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BANKING

Nordea closes out 2011 by beating forecasts

Nordea, the biggest Nordic bank, posted Tuesday a better-than-expected fourth quarter net profit, up by two percent to €786 million ($1.02 billion), while its full-year 2011 profit slipped by 1.0 percent to 2.63 billion euros.

Nordea closes out 2011 by beating forecasts

Nordea chief executive Christian Clausen said the bank had “delivered increased efficiency in cost, capital, liquidity and funding while we have maintained strong income growth and solid profit development.”

The fourth quarter net profit figure was stronger than expected, as analysts had forecast a profit of 695 million, according to Dow Jones Newswires.

The bank’s operating profit for the full year slid by three percent to €3.54 billion, and slipped by four percent in the fourth quarter to 1.02 billion.

But net interest income rose by six percent in the full year, to 5.45 billion, and by five percent in the fourth quarter to 1.42 billion.

Nordea’s share price opened up by 1.14 percent on a Stockholm exchange down by 0.63 percent.

The bank said it had “no direct exposure” to the current eurocrisis.

“However, as all banks, we are indirectly affected by volatile markets and regulatory changes.”

The bank noted that the slowdown of the global economy and the European downturn affected its net loan losses in the fourth quarter, which swelled to 263 million euros from 112 million in the third quarter and from 166 million in the fourth quarter a year earlier.

For the full year, net loan losses shrank by 16 percent to 735 million euros.

Nordea, which has some 34,000 employees, announced in August that it would slash 2,000 jobs across the Nordic region by the end of 2012 to counter the effects of rising costs.

So far, the number of employees has been reduced by around 1,100, it said.

The bank said its short term cost-cutting targets have been met.

It said it was maintaining its target “to reach a return on equity of 15 percent in a normalized economy with higher interest rates and capital requirements of 11 percent.”

Swedish authorities have set the core tier 1 capital requirements to at least 12 percent from 2015.

“The Swedish capital requirements differ from (the bank’s) assumptions, but before the European levels are known and the funding and liquidity regulation is finalized, it is difficult to foresee the full effect of this deviation.”

The bank said it was concerned “not only about the risks of unfair competition from unequal regulation, but even more so about the effects on investments, growth and new jobs.”

Clausen said 2012 looked “just as challenging” as 2011.

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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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