The talks over the disconnection of the UK from the EU begun and the picture of the meeting showed a clear imbalance: Michel Barnier boasted about EU27 unity and brought a stack of papers; David Davis wasn’t carrying any documents, but growing political dissent at home could be heard from Brussels.
Graham Bishop/Paula Martín
Organised by the Centre for the Study of Financial Innovation (CSFI) with co-presenterConor Foley (Norton Rose Fulbright)
This blog covers the key subjects since our last meeting that I hoped to cover but, as always, we ran out of time to deal with them all. As a Friend, you can watch the 24th `structured’ CPD web-cast with CISI (to be done on 1st August on this occasion). These Notes may be read to record a further 30 minutes of `structured CPD’, including a dipping into the links to the underlying stories.
Highlights from the “Brussels for Breakfast” meeting
As we met, the deadline was closing for UK financial institutions to report their detailed “Brexit” plans to their regulator. On the other side of the Channel, EU regulators (ESMA, SSM, EIOPA) are making it ever more clear that naïve, un-researched claims by Leavers that nothing would change except for a wave of “brass plates” around the EU were always just an exercise in “whistling” - mainly in the dark. Instead, the sound of the “ticking clock” is getting louder.
Inevitably, the beginning of serious Brexit negotiations overshadowed the discussions and the problem of residence rights featured as the feeling was that the UK did not understand the magnitude of the problem. My comments about my attendance at the Paris Europlace meeting earlier in the week also proved controversial as it is quite clear that Paris – as a major city and financial services centre – is positioning itself for the jobs and revenue that the UK has decided to push out. Can this cost be minimised by some sort of transition arrangements such as EEA membership? My argument continues to be that the transition cannot be decided until the shape of the final deal is clear and by then there will not be enough time to go through the probable legal arrangements to make the transition operation fully by 29 March 2019 – even if the EEA will have us for a short period!
The Hamburg G20 Summit committed to working to finalise the Basel III accord but “without increasing overall capital requirements” for banks. The US is pushing for a result that gives an “output floor of 75%” of the models but the EU wants it at no more that 70% -- indeed French bankers would like to see it at 0%! However, US voices suggested that President Trump’s possible appointments were far more internationally minded so a compromise may well be possible once they are in office.
The discussion on the BRRD’s first use caused some dissent from the view that the market should now regard senior bank bonds as “sovereign backed”. The letter of the rules had been followed and the genuinely bail-in–able characteristic of such bonds would become fully apparent in the future. Yet again, the debate on CCPs came back to the question of whether this is a land-grab by the Eurozone – especially France – or whether it is simply following the global push launched by UK PM Gordon Brown in 2009for the central bank of issue (in this case the ECB for euros) to have ultimate control. This topic will surely be continued!
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These Notes for the Friends of Graham Bishop will be supplemented by our full Workbook for our CPD clients (link) – in conjunction with the 30-minute CISI webcast. Our new Brexit &UK service (link) provides further detailed news on relevant developments in financial services.
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