Welcome to our Gold Friends weekly e-mail.
My highlights of the week: The imminent demise of LIBORcontinues to trigger a torrent of comments by regulators so that market participants cannot be in any doubt! The Commission proposed a new Consumer Credit Directive, but was immediately criticised for lack of ambition. AFME pointed to the illogicality of enforcing the buy-in provisions next year while announcing a review of those provisions. Remarkably, EU Member State Malta has just been added to FATF’s `grey list’ for AML. The UK looks to have secured a carveout for financial services from the new global tax plan it negotiated.
Financial Brexit may have been a bit quiet recently but that seems to be about to end: Yes – the EU granted an equivalence ruling for data protection BUT only for four years and withdrawable at any time. The EU granted a one-year extension for bank capital requirements on non-EU CCPs – so it ends around the time the CCP stress test results will appear. SSM’s Enria told ECON about SSM’s difficulties in overseeing “third-country” bank branches in the EU under the current rules. Finally, Chancellor Sunak is scheduled to announce a sharpening of the City of London’s competitive edge.
Graham Bishop
Articles from 25 June - 1 July
General Financial Policy
Statement of the Euro Summit, meeting in inclusive format : Re-commits to completing Banking Union and politcal support for CMU View Article
ECB's Lagarde: Financing a green and digital recovery : Speech by Christine Lagarde, President of the ECB, at the Brussels Economic Forum 2021 View Article
ECB's de Guindos: Euro area banks in the recovery : Banks have weathered the pandemic and the economic outlook is now brightening View Article
FSB launches thematic peer review on corporate debt workouts and invites feedback from stakeholders : The objective of the review is to support COVID-19 response efforts by examining FSB member jurisdictions’ practices, experiences and lessons from out of court debt workouts (OCWs), and the implications for financial stability. View Article
EURACTIV: Commission to ease state aid straitjacket as recovery fund kicks in : The European Commission will present in the second half of this year a wide-ranging review of its state aid rules to facilitate public funding to strategic areas, as member states await the first transfers of the EU’s recovery funds. View Article
BIS: Annual Economic Report : BIS annual report by chapter: A bumpy pandexit; Covid and beyond; The distributional footprint of monetary policy; CBDCs: an opportunity for the monetary system View Article
Banking Union
SSM's Enria: Hearing at the European Parliament’s Economic and Monetary Affairs Committee : "..banks have proven to be resilient so far. They have robust capital positions and their profitability recovered in the second half of 2020 and the first quarter of 2021. However, there is still some uncertainty about how the pandemic will evolve..." View Article
EBA data shows a deterioration in asset quality of the most affected sectors : CET1 ratio increased slightly and leverage ratio contracted quarter-on-quarter (QoQ); Strong rise of forborne loans, but stable forbearance ratio amid a similar rise in total loans and advances; Return on equity rose strongly QoQ, not least due to declining cost of risk. View Article
European Council:Non-performing loans: provisional agreement on selling credit to third parties : EU ambassadors today confirmed a provisional agreement reached between the Council presidency and the Parliament on a new directive harmonising rules for credit servicers and credit purchasers of non-performing loans issued by credit institutions. View Article
JOINT PUBLIC STATEMENT: Forthcoming cessation of all LIBOR settings : The European legislative framework regulating financial benchmarks (Regulation (EU) 2016/10111) has been recently amended granting the European Commission powers to accompany the transition away from LIBOR in the European Union. Nevertheless, significant reliance on any of the LIBOR settings at the time of their discontinuation or loss of representativeness may have an impact on the functioning of the European financial system. View Article
IAIS issues statement on benchmark transition : The IAIS endorses the Financial Stability Board’s (FSB) statements and related reports documents regarding a smooth and timely transition away from LIBOR by the end of 2021 and encourages insurance supervisors to strengthen their efforts in to facilitating facilitate insurers’ transition. View Article
MEP Giegold: Malta placed on FATF "grey list" for money laundering and terrorist financing : Malta was placed on the FATF’s list of jurisdictions under increased monitoring, better known as the ‘grey list’. It is the first time that an EU Member State has been placed on this list due to increased and persistent money laundering and terrorist financing risks. View Article
European Commission: New proposal for a Directive on consumer credits repealing and replacing the Consumer Credit Directive (2008/48/EC) : A REFIT Evaluation2in 2018-2019 found thatthe 2008 Directive’s objectives.. are still relevant in the context of a regulatory landscape that is significantly fragmented across the EU and have been only partially met. View Article
MEP Giegold: Consumer Credit/EU Commission: No breakthrough for consumer protection : The EU Commission’s proposal falls short on key points. Consumer protection for small loans is not sufficiently strengthened. People in difficult financial situations are often misled by supposedly favourable interest rates. View Article
SRB launches 2020 Annual Report : The SRB today published its 2020 Annual Report detailing the progress made in promoting financial stability while protecting the taxpayer through Europe's banking resolution framework. View Article
Capital Markets Union
Financial stability: Commission adopts final one-year extension of the transitional regime for capital requirements for non-EU central counter parties : The European Commission has today extended – by one additional year –the current transitional regime regarding the capital requirements that EU banks and investment firms must maintain when exposed to non-EU central counterparties (‘CCPs'). This transitional regime will therefore continue to apply until 28 June 2022. View Article
Motor insurance directive: Coreper endorses provisional agreement : The Council’s Permanent Representatives Committee (Coreper) today gave its support to the political agreement reached between the Council and the European Parliament’s negotiators during the trilogue on 22 June 2021 on the amendment to the motor insurance directive that will strengthen the protection of injured parties in motor vehicle accidents and improve the rights of policyholders. View Article
EIOPA continues to reinforce supervisory cooperation in cross-border activities : The new Decision is key for achieving consistent supervisory practices to enhance preventive consumer protection across the European Union. View Article
Insurance Europe: Solvency II - Share Use of LEI code could help improve information quality and automation of data processing : Insurance Europe supports the use of the same identification code for various reporting tasks, which can help improve quality of information and automation of data processing. View Article
EBA consults on technical standards on risk retention requirements under the Securitisation Regulation : The European Banking Authority (EBA) launched today a public consultation on draft Regulatory Technical Standards (RTS) specifying the requirements for originators, sponsors, original lenders and servicers related to risk retention, in line with the Securitisation Regulation. View Article
AFME calls for action on mandatory buy-in rules : “It is helpful that the Commission has stated its intention to consider amendments to the mandatory buy-in regime, subject to an impact assessment. Given that amendments may now be made at a later date, it does not make sense for the current rules to be implemented and enforced on 1 February 2022... View Article
IPE: Analysis on ‘double materiality’ in pensions framework part of new EC strategy : The European Commission (EC) is planning to ask EIOPA to assess the potential need to introduce the notion of double materiality in the “pension framework”, according to a leaked draft of the EU executive’s new sustainable finance strategy. View Article
FSB seeks feedback on its policy proposals to enhance money market fund resilience : The proposals form part of the FSB’s work programme on non-bank financial intermediation (NBFI). View Article
Environmental, Social, Governance (ESG)
Council adopts European climate law : The Council adopted its position at first reading on the European climate law, ending the adoption procedure and setting into legislation the objective of a climate-neutral EU by 2050. View Article
IOSCO consults on sustainability-related regulatory and supervisory expectations in asset management : View Article
GRI: Five tips for GRI and SASB reporters : Insights from the joint guidance on using both sets of standards: Many companies use both GRI and SASB Standards to generate information that meets the needs of all constituencies and markets. View Article
SSE Climate Disclosure: Making Markets Climate Resilient and Model Guidance on Climate Disclosure : The United Nations Sustainable Stock Exchanges (SSE) initiative today launches a new Action Plan to Make Markets Climate Resilient and a Model Guidance on Climate Disclosure. View Article
wbcsd: The reality of materiality – insights into current ESG materiality practice : The World Business Council for Sustainable Development (WBCSD) in collaboration with the Erasmus School of Economics release a report diving into current ESG materiality assessment practice including some of the main challenges and opportunities for companies View Article
IFAC Supports IOSCO’s Vision for a Global Baseline of Investor-Focused Sustainability Standards : The International Federation of Accountants (IFAC), which represents more than 3 million professional accountants globally, welcomes IOSCO’s new report in which it elaborates on its vision and expectations for the IFRS Foundation’s work toward a global baseline of investor-focused sustainability standards. View Article
IASB: Is there a path to global sustainability standards? : Erkki Liikanen, Chair of the IFRS Foundation Trustees, talked about its work to meet the information needs of investors and other capital market participants by creating a proposed new board that would develop a global baseline of sustainability-related disclosures focused on enterprise value View Article
IOSCO elaborates on its vision and expectations for the IFRS Foundation’s work : towards a global baseline of investor-focussed sustainability standards to improve the global consistency, comparability and reliability of sustainability reporting View Article
Strengthening corporate governance should be a priority to boost economic recovery, says OECD : The COVID-19 pandemic has exacerbated existing structural weaknesses in the corporate sector and capital markets. View Article
Protecting Customers
CRE: EU grants UK data protection adequacy with four-year ‘sunset clause’ : The EU will allow its companies and public bodies to share personal data with UK entities after the European Commission agreed UK laws are equivalent with the bloc’s General Data Protection Regulation (GDPR). View Article
Fin Tech Regulation
Insurers welcome EC proposals for Data Act, highlight need for level-playing field on access to data : Insurance Europe welcomes the Act’s overall objective of creating a single market for data, where data from public bodies, businesses and citizens can be used safely and fairly for the common good. View Article
Economic Policies Impacting EU Finance
FT: Financial services sector set for carve-out from new global tax rules : UK due to secure exemption for City of London banks from regulations brokered at OECD View Article
Brexit
Bloomberg: Sunak Promises to Sharpen City of London’s Competitive Edge : Plan to emphasize focus on green finance and technology; Mansion House speech comes day after green gilt announcement View Article
Bloomberg: City of London Drew Fewer Foreign Investors in 2020, Report Says : U.K. narrowly ahead of France in 2020, according to EY survey; Square Mile has been hampered by years of Brexit uncertainty View Article
Reuters: Paris gets new JPMorgan trading hub in post-Brexit push : French President Emmanuel Macron inaugurated JPMorgan's (JPM.N) new trading hub in Paris on Tuesday, as France pitches for more banking jobs and tries to lure finance workers looking to leave London after Brexit. View Article
Joint readout of principals’ meeting of UK and US authorities regarding central counterparty resolution : Senior officials from the Bank of England, Federal Deposit Insurance Corporation, Commodity Futures Trading Commission, Securities and Exchange Commission, and Federal Reserve Board convened a virtual meeting today to discuss certain issues relating to the concept of resolution of a CCP. View Article
ICMA AMIC responds to FCA consultation on UK MiFID research and best execution : ICMA’s Asset Management and Investors Council has responded to the FCA consultation paper CP21/9 on UK MiFID research and best execution. In its response, ICMA welcomed an exemption for FICC research from unbundling rules as well as the proposal to remove the RTS 27 and RTS 28 best execution reports. View Article
City AM: UK current account deficit narrows to £12.7bn : The UK current account deficit narrowed to £12.7bn in the first quarter of 2021 as the reintroduction of restrictions to curb the spread of coronavirus hit the economy and dampened import demand. View Article
EU-UK relations: solutions found to help implementation of the Protocol on Ireland and Northern Ireland : The European Commission has today put forward a balanced package of measures to address some of the most pressing issues related to the implementation of the Protocol on Ireland and Northern Ireland. It demonstrates the EU's strong commitment to finding creative solutions – including by changing its own rules – with the core purpose of benefitting people in Northern Ireland. View Article
Federal Trust: Brexit: So little said, so much to say. : In a new video, our Director Brendan Donnelly criticises British political parties for their reluctance to talk about Brexit. He thinks this reluctance stems primarily from calculations of political advantage. These calculations may however be mistaken. It is not a foregone conclusion that the Conservative Party will win the next General Election. View Article
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