Market updates and sector developments

US federal bank regulatory agencies have extended the comment period for both the Basel Endgame risk-based regulatory capital proposal and the G-SIB surcharge proposal until 16 January 2024 (SCI 28 July). Comments on both proposals were originally due by 30 November, but the comment period has been extended to allow interested parties more time to analyse the issues and prepare their comments.

The Federal Reserve has concurrently launched a data collection exercise to gather more information from the banks affected by these proposals, with a submission deadline also of 16 January. It is hoped that the additional data will further clarify the estimated effects of the proposal on the calculation of RWAs and inform any final rule, with summaries to be made public.

In other news…

Algonquin ratings assigned
DBRS Morningstar has assigned respective ratings of triple-A, double-A, single-A (high) and single-A (low) to the A, B, C and D tranches of Bank of Montreal’s Algonquin 2023-1, which priced last week. The transaction references a portfolio of primarily US and Canadian senior secured and senior unsecured loans.

Alpha, UniCredit sign strategic partnership
UniCredit and Alpha Services and Holdings have signed a binding term sheet for the creation of a strategic partnership in Romania and Greece. The parties have agreed the key economic terms for the merger of UniCredit Romania with Alpha Bank Romania, to create the third largest bank in the local market with a combined 12% market share by total assets.

Transaction closing is expected in 2024, subject to the completion of a due diligence process, corporate approvals for the merger and all necessary regulatory consents. Upon completion, Alpha Bank is expected to retain 9.9% of the combined entity’s share capital and receive a cash consideration of €300m.

Additionally, UniCredit and Alpha have agreed key terms for the purchase by UniCredit of a 51% stake in AlphaLife Insurance Company and the distribution of UniCredit onemarkets mutual funds through the Alpha Bank network, which serves more than 3.5 million clients in Greece. The parties will also explore further collaboration opportunities to support their customers’ needs, leveraging on their combined international footprint and origination capabilities in regional banking, transaction banking, syndicated lending, advisory, other market and corporate services, as well as other banking services and products.

Finally, UniCredit has submitted an offer to the Hellenic Financial Stability Fund (HFSF) to purchase all the shares the HFSF currently holds in Alpha, equal to 9%.