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03 November 2011

This week in "Brussels"
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Articles from 27 October 2011 - 03 November 2011

Banking

European banks will help implement solutions
The European Banking Federation (EBF) welcomes the EU Member States' decisions towards financial stability and solving the current difficulties of the sovereign debts.  View Article
FBF: French banks are ready to participate actively in the implementation of a lasting solution for the eurozone crisis
French banks welcomed the decisions taken by the European heads of state and government on a solution to stem the eurozone crisis.  View Article
FSB published recommendations on Shadow Banking
The report calls on authorities to assess the broad scale and trends of non-bank credit intermediation in the financial system, drawing on information sources such as Flow of Funds and Sector Balance Sheet data, and complemented with other information such as supervisory data.   View Article
BBA: Marcus Agius letter to the Prime Minister on G20
Marcus Agius, Chairman of the British Bankers' Association (BBA), wrote to Prime Minister David Cameron regarding the G20 summit to offer the perspective of BBA members.  View Article
Bruegel: How to restore trust in the ECB
Guntram B Wolff writes that when Mario Draghi takes office on November 1, he will face tough choices. Should he be more “German” than the Germans or more “Italian” than the Italians? More fundamentally, should he continue or discontinue the European Central Bank's bond purchasing programme?   View Article
J Bradford DeLong: The ECB’s battle against central banking
Writing for Project Syndicate, DeLong says that when the ECB announced its programme of government-bond purchases, it let financial markets know that it thoroughly disliked the idea, was not fully committed to it, and would reverse the policy as soon as it could.  View Article
EPC: SEPA Governance - setting the record straight: SEPA is European integration in action; this process allows any party to engage
Several lobbying organisations regularly claim that the Single Euro Payments Area (SEPA) process is 'driven exclusively by the banking industry' and 'leaves out all other stakeholders'. In the view of the EPC, this statement is inaccurate and misrepresents the role of the EPC in the SEPA process.  View Article
EPC Newsletter Issue 12 - October 2011
The European Payments Council Newsletter October 2011 edition focuses on the legislative process aimed at establishing mandatory deadlines for migration to the Single Euro Payments Area (SEPA).   View Article
EFBS: International Union for Housing Finance appoints new Secretary General
Dr Hartwig Hamm, Managing Director of the Association of Public Bausparkassen (LBS) in Germany and Second Vice-President of the European Federation of Building Societies (EFBS), has been appointed Secretary General of the International Union for Housing Finance (IUHF) as of 1 November 2011.  View Article
BIS: Capitalisation of bank exposures to central counterparties - consultative paper issued by the Basel Committee
The Basel Committee issued their second consultative paper on the capitalisation of bank exposures to central counterparties.   View Article

Securities

DBRS, Fitch, Moody’s, and S&P receive EU registration
ESMA announces today the successful registrations of DBRS, Fitch Ratings, Moody's Investor Service, and Standard & Poor's (S&P) as credit rating agencies (CRAs).  View Article
Bruegel: Rate expectations - what can and cannot be done about rating agencies
Nicolas Véron writes that CRAs have been under the spotlight since the beginning of the current financial crisis. Although they failed in their assessment of US residential mortgage-based securities in the mid-2000s, investors generally consider them useful to help form their views on credit risks.   View Article
Consultation on ESMA's Draft Regulatory Technical Standards on the content and format of ratings data periodic reporting from CRAs
The reason for requiring periodic reporting of ratings data from credit rating agencies is to enable ESMA to use this data as a basis for its supervisory reviews and, in general, to support the tasks that ESMA will carry out in order to discharge its obligations under the Regulation.  View Article
Consultation on ESMA’s draft RTS on the presentation of the information that credit rating agencies are to disclose
The purpose of this central repository (CEREP) is to improve transparency and to contribute to the protection of investors by providing information on the past performance of credit rating agencies and about credit ratings issued in the past.  View Article
ISDA statement on CDS credit event process
The International Swaps and Derivatives Association issued the following statement in order to ensure an accurate understanding of how credit events are determined for credit default swaps contracts.   View Article
FN: EC should focus on forging a euro champion
All of the concerned parties are keeping very quiet about the proposed merger of NYSE Euronext and Deutsche Börse.  View Article

Insurance

The Geneva Association writes an open letter to the finance ministers and central bank governors of the G20
It would be unfortunate if the healthy insurance industry would not only have to suffer in financial terms from the effects of some high-risk non-insurance activities but possibly also by inheriting an inappropriate approach to systemic risk and potential SIFI designation process from banking.  View Article
Insurers write to G20 on SIFIs
The CEA has co-signed an International Network of Insurance Associations (INIA) letter to the G20 leaders, setting out the industry's views on the treatment of insurers in the financial stability and systemic risk debate.  View Article
Risk.net: ABI plans Solvency II impact study to highlight undesirable outcomes
Qualitative study will aid lobbying efforts in Europe, says trade association. The study would investigate issues such as the Directive's impact on consumers and insurers' asset allocation strategies in order to highlight the potentially undesirable consequences of Solvency II in its present form.   View Article
Fitch: US will get Solvency II equivalence
The regulatory regime in the US is likely to be deemed equivalent to the Solvency II requirements by the EU because of its long-standing use of risk-based capital requirements, according to Fitch.  View Article

Asset Management

FSA's Nicoll: Update on EU fund management regulatory developments
Ms Nicoll covered two of the most important legislative developments for the fund management industry currently on the European policymakers' table – the Alternative Investment Fund Managers Directive (AIFMD), and the Markets in Financial Instruments Directive (MiFID).  View Article
City of London: Equity markets 2011 report
The report says that the global equity markets continued their recovery for the second year running in 2010 with bouts of volatility so far in 2011. Also, the UK's substantial domestic market in equities is complemented by London's role as a major centre for trading in foreign equities.  View Article
IPE: New Irish pension funding standard 'in the area' of Solvency II
New funding standards announced by the Irish government appear to emulate proposals for Solvency II.  View Article

Corporate Governance/Accounting

ECIIA's report on responses to the EC's consultation on corporate governance in listed companies
This issue's special report “Lessons in Governance” focuses on the ongoing debate on corporate governance within the EU, and takes a look at the EC's most recent Green Paper. The report includes an interview with Susannah Haan, EuropeanIssuers' Secretary General, on corporate governance.  View Article
IFAC: IPSASB published IPSAS 32 Service Concession Arrangements: Grantor
Service concession arrangements provide a way for public sector entities to build the infrastructure necessary to maintain and improve critical public services. The use of service concession arrangements continues to increase due to the ongoing global financial and economic crises.  View Article
EFRAG's final comment letter on ED Mandatory Effective Date of IFRS 9
EFRAG issued its final comment letter to the IASB on the Mandatory Effective Date of IFRS 9 Financial Instruments.   View Article
EFRAG commented on the IASB's ED/2011/2 Improvements to IFRSs
EFRAG issued its final comment letter to the IASB on ED/2011/2 Improvements to IFRSs. EFRAG agrees with most proposals in the ED, except for the amendment to IAS 1 to reflect the Conceptual Framework for Financial Reporting 2010, and IAS 32 relating to distributions to holders of equity instruments.  View Article
IASB: “The future of IFRSs and the path for the IASB” - speech by Chairman, Hans Hoogervorst
On 27 October 2011 Hans Hoogervorst, Chairman of the IASB, addressed the IFRS Conference 'Latin America and the Caribbean', in São Paulo, Brazil. His speech touched on the prospects for global accounting standards, Latin American adoption of IFRS, and the agenda and priorities of the IASB.  View Article
FRC: Sharman Panel recommends improvements to reporting of going concern and liquidity risks
The Sharman Panel of Inquiry, established at the invitation of the FRC to consider Going Concern and Liquidity Risks: Lessons for companies and auditors, publishes its preliminary report and recommendations.  View Article

Financial Services Policy

Change of Presidency of the European Central Bank
Today, Mr Mario Draghi, former Governor of the Banca d'Italia, has taken up his duties as President of the European Central Bank (ECB).  View Article
FT: Schäuble calls for EU lead on Tobin tax
Wolfgang Schäuble wants the European Union to take the global lead in introducing a financial transaction tax to curb speculative trading, along with tougher regulation of big banks and the “shadow” banking sector, such as hedge funds.  View Article
SIFMA opposes latest financial transaction tax legislation
SIFMA today released the following statement from Kenneth E Bentsen, Jr, executive vice president, public policy and advocacy, in response to legislation introduced by Senator Tom Harkin and Representative Peter DeFazio to impose a tax on trades of stocks, bonds and derivatives contracts.  View Article
IFAonline: Sants admits FSA accountability issues; apologises for RDR response
Hector Sants, chief executive of the Financial Services Authority (FSA), has admitted accountability issues with parliament and apologised for ill-feeling caused by the FSA's refusal to delay the retail distribution review (RDR).  View Article
Deloitte: High alpha fund managers to benefit from RDR
Deloitte, the business advisory firm, says the implementation of the Retail Distribution Review (RDR) at the end of 2012 will have a bigger impact on investment managers than many believe.  View Article

Economic Crisis

Joint statement by European Council President Van Rompuy and European Commission President Barroso on latest developments in the eurozone
Van Rompuy and Barroso take note of the intention of the Greek authorities to hold a referendum. They are convinced that this agreement is the best for Greece. They fully trust that Greece will honour the commitments undertaken in relation to the euro area and the international community.  View Article
Speech by President Barroso: Briefing on the conclusions of the European Council of 23 and 26 October 2011
President Barroso said that Europe is closer to resolving its economic and financial crisis and to getting back on a path to growth. The Euro Summit took solid and substantial steps that should enable Europe to turn a corner.  View Article
President Barroso appeals for national and political unity in Greece
President Barroso called on the government and the political leaders of Greece to show that they are ready to work for national political unity and for achieving the broad support needed for the implementation of the programme.  View Article
ALDE Verhofstadt on how to break the European deadlock
Speaking at the European Chamber of Commerce in Hong Kong, Verhofstadt said: "We have yet again seen that a piecemeal approach is not sufficient. Even when the heads of state and governments take decisions that go in the right direction - such as last week - it is clearly not enough."   View Article
Reuters: Draghi over-interpreted on bond buys, says Trichet
Outgoing ECB President, Jean-Claude Trichet, said that markets have over-interpreted comments by incoming European Central Bank chief, Mario Draghi, on the bank's readiness to go on buying the bonds of troubled eurozone states.  View Article
WSJ: Europe's Greece ultimatum
Europe's leaders, making it plain that they've reached the end of their patience with Greece, demanded that the beleaguered nation declare whether it wants to stay in the euro currency union — or risk going it alone in a dramatic secession.  View Article
FT: Greece calls referendum on EU bailout
Greece's prime minister unexpectedly announced a referendum to approve a second EU bailout deal for his austerity-hit country, less than a week after it was agreed with international creditors at a European Union summit.  View Article
CNN: Staring into the abyss - What if Greece rejected austerity? (Graham Bishop article)
Greek Prime Minster Papandreou has called for a referendum on the terms of the loans from the eurozone and IMF. Markets are now trying to fathom out the possible outcomes of this decision -- and they are not all negative.  View Article
FN: Regulators review sovereign risk pricing following Greek deal
Plans for a voluntary debt exchange of Greek bonds with a 50 per cent writedown have added fuel to a debate among regulators about how sovereign debt is priced.  View Article
EFSF's top credit rating affirmed
Following the official entry into force of the Amendments to the EFSF Framework Agreement on 18 October 2011, all three credit rating agencies affirmed the best possible credit rating to the EFSF: Standard & Poor's "AAA"; Moody's "(P)Aaa"; and Fitch Ratings "AAA".  View Article
FT: EFSF bond may see weak demand
Bankers have warned that the eurozone rescue fund might face lacklustre demand for a planned bond issue designed to finance Ireland's bailout.  View Article
Douglas J Elliott: Levering Europe - alternatives for the European Financial Stability Facility
There is no doubt that European leaders made significant progress on key issues necessary to solve the euro crisis. However, they also left us with many intriguing questions, especially how they intend to lever up the European Financial Stability Facility (EFSF).  View Article
Bloomberg: Europe looks to IMF and China for aid
European officials are studying the potential for an International Monetary Fund channel for money for their enlarged rescue fund, as China considers contributing to ending the area's sovereign-debt crisis.  View Article
FT: China could play key role in EU rescue
China is very likely to contribute to the eurozone's bailout fund but the scope of its involvement will depend on European leaders satisfying some key conditions.  View Article
IIF Dallara: Press statement on euro area stabilisation measures
Dallara, Managing Director of the Institute of International Finance, welcomed the announcement by the leaders of the euro area of a comprehensive package of measures to stabilise Europe, to strengthen the European banking system, and to support Greece's reform efforts.   View Article
Statements by Dr Ackermann and Mr Dallara on behalf of the IIF on the new Greek agreement
Dr Josef Ackermann, Chairman of the Board of Directors of the Institute of International Finance and Chairman of the Management Board and the Group Executive Committee of Deutsche Bank AG, today confirmed his full support for the voluntary agreement reached last night between euro area leaders and the IIF on a new Greek debt deal.  View Article
OECD's Gurría says that bold G20 action is needed to rebuild confidence amid weak economic growth
Bold decisions are needed from the G20 leaders meeting in Cannes this week to get the global economy back on track, said OECD Secretary-General, Angel Gurría.  View Article
FT: Japan urges more action on euro crisis
Yoshihiko Noda, Japan's new prime minister, has signalled his country will contribute to the eurozone's revamped bailout fund, but called on EU leaders to make “even greater efforts” to resolve their sovereign debt turmoil.  View Article
Bruegel: A glass half full
A comment by deputy director, Guntram Wolff, on the outcomes of the latest summit of eurozone heads of state and governments.  View Article

International/G20

Joint letter from Van Rompuy and Barroso to the G20 leaders
They stressed that there is a continued need for joint action by all G20 partners. The two Presidents also outlined the EU's priorities and stressed that the overall objective would be "to help restore global confidence, support sustainable growth and job creation, and maintain financial stability”.  View Article
IIF MD Dallara sends Policy Letter to G20 Summit leaders
On the eve of the G20 Summit in Cannes, Dallara wrote to the leaders to highlight the IIF's perspectives on a series of critical issues. He noted that the IIF believes that the Summit “should focus squarely on setting out strong, convincing measures to revitalise growth”.  View Article
Bruegel: Wanted - a stronger and better G20 for the global economy
Ignazio Angeloni and Jean Pisani-Ferry say that the resurgence of turbulence in international financial markets, with the epicentre not in the US banking system, as in 2008, but in the European sovereign sector, potentially brings the G20 closer to the centre of policy action after a phase of relative eclipse.  View Article
FSB published consultation on residential mortgage underwriting practices
The consultation covers the verification of income and other financial information; reasonable debt service coverage; loan-to-value ratios; and effective collateral management.  View Article

Financial Services Month in Brussels - Report

October 2011 Economic Crisis Month in Brussels Report
Graham Bishop's Personal Overview of developments in the economic crisis throughout the month of October.  View Article
October 2011 Financial Services Month in Brussels
Graham Bishop's Personal Overview of events throughout October 2011.  View Article

Graham Bishop’s Articles

Graham speaks at Federal Union event: 'Solving the financial crisis – who pays?', 10 November 2011, London
On the agenda for discussion are questions such as how we should treat Europe's debtors, be they countries in the eurozone, banks whose loans have gone sour, or individuals fallen on hard times.  View Article

Think Tanks

European Summit: "Progress but not final decisions", says Schulz (S&D)
The decision of the European Summit, which finished early this morning, offered "progress but not complete solutions to the crisis", declared Martin Schulz, the president of the Socialist and Democrat Group in the European Parliament.  View Article
Bruegel: The Greek demos vs the Greek demons
Shahin Vallée and Guntram B Wolff comment that ultimately what PM Papandreou has called is much more than a Greek referendum. It is a moment of truth for the euro area and for the European Union as a whole.  View Article
Bruegel: The international monetary system is changing - What opportunities and risks for the euro?
Ignazio Angeloni and André Sapir comment that after a 30-year pause, discussions on the future of the international monetary system (IMS) have restarted. This is partly due to the fact that the IMS has facilitated, or at least not prevented, the economic and financial imbalances that led to the recent crisis.  View Article
Bruegel: An evaluation of IMF surveillance of the euro area
This report by Jean Pisani-Ferry, André Sapir and Guntram B Wolff evaluates International Monetary Fund surveillance of the euro area in the years before the financial crisis and during 2008-10, and makes a number of recommendations to improve surveillance.  View Article
CEPS: The pitfalls of official first-loss bond insurance
In his commentary, Daniel Gros argues that a central pillar of the rough outline of a package of measures, agreed by eurozone leaders and designed to end the crisis in the eurozone, will not work. The so-called 'first-loss insurance' of eurozone sovereign debt relies on an incomplete analysis of the underlying problem and the proposed solution.  View Article

Commentaries

Wolfgang Münchau: What saves the euro will kill the union
Angela Merkel has been saying it for some time: when the euro fails, Europe fails. The German chancellor is right, says Münchau, but he would add a twist: if the euro succeeds, Europe is also likely to fail.   View Article
OMFIF: European debt rescue could pave way for renminbi borrowing
Writing from Beijing, David Marsh says that China is serving up a steely reminder to Europe: you may have to start borrowing in renminbi to gain a sympathetic hearing from the world's largest creditor.  View Article
Stewart Fleming: In search of salvation
In his article for European Voice, Fleming observes that weak governments in Greece and Italy now threaten the eurozone's strategy for shoring up the single currency. Dysfunctional decision-making once again threatens efforts to salvage the single currency.  View Article
Simon Nixon: Big euro crisis question has still to be answered
Eurozone leaders inevitably proclaimed their latest summit deal a triumph — as they had after each of the previous 13 crisis meetings — but WSJ's Nixon wonders whether their hearts are truly in it any more.   View Article
FT Opinion: Why it’s worth keeping the EU dream alive
Giuliano Amato and Federico Ghizzoni believe that for our generation, and even more for those who before us helped to shape the European Community, there is now something more at stake: that is the European dream.  View Article
BBC Analysis: An EU of two tiers after eurozone debt crisis
Kirsty Hughes comments that as another euro rescue package emerged from the summit in Brussels, a big new political question came with it: has the crisis created a two-tier EU with the insiders, the 17 eurozone countries, driving decision-making, while the 10 euro "outs" are not even in the room?  View Article
European Voice: EU should not duck collision on treaty change
The British Conservatives' continuing civil war over EU membership will not remain a sideshow for ever, it will move centre-stage. It will affect the rest of the EU and it could well have an impact on the eurozone debt crisis.   View Article
Joschka Fischer: Europeanising Europe
In his article for Project Syndicate Fischer, Germany's former foreign minister and vice-chancellor, maintains that the eurozone is at the centre of the global financial crisis, because only there, in the realm of the second most important currency after the dollar, does the crisis hit a weak “structure” rather than a state with real power.  View Article

Graham Bishop's Webinars

Graham Bishop's Webinar: Review of October 2011
Our next webinar will be held on the 4th November 2011, when Graham will be joined online by outstanding specialist co-hosts.   View Article




© Graham Bishop

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