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05 November 2019

156th Brussels for Breakfast – CPD Notes

Organised by the Centre for the Study of Financial Innovation (CSFI), hosted by CISI and with co-presenters Sir David Liddington MP, John Rega (Politico) and Helen Thomas (BlondeMoney).

This blog complements the subsequent Brussels 4 Brunch 30-minute CISI webinar that is also available to Friends of GrahamBishop.

We want to involve the Brussels Finance Watchers community in the choice of future topics so my video invitation to the 5th December event will include my then-current thinking about the top three topics - but we welcome your suggestions to

General Election

With such an illustrious political speaker, the Election was the first topic! If the Tories do not get an absolute majority of seats, no other party will provide support. So that opens the possibility of a Labour-Lib Dem-SNP grouping that might have a clear majority. They would be united only in wanting a second referendum and the work done on the timetable points to a May poll at the earliest with Remain versus a “Labour deal” on the ballot paper. (GPB: But why will the EU expend time and energy on negotiating a deal that Labour will not support in the referendum???).

Any extension to the transition period must be agreed by mid-2020 so the timetable for negotiating the Future Trade Deal is actually very short. The Political Declaration on that remains 95% Mrs May’s text and the texts on financial services are unchanged – making clear that any “Canada +++” deal will still include the standard “prudential carve-out” common to all free trade deals.

Progress on the new Commission

The proposed French Commissioner – Thierry Breton – announce overnight that he had sold all his shares to remove any conflict of interest so the feeling was that he now had a clear run. Moreover, the “other” Mr Orban had just become Prime Minister of Romania so there should be a Romanian Commissioner nomination soon. Probably the new Commission will only be a month late!

ECB changes

With two Board changes already in the past year, Lagarde assuming the Presidency will mean that there will have been five changes in the 8-person Board within a year. Cœuré’s replacement - Panetta - is a career central banker but Schnabel is a professor of economics. It was felt that she is not as hawkish as Lautenschlager so the balance of the ECB may have shifted away from the central bank technocrats.

Capital Markets Union

A High Level Forum is to be set up swiftly – with a final report by May 2020. Its task is to create “targeted and concrete policy recommendations” in three sectors: (i) cross-border capital raising, (ii) a European capital market infrastructure (now that the UK is assumed gone) – including market infrastructure. Does that open the way to the ECB’s EDDI proposal moving quickly? (iii) Promoting greater retail investor participation. AFME and ten associations produced their second annual scorecard on CMU and found that reliance on banking lending had actually increased last year to 88% of new funds. The new Forum has work to do!

Banking Union

The EBA’s Risk Dashboard produced an uncomfortable discussion about EU banks – in aggregate – being locked into a vicious circle of low profitability – RoE, at 7.0%, remains well below the cost of capital. Even the EBA’s deadpan language could not disguise the risks that might flow from the slowing economy and thus rising loan losses. Papers from both ECB and Parliament questioned if banks had been gaming the stress tests while the ECB’s report on liquidity pointed to “optimisation strategies” at some banks and that the exercise was only “broadly positive”.

Fin Tech

The problems for Libra continue to mount in Europe whilst both the FSB and BIS have just launched projects on the regulatory issues flowing from “stablecoins”.


We ran out of time to do full justice to the events this month but it is noticeable that the accounting profession is now becoming fully engaged in how to report the data that stake holders want. Clearly, the Non-Financial Reporting Directive will need to be reviewed. The financial sector is seen as a key enforcer of sustainability but a third of the world’s biggest banks have failed to sign up to the climate initiative.


© Graham Bishop

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