21 March 2011

Graham's Blog, 21st March 2011

Adair Turner was as blunt as ever: Basel III capital rules are too low. He then talked of surcharges for SIFIs that could take required capital into the 15-20% region. View Article That would certainly chop bank profitability – and thus bonuses! The FT said that European banks' stress test criteria were going to be softened. The required capital ratio European banks need to hold to pass the stress test would be just 5% of core Tier 1 capital. View Article This sounds less than the 6% pass-rate last year but the definitions may make the comparison like apples and oranges – e.g. the German Landesbanken immediately complained this would exclude their “silent participations”. View Article

However, Paul Goldschmidt called for the tests to be toughened in a crucial way - make them check for contagion from failed banks. If recognised as "objective", the new stress tests will represent a major step forwards. View Article

The Committee on Payment and Settlement systems (CPSS) and the Technical Committee of the International Organisation of Securities Commissions (IOSCO) have issued a public consultation for new and more demanding International Standards for payment, clearing and settlement systems. View Article Deeply technical, but this is vital stuff to make sure that forcing derivatives trades into CCPs does not just make them into a time bomb!

European Commission proposed a common system for calculating the tax base of businesses operating in the EU - Common Consolidated Corporate Tax Base (CCCTB to its friends!). It is about ensuring that the cross-border nature of enterprises is properly recognised, by allowing them to offset losses in one Member State against profits in another. View Article 

Tax harmonisation is always a very touchy subject – watch the squeals from the UK - but will the eurozone just go ahead anyway?

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© Graham Bishop