Welcome to our Gold Friends weekly e-mail.
Our next newsletter will be on 7th January, so we would like to wish you a Happy (and safe!) Christmas. Brexit transition will have ended (probably...) when we next write so it may be a more relaxed New Year OR the preparations may not have been as comprehensive as we are told!
With Covid vaccines, 2021 is likely to be a much better economic year but that will still leave a `day of reckoning’ on NPLs – despite the Commission’s action plan. However, the ESM is now enabled to provide a credit line to the Single Resolution Fund and most banks will still not be allowed to pay significant dividends until that `day’ has passed.
Happy New Year!
Graham Bishop
Articles from 10-17 December 2020
General Financial Policy
Rule of Law mechanism applies without further delay as of 1 January, MEPs stress : European Council political declarations on Rule of Law Mechanism are “superfluous” as they are not legally binding; Package including long-term EU budget, recovery and Rule of Law conditionality is of “historic importance” ; Unanimity rule in Council is outdated and counterproductive View Article
European Council, 10-11 December 2020 : EU leaders reached a deal to address the concerns expressed on the recovery package and agreed on the 55% emissions reduction goal. They also adopted conclusions on COVID-19, security and external relations, and met for a Euro Summit in inclusive format. View Article
Politco: EU leaders back deal to end budget blockade by Hungary and Poland : Compromise defuses clash over rule of law in short term but deep divisions remain. EU leaders on Thursday clinched a deal to end a blockade of the bloc's historic €1.8 trillion budget-and-recovery package by Hungary and Poland over plans to link EU payments to respect for the rule of law. View Article
Remarks by Paschal Donohoe following the Eurogroup video conference of 16 December 2020 : EU Leaders welcomed the major step forward achieved in the Eurogroup at the end of November, when we agreed on the reform of the European Stability Mechanism and the early introduction of the backstop to the Single Resolution Fund. View Article
ECON:The proposed amendments to the Treaty establishing the European Stability Mechanism : This document presents the proposed amendments to the Treaty establishing the European Stability Mechanism (the 2019 ESM reform). View Article
SUERF: Is NGEU a game changer for the ECB’s role in fighting the fall-out from COVID-19 in the euro area? : Given the asymmetric nature of the COVID-19 shock, fiscal policy is better equipped to implement measures targeted to sectors that are most affected. At the same time, national fiscal responses could be constrained by the national fiscal space in those countries that are most affected. View Article
Eurogroup Statement on the Draft Budgetary Plans for 2021 : The Eurogroup welcomes the Commission’s analysis of the budgetary situation in the euro area as a whole and its Opinions on the individual draft budgetary plans (DBPs) of the euro area member states. This exercise is key to the coordination of fiscal policy in the euro area. View Article
IMF: Glaciers of Global Finance: The Currency Composition of Central Banks’ Reserve Holdings : The currencies that are being held by central banks as foreign exchange reserves have remained largely steady over decades. Changes in the composition of these holdings can, at best, be described as glacial in pace... Financial links seem to be a key driver of reserve currency holdings View Article
G30 Report: REVIVING AND RESTRUCTURING THE CORPORATE SECTOR POST-COVID : The report stresses that the time for policymakers to act to head off the looming corporate solvency crisis is now, and provides guidance for the development of policy actions to support the corporate sector and prepare for recovery and growth View Article
Banking Union
ECB asks banks to refrain from or limit dividends until September 2021 : ECB calls on banks to refrain from or limit dividends until 30 September 2021; Dividends to remain below 15% of cumulated 2019-20 profits and not higher than 20 basis points of CET1 ratio; ECB reiterates supervisory expectation that banks exercise extreme moderation on variable remuneration View Article
EBF: ECB decision on bank dividends is a step in the right direction : “The ECB’s decision on bank dividends clearly is a step in the right direction that announces the resumption of bank profit distribution from September 2021 onwards and allows partial distributions at least in individual cases in the meantime,” View Article
Vox: Two proposals to resurrect the Banking Union: The Safe Portfolio Approach and SRB+ : Without completion of the Banking Union, Europe’s Economic and Monetary Union will continue to be fragile and exposed to a return of the doom loop. View Article
Opening remarks by Commissioner McGuinness at the press conference on the Action Plan for non-performing loans (NPLs) : Vice-President Dombrovskis introduced the rationale for this strategy: the economic shock of COVID-19, the important role of banks during the crisis, and the need to act now to prevent a build-up of NPLs. View Article
AFME: Commission’s revised action plan for NPLs from Covid-19 disappoints : “The Commission’s NPL action plan launched today is an unambitious review of its 2017 proposals. It doesn’t take into consideration that today we are facing a NPL crisis caused by an exceptional economic downturn resulting from the Covid-19 pandemic.... View Article
Association of German Banks has reservations about EU action plan to reduce non-performing loans : Bad banks must not lead to a mutualisation of debt View Article
Speech by Elke König at CER - ‘Coping with Covid: the next steps for banks : The SRB’s approach has been to support the banks where necessary with operational and financial relief measures, using the flexibility in the EU’s resolution framework. View Article
ECON: Update on recent banking developments : This briefing gives an update on and summarises recent events and developments in the Banking Union, based on publicly available information. View Article
Steven Maijoor speaks at the third ECB roundtable on euro risk-free rates : The focus of the event was the fallbacks for EURIBOR, where working group on euro risk-free rates members will guide the audience through the recently launched public consultations on EURIBOR fallback trigger events and €STR-based EURIBOR fallback rates. View Article
ESBG: Draft revised guidelines on major incident reporting under PSD2 : ESBG submitted today its response to the European Banking Authority consultation paper on the draft revised guidelines on major incident reporting under PSD2. View Article
BIS: Basel III monitoring results based on end-December 2019 data published by the Basel Committee : Prior to Covid-19, large internationally active banks made further progress towards meeting fully phased-in final Basel III capital requirements; liquidity ratios improved compared with end-June 2019; Basel III monitoring dashboard gradually introduces an interactive visualisation of the results View Article
Project Syndicate Howard Davies: The Measure of Financial Regulators’ Independence : The benefits of central bank independence are accepted by almost everyone nowadays. And there is growing evidence that financial regulation works best – boosting the stability of the banking system – when regulators and supervisors have similar independence. View Article
Capital Markets Union
Capital Markets Recovery Package: Council confirms targeted amendments to EU capital market rules : On behalf of the Council, EU ambassadors today endorsed targeted amendments to the EU capital market rules provisionally agreed with the European Parliament last week to support economic recovery from the COVID-19 crisis. View Article
ECON: Deal to help companies access diverse sources of fresh capital : The agreement reached with the Council on targeted adjustments to the Prospectus Regulation should facilitate economic recovery by removing red tape for companies while protecting investors. View Article
Better Finance:The 2020 Shareholder Meetings harmed Shareholder Rights and often severely : The annual general meeting (AGM) is the cornerstone of shareholder democracy and an essential part of sound corporate governance. View Article
IAIS sets outs priorities for 2021 and beyond : he International Association of Insurance Supervisors’ (IAIS) executive committee has revealed its four overarching priorities for the coming years, together with leadership reappointments and the addition of five new members to the IAIS View Article
EIOPA: Solvency II review: A balanced update for challenging times : The European Insurance and Occupational Pensions Authority (EIOPA) submitted today to the European Commission its Opinion on the Solvency II 2020 Review. EIOPA’s approach has been “evolution not revolution”. View Article
EFAMA:12th edition of our ‘Asset Management in Europe’ report. : The report aims to provide a unique and comprehensive set of facts and figures on the state of the asset management industry at the end of 2018 but also to highlight the fundamental role of asset managers in the financial system and wider economy. View Article
ESMA: Final report on Guidelines on stress test scenarios under the MMF Regulation : Article 28 of the MMF Regulation provides that ESMA shall develop guidelines with a view to establishing common reference parameters of the stress test scenarios to be included in the stress tests that MMFs or managers of MMFs are required to conduct. View Article
Better Finance: Ensure a Level Playing Field for ELTIFs to Take Off : With merely 22 active funds, of which just a handful are marketed and distributed to individual, non-professional (“retail”) investors, the EU Long-Term Investment Funds (ELTIF) market is still struggling to develop more than five years after its launch. View Article
Environmental, Social, Governance (ESG)
Commission: Interim study on the development of tools and mechanisms for the integration of environmental, social and governance (ESG) facto : The study consists of the collection and aggregation of information from as wide a range of representative stakeholders as possible, in order to reflect a full spectrum of views. View Article
ICMA AMIC responds to third EC consultation on the EU Ecolabel for financial products : ICMA's Asset Management and Investors Council has today published its response to the third EC consultation on the EU Ecolabel for financial products. View Article
EFAMA’s ANSWER TO THE JRC CONSULTATION ON THE 3RD TECHNICAL REPORT ON DEVELOPMENT OF EU ECOLABEL CRITERIA FOR RETAIL FINANCIAL PRODUCTS : We believe the 3rd technical report strikes a better balance between the strictness of criteria and a sufficiently large pool of investment opportunities, and present the following recommendations: View Article
ESAs issue a comment letter to the IFRS Foundation’s consultation : (i) the global challenges posed by sustainability for investors and other stakeholders and their call for a common set of standards; (ii) build on existing initiatives and to take key notions such as ‘double materiality’ into account; (iii) it is necessary to address ESG aspects beyond climate. View Article
GRI: Financial and sustainability reporting must be given equal footing - Response to IFRS : GRI has called for strengthened financial reporting that complements sustainability reporting and takes account of the financial risks and opportunities related to a company’s sustainability impacts – with mandatory disclosure to ensure transparency on corporate contributions to global challenges. View Article
IFAC Responds to IFRS Foundation Sustainability Reporting Consultation : Reiterates Call for International Sustainability Standard-Setting Board Under the IFRS Foundation, Encourages Accountancy Profession to Support a Sustainable Future View Article
WSBI-ESBG: IFRS Foundation: Consultation paper on sustainability reporting : WSBI-ESBG welcomes the opportunity to comment on the IFRS Foundation’s Consultation Paper on Sustainability Reporting. View Article
IPE: Dutch and French regulators in joint call for ESG rating regulation : Providers of sustainability-related services such as ESG ratings must be placed under the supervision of European Securities and Markets Authority (ESMA) in order to enforce transparency on the underlying methodologies used by these providers and avoid conflicts of interest..., View Article
Fin Tech Regulation
Europe fit for the Digital Age: Commission proposes new rules for digital platforms : The Commission has proposed today an ambitious reform of the digital space, a comprehensive set of new rules for all digital services, including social media, online market places, and other online platforms that operate in the European Union: the Digital Services Act and the Digital Markets Act. View Article
ECB Keeping cyber risk at bay: our individual and joint responsibility : Introductory remarks by Fabio Panetta, Member of the Executive Board of the ECB, at the fifth meeting of the Euro Cyber Resilience Board for pan-European Financial Infrastructures View Article
Economic Policies Impacting EU Finance
Insurance Europe: BEPS rules must reflect low risk posed by insurance; carve-outs needed when calculating tax rates : Insurance Europe has published its response to a consultation conducted by the Organisation for Economic Cooperation and Development (OECD) on the reports on its pillar two blueprint, which aim to create a single set of international tax rules to address base erosion and profit shifting (BEPS). View Article
EFAMA COMMENTS ON THE TAX CHALLENGES ARISING FROM DIGITALISATION : EFAMA, the voice of the European investment management industry, is grateful for the opportunity to comment on the OECD / G20 Inclusive Framework (IF) on BEPS public consultation on the Reports on Pillar One and Pillar Two Blueprints. View Article
Brexit
FT: EU cannot be ‘captured’ by City of London, warns financial services chief : Mairead McGuinness insists bloc must not be overly reliant on third countries in significant sectors View Article
Bank of England: The provision of financial services after the end of the transition period : Financial sector preparations for the end of the transition period with the EU are now in their final stages. Most risks to UK financial stability that could arise from disruption to the provision of cross-border financial services at the end of the transition period have been mitigated. View Article
EURACTIV: ‘Turning the tide’: Frankfurt attracts London banks : More than four years after the vote that took Britain out of the European Union, Frankfurt is emerging the winner among EU financial capitals in attracting London’s much-coveted banking business, ahead of Paris, Milan and Amsterdam. View Article
Federal Trust:Are we ignoring the services sector at our peril in the current Brexit negotiations? : Barnier tweet: Never before has such a comprehensive agreement (trade, energy, fisheries, transport, police & judicial cooperation, etc) been negotiated so transparently and in such little time.’ View Article
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