Welcome to our Gold Friends weekly e-mail.
My Highlights of the week: European bank shares tumbled another 12 % this week (and are now just 11% of their all-time high) – as the OECD warned “the pace of recovery has lost some momentum” and the ESAs’ risk assessment highlighted that “the impact of the crisis on EU banks’ asset quality is a key concern”. Amidst this gloom, ECB President Lagarde spoke to the Franco-German Parliamentary Assembly and reflected on the forces that have always driven Europe together. The UK’s High Court ruled on the meaning of some “business interruption” insurance clauses and the regulator told insurers to pay up promptly.
The Brexit stand-off continues – despite the UK government’s admission of the possibility of 7000 lorries in a two-day queue at Dover…. The Commission gave a time-limited extension of permission to use UK CCPs - for a simple reason “give market participants the time needed to reduce their exposure to UK CCPs”
(Many of these topics were covered in the Zoom video of the 166th edition of Brussels 4 Breakfast at www.GrahamBishop.com)
Graham Bishop
Articles from 18 - 24 September 2020
General Financial Policy
EU financial regulators assess risks to the financial sector after the outbreak of COVID-19 and call for enhanced cooperation : The three ESAs have issued their first joint risk assessment Report of the financial sector since the outbreak of COVID-19. The Report highlights further amplified profitability concerns across the board and heightened liquidity challenges in segments of the investment fund sector. View Article
OECD: Building confidence crucial amid an uncertain economic recovery : After an unprecedented collapse in the first half of the year, economic output recovered swiftly following the easing of containment measures and the initial re-opening of businesses, but the pace of recovery has lost some momentum more recently. View Article
ECB's Lagarde: Speech at the Franco-German Parliamentary Assembly "Jointly shaping Europe’s tomorrow" :
 This parliamentary assembly is an embodiment of the special relationship between our two countries and their commitment to European integration....Europe’s citizens must be at the centre of the debate about the Europe that we want to build as we emerge from the crisis. View ArticleFT Brexit and the City: Brussels’ new battle to rival London in finance : The EU believes it needs to have a stronger financial sector but will find it hard to replicate the UK's capabilities View Article
Banking Union
SSM: Technology exposes banks’ vulnerabilities : Speech by Pentti Hakkarainen, Member of the Supervisory Board of the ECB, at the Institute of International Finance Digital Interchange: The Global Dialogue on Digital Finance View
IFAC and ICAEW Release First Installment of Six-Part Anti-Money Laundering Educational Series : The publication is part of a 6-month short series helping professional accountants enhance their understanding of how money laundering works, the risks they face, and what they can do to mitigate these risks and make a positive contribution to the public interest. View Article
EDPB’s consultation on the interplay of the PSD2 and the GDPR: EBF response : EBF has responsed to the European Data Protection Board’s (EDPB) consultation on the draft guidelines on the interplay of the PSD2 and GDPR. We welcome the EDPB’s efforts to clarify uncertainties that persist between these two essential legislative frameworks for the banking sector. View Article
ESBG: Harmonise EU payments & data protection rules : Calls out Third Party Providers on silent party data, arguing banks not responsible for their processing, Rejects claim that financial transactions reveal sensitive data, data filtering costly, hinders PSD2 aims? View Article
EBA flags to the EU Commission elements of the definition of credit institution and aspects of the scope of authorisation: EBA published an Opinion addressed to the European Commission to raise awareness as to the opportunity to clarify certain issues relating to the definition of credit institution in the upcoming review of the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD). View Article
ECB allows temporary relief in banks’ leverage ratio after declaring exceptional circumstances due to pandemic: ECB Banking Supervision exercises regulatory discretion declaring exceptional circumstances; Measure allows banks to exclude central bank exposures from leverage ratio; Banks to benefit from relief measure until 27 June 2021 View Article
FT: European banks load up on government bonds, raising concerns over ‘doom loop’ : S&P says rapid build-up is different to period before eurozone crisis but long-term risks loom View Article
Capital Markets Union
S&P: EU will be big new player in bond market with likely triple-A asset : The European Union's planned issuance of €750 billion in bonds to fund its recovery program will create a major new player in bond markets for the long term, and it could also ease pressure on the "doom loop" that has bedevilled weaker EU banks and economies, according to market participants. View Article
Financial stability: Commission adopts time-limited decision giving market participants the time needed to reduce exposure to UK central cou : On 1 January 2021, the UK will leave the Single Market. Today's temporary equivalence decision aims to protect financial stability in the EU and give market participants the time needed to reduce their exposure to UK CCPs. View Article
AFME welcomes Commission equivalence decision on UK CCPs : Oliver Moullin, Managing Director at AFME said: “We welcome today’s confirmation that the Commission has adopted a time-limited equivalence decision for UK CCPs. This is a vital step to address an important financial stability risk and ensure continued access for EEA firms to clearing services ... View Article
CRE: FCA tells insurers to settle BI claims as quickly as possible : The UK regulator has told insurers to settle Covid-19 business interruption (BI) claims clarified in last week’s High Court judgment “as quickly as possible”, and warned against “creating additional barriers or delays to paying valid claims”. View Article
ACCA: Interruption insurance victory opens door for claims : Accountants are warning that calculating the extent of losses caused by the Covid-19 pandemic are far from straightforward when making a business interruption (BI) insurance claim despite the Financial Conduct Authority’s successful action against insurance companies. View Article
CEPS: Fostering capital market integration : Is there a role for a CMU equity market index? The EU has been struggling to integrate its capital markets for decades. Despite the broad public support shown for a Capital Markets Union (CMU) since its launch in 2015, progress in realising it has been very limited. View Article
Better Finance: Stakeholders and authorities show faith in European Personal Pension (PEPP) : PEPP only called into question by finance industry due to high costs for intermediaries View Article
Environmental, Social, Governance (ESG)
Accountancy Europe welcomes cooperation by sustainability reporting bodies : A crucial step towards global standards for non-financial information (NFI) reporting: that’s how we view the joint statement that CDP, CDSB, GRI, IIRC and SASB issued on 11 September 2020. View Article
CDSB welcomes call from global investor groups to reflect climate-related risks in financial reporting : CDSB welcomes the letter by investor groups yesterday confirming the view that “climate-related risks are considered a material factor and thus should be reflected appropriately in financial statements.” View Article
Accountancy Europe: EC’s roadmap on obligation for companies to publish non-financial information : Accountancy Europe has responded to the European Commission’s roadmap on obligations for certain companies to publish non-financial information. View Article
BDB: Sustainable Finance - The Contribution of Private Banks : This position paper shines a light on the role of private banks in sustainable finance and, more specifically, in climate protection. It aims to show where the industry currently stands, what major challenges it faces and what private banks are planning for the future. View Article
ESAs launch survey on environmental and/or social financial product templates : The European Supervisory Authorities published today a survey seeking public feedback on presentational aspects of product templates, pursuant to Article 8(3), Article 9(5) and Article 11(4) of the Regulation on sustainability-related disclosures in the financial services (SFDR). View Article
Protecting Customers
EURACTIV: Commission fears UK data protection regime ‘may change in the future’ : The European Commission has concerns that certain aspects of the UK’s data protection regime may change in the future and negatively impact the safety of EU personal data when transferred to the country, Commission sources have informed EURACTIV. View Article
Fin Tech Regulation
EURACTIV: LEAK: EU to create ‘superbody’ of watchdogs to oversee digital currencies : The EU will set up a new college of supervisors, including national and European authorities, to oversee “significant” digital currencies including Facebook’s Libra, according to the European Commission’s cryptocurrency draft proposal seen by EURACTIV. View Article
SUERF: A Journey through the Monetary Cyber World : A guide through the swift evolution in the concept of digital money since early 2009, when Bitcoin was launched with the project, still not implemented, to replace legal tender. Stablecoins, have emerged more recently, and aim to remedy the shortcomings in the first generation of crypto-assets. View Article
EURACTIV: LEAK: Commission plans new revolution for “open finance” in 2022 : The European Commission wants financial firms and other companies to share more customer data to create a “broader open finance space” with new services for citizens, according to a draft of the Digital Finance Strategy seen by EURACTIV. View Article
Economic Policies Impacting EU Finance
POLITICO: Vestager faces risks in potential appeal of Apple ruling : EU competition chief Margrethe Vestager seems to have no intention of letting go of her €13 billion Apple case, but a potential appeal of the July court verdict against her is fraught with risk, both legal and political. View Article
Brexit
Bloomberg: JPMorgan to Move $230 Billion Assets to Germany Under Brexit : Migration will make the U.S. firm a top 10 bank in the country; Head of the Frankfurt unit has taken on more responsibilities View Article
CRE: London market brokers choose Belgium as top EU base for post-Brexit business : Almost one quarter of London market brokers have set up a base in Belgium - according to the London & International Insurance Brokers Association (LIIBA) that is confident members will be able to continue serving clients in the EU. View Article
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