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BANKING

SEB sells German retail banking operation

Swedish bank SEB announced on Monday that it has signed a €555 million euros ($698 million) agreement to sell its German retail banking business to Spanish bank Santander.

The transaction includes all of SEB’s 173 retail branches in Germany, which have some one million customers and about 2,000 employees.

SEB said the transaction would allow it to focus on its merchant banking and wealth management divisions.

“The sale of our German banking business will free up capital that will be reinvested in SEB’s core strategic growth areas,” SEB chief executive Annika Falkengren said in a statement.

SEB said the price of €555 million was at a premium to allocated equity of €420 million. It added transaction costs were estimated at €375 million.

The bank had announced in May it was selling its German retail business because of unsatisfactory profitability.

Santander and Italy’s Unicredit had reportedly submitted offers, and a deal was expected for the end of July.

Evli Bank analyst Kimmo Rama said the sale was a “positive deal for SEB.”

“SEB is more focused on corporate banking in Germany, and the retail branch has been loss making for some time. In the low margin German retail sector, economy of scale is necessary and thus Santander is a good fit,” he told Dow Jones Newswires.

SEB is Sweden’s third-biggest bank in terms of market capitalisation and employs about 21,000 people worldwide.

SEB acquired its German retail banking business in 2000 and had planned to sell it in 2008, but the transaction was suspended because of the global financial crisis.

At 10.30am, SEB’s shares were down 0.72 percent to 45.60 kronor on a Stockholm Stock Exchange down 0.43 percent.

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BREXIT

Brits in EU risk losing UK bank accounts ‘within weeks’

Some of Britain's biggest banks have begun contacting customers in European Union countries, warning them that their accounts will be closed down within weeks because the cost and complexity of operating without a continuation of pan-European banking rules is too much.

Brits in EU risk losing UK bank accounts 'within weeks'
Lloyds Bank expects to close at least 13,000 accounts. Photo: Lloyds Bank
According to a report in The Times, thousands of Britons who live in Europe face being stripped of their UK bank accounts and credit cards, because of the UK government's failure to agree rules for operating after Brexit. 
 
Each of the EU's 27 member states has different rules for cross-border bank accounts which will start to apply immediately the UK's transition period ends on 31st December 2020. 
 
“In some cases, continuing to serve customers would be incredibly complex, extremely expensive and very time-consuming, and simply would not make economic sense,” a source at one British bank told the newspaper. “This is passporting — this is the reality of Brexit.”
 
 
If a way is not found to continue pan-European banking rules, or passporting, UK banks will br breaking the law if they don't apply for new banking licenses in each European Union Country. 
 
 
Lloyds, Britain’s biggest banking group, began writing to customers in August, warning them that their bank accounts would  close down on December 31.
 
The bank estimates that 13,000 customers, including those based in Holland, Slovakia, Germany, Ireland, Italy and Portugal, would lose their accounts. 
 
“If customers have regular deposits into, or payments out of, their account, they will need to make other arrangements before their account is closed,” the bank said. 
 
Barclays and Coutts have also started contacting customers. 
 
“In light of the UK leaving the EU at the end of 2020, we continue to review the services we offer to customers within the European Economic Area (EEA), and any impacted customers will be contacted directly,” Barclays said in a statement. “The timings for account closure will depend on the type of product that a customer holds, but we will always give notice to customers.”
 
“In the event that no alternative to the European Economic Area passporting regime for financial services is agreed between the UK and EU, we have taken the difficult decision to withdraw from offering our services to clients who reside in the EEA,” Coutts said. 
 
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