP Banka Slovensko (Slovakia) from Hungarian OTP (2020)

BBVA (Spain) increases its stake in Garanti (Turkey) to 49.85% (2017) and launches a bid for the remaining shares (2021)

Eurobank (Greece) merges its subsidiary in Serbia with local bank Direktna Banka (2021)

For examples from 2022 and later, see this post.

Chinese financial statistics

Financial Market Reports, includes outstanding bonds

Aggregate assets and liabilities of Financial Institutions (banks, insurers, securities institutions)

Monetary Policy Reports, includes breakdown of loans and deposits by borrower (households, enterprises and public entities, non-banking financial institutions, overseas), lending volumes according to size of banks, Aggregate funding to the real economy according to loans, bonds, other funding; balance of payments, foreign exchange reserves

Monetary Policy Instruments, including Open Market Operations (short term reverse repo), Required Reserves (required reserve ratios), Interest Rates, Lending Facilities

Interest rates and exchange rates

Money and Banking Statistics, includes Balance Sheet of Monetary Authority (i.e. People’s Bank of China)

Official lists of credit institutions

Albania

Andorra

Brazil

Cayman Islands

Dubai (query for bank/banc/banque/credit in the company name and status = active)

European Union (query for individual banks available here)

Guernsey

Hong Kong

Iceland

Isle of Man

Japan

Jersey

Liechtenstein

New York (query ‘Foreign Agency’ and ‘Foreign Branch’ to find the international banks in NY)

Norway

Russia

Serbia

Singapore

South Korea

Switzerland

United Arab Emirates

United Kingdom

United States (national banks, supervised by the OCC)

If you know where to find official lists of banks in China, please let me know in the comments!

Green TLTRO

How can the European Central Bank (ECB) support a sustainable recovery? In a report for Positive Money Europe and Sustainable Finance Lab, Jens van ‘t Klooster and Rens van Tilburg propose that the ECB starts a Green TLTRO program.

Green TLTRO is a refinancing program for commercial banks. Banks can fund their green loans with longer term (several years) deposits from the European Central Bank (ECB). Green loans are bank loans that comply with the EU’s Green Taxonomy.

The figure below shows the balance sheet of a commercial bank with conventional (left) and green (right) TLTRO. Under TLTRO-III, the ECB funds 50% of a bank’s eligible assets. Under green TLTRO, the ECB funding is only available for green bank loans.

The interest rate on the Green TLTRO is determined by the volume of green bank loans. More green loans result in a lower interest rate on the funding from the ECB. With negative interest rates, banks have to pay back less to the ECB than they borrowed. This provides a strong incentive to banks to increase their lending to green projects, and to pass on the low rates to borrowers.

Is Green TLTRO a pie in the sky proposal? Only if you’re not keeping up with the times.

TLTROs are a well-established monetary policy tool. The ECB is currently doing TLTRO-III.

In a recent speech, ECB Executive Board Member Isabel Schnabel pointed out that climate change is a market failure. She said that collective action, including by the ECB, should correct this market failure and accelerate the transition towards a carbon-neutral economy.

Asked about the Green TLTRO report by MEP Bas Eickhout, ECB President Lagarde said that “climate change has to be part and parcel of our strategy review. Not because it is a secondary objective, but because of its impact on price stability, because of its significant impact on risk assessment and risk management. And the Green TLTRO, as you called it, is a matter that is of interest and that we will look at.”

What volume of green loans should the ECB target during the first 3 years? How low should the interest rate on Green TLTRO be? Should the eligible bank assets include loans to households for house purchases, a category that is currently exluded from TLTRO?

In a webinar on 12 October 2020, Jens van ‘t Klooster discusses the Green TLTRO proposal with Isabel Vansteenkiste (ECB) and Frederik Ducrozet (Pictet).

Update 2020/10/18: this is the video

Full disclosure: I have done consulting work for this report.

Tax havens

Vanessa Ogle on the history of tax havens and decolonization (academic paper, yet reads like a “normal” article). Twitter summary here.

The Tax Justice Network has more articles on offshore history.

How oil companies use captive insurance companies in tax havens to minimize their taxes.

How much money from public tenders in the EU goes to tax havens? (Article has some discussion of methodology)

Random reads summer 2020

Banking update August-September 2020

  • ABN AMRO exits all its non-European corporate banking activities
  • CaixaBank and Bankia are planning a merger
  • HSBC wants to sell its French retail network
  • Rumors of a merger between Credit Suisse and UBS

The strategy of European banks ever since the Global Financial Crisis has been to focus on profitability1. How do you achieve a higher return on equity? There are two commonly followed options. Either you cut costs, e.g. by merging banks in the same geography and closing down the redundant branches. Or you sell the business, especially when you’re an also-ran outside of your home market.

The education business

Two insightful articles by Adam Keesling (Napkin Math) on education and content creation:

Why MasterClass isn’t really about mastery (tldr: MasterClass doesn’t compete against universities, it sells credibility and inspiration)

Why software is more profitable than content (tldr: “Content products talk to humans, while software products talk to computers. That’s why the value of content decays faster than the value of software.”)

Alex Zhu (TikTok) also discusses the challenges of online content and learning at the beginning of this interview:

His key insights:

  • people want light content, both as consumers and as creators
  • education goes against human nature: most people use their smartphone for communication and entertainment, not to learn

Neil Patel wrote a very instructive blog post about creating and selling online courses. By giving away the course for free (for a limited time), you can generate publicity and collect an email list for future courses.