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12 November 2009

This week in "Brussels" - with podcast

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Financial Services Policy Banking Securities Insurance
Asset Management Corporate Governance Competition: Financial Services Financial stability - policy analysis
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Articles from 05 November 2009 - 12 November 2009
Financial Services Policy Back to top 

10 November ECOFIN council conclusions on Solvency II and Capital Requirements
The Council adopted 'Solvency II' to reflect the latest developments in prudential supervision, actuarial science and risk management, and to allow for updates in the future. Solvency II is the recast of 14 existing insurance directives.  View Article

IMF says that ‘Too Complex to Fail’ is the real issue and that size and linkages between firms are among the principles to consider
The IMF is warning that governments should consider the potential of financial institutions to severely damage global financial and economic stability. The goal is to create a framework to determine a firm’s importance to the financial system.  View Article

IMF: experts warn financial system risks still high
An IMF conference is calling for a much better understanding of macro-financial linkages. The IMF is researching how the financial sector affects the broader economy, but global imbalances raise concerns about future stability.   View Article

European Parliament special CRIS committee: phasing out of support measures not imminent
CRIS Committee Chairman Wolf Klinz said that the EU does need regulation, but that it must be a 'smart'. A regulatory framework should be created within which the actors are left to move with certain freedom.  View Article

ECOFIN background note on exit strategies and support measures to the financial sector
ECOFIN ministers will discuss the methods and timing of the phasing out of bank guarantee schemes. Retaining state aid measures longer than necessary could lead to artificially maintaining banking activities that would not otherwise be profitable.  View Article

US Banking Committee unveils plan for regulatory overhaul
“We will end 'too big to fail'", Committee Chairman Chris Dodd said, proposing an independent council of regulators and implementing a resolution system “to safely shut down large failing companies without destabilizing the financial system.”  View Article

Fed Tarullo on supervising and resolving large financial institutions
US authorities propose a resolution authority to enable the government to wind down a systemically important firm in an orderly way, as part of sweeping legislation to overhaul financial regulation.  View Article

FDIC Bair calls for new resolution system
Sheila Bair strongly supports requiring all systemically important financial institutions to prepare so-called 'living wills'. Bair also calls for a reserve fund and higher capital requirements, as proposed in the Basel II proposal.  View Article

Britain and U.S. disagree at G20 on tax to insure against crises: UK proposes and US denies
UK proposals include imposing a new tax on financial transactions to support future bank rescues. The US trusts the IMF and urges waiting until it proposes a set of options next spring to ensure financial stability.  View Article

SEC Shapiro asks Congress to leave FASB alone
SEC Chairman Mary Schapiro asked the House Financial Services Committee leadership not to put the FASB under the supervision of a proposed Federal Accounting Oversight Board instead of the SEC.   View Article

IASB and FASB reaffirm convergence plans
IASB and FASB issued a joint statement and agreed to intensify their major joint projects. Their boards reaffirmed their commitment to bring about the convergence of their accounting standards.   View Article


Banking Back to top 

EBF’s report on overcoming the crisis, moving beyond and the new challenges ahead
EBF's Report identified two new challenges as a direct result of the crisis. The first new key challenge is to restore confidence in the banking sector, and the second is to establish meaningful transparency in financial markets.  View Article

CEBS working programme 2010 - transformation into the European banking authority by the end of 2010
For 2010, CEBS’s highest priority in relation to the regulatory and supervisory consequences of the crisis is connected to the upcoming changes in Basel II and the CRD, and to the work linked to the change from CEBS to the EBA by the end of 2010.  View Article


Securities Back to top 

CEBS publishes its advice on the effectiveness of a minimum retention requirement for securitisations
CEBS proposes, in particular, the retention number of 5 per cent to be kept, since a significant increase could have the unwanted consequence of undermining the ability of firms to achieve significant risk transfer.   View Article

Commission consults on review of Financial Conglomerates Directive and urgent need to control group risks
The Commission’s main questions refer to top level supervision; exactly what should be included in the scope of supplementary supervision, the role of capital buffers and developing binding principles for remuneration.  View Article

CESR’s work programme for 2010
The first item of CESR top priorities is the transformation into the European Security and Markets Authority. CESR will also be focused on the ECOFIN roadmap and the work stream related to OTC markets.  View Article


Insurance Back to top 

CEIOPS first self-assessment exercise and reports on application of Level 3 provisions on information exchange and supervisory co-operation
The report gives useful insight into areas which could benefit from more attention by supervisors. It points to issues requiring further harmonisation. With this publication CEIOPS closes the first phase of a full peer review exercise.   View Article

CEIOPS report on risk management rules applicable to IORPs
CEIOPS has decided to undertake a survey of the risk management rules applicable to IORPs in each Member State. The report findings show that slightly more than half the Member States have implemented generic risk management rules.   View Article

CEIOPS and Groupe Consultatif Actuariel Européen publish report on use of insurance market data in the valuation of technical provisions.
The study illustrates mainly the role of insurance market data and considers broadly the interconnection of this issue with the Level 1 text and the future work on Level 3.  View Article


Asset Management Back to top 

UK Treasury publishes asset management report on challenges and opportunities facing UK as an asset management centre
The HMT report identifies the particular challenges and opportunities facing the UK as an asset management centre and makes 22 recommendations. These are a mixture of aspirations, policy aims and calls for immediate action.  View Article

Asset managers warning on watchdog role: government must not impose better governance
Treasury-sponsored report by 15 prominent figures in Britain’s investment industry says asset managers believe government must not impose a blanket rule forcing investment managers to push companies for better governance.  View Article

ECON hearing and workshop on AIFM: the debate is still highly divided
Speakers from pension funds, industry, supervisors and the trade union movement gave their views and responded to MEPs’ questions. One key issue was the treatment of third-country funds and the depositaries.  View Article

House of Lords EU Committee publishes evidence on proposed AIFM directive
Lord Baker said that the more the European proposal looks like the Obama proposal, the more we would welcome it, which shows the UK position relative to the current debate on the AIFM.  View Article


Corporate Governance Back to top 

EFRAG's Endorsement Advice on Amendment to IAS 32: Classification of Rights Issues
Regardless of the currency in which the exercise price is denominated, in a rights issue an entity will receive a fixed amount of cash for a fixed number of its equity instruments. These are classified as an equity instrument.   View Article

IASB proposals on impairment of financial assets – IAS 39
The exposure draft proposes requirements for how to include credit loss expectations in the amortised cost measurement of financial assets. The proposals form part of a project to replace IAS 39 with a new standard.  View Article


Competition: Financial Services Back to top 

Commission opens in-depth investigation into support measures for German savings bank Sparkasse KölnBonn
The Commission, working with the German authorities, has invited Sparkasse KölnBonn to submit a restructuring plan in order to find a viable long-term solution for it. The capital of Sparkasse KölnBonn was strengthened by a total of €650 million.  View Article

Commission opens in-depth investigation into Portugal's state guarantee for Banco Privado Português
Banco Privado Português was granted a state guarantee on a €450 million loan. The measure was approved for a period of six months, subject to the submission of a restructuring plan. Such a plan has not yet been submitted to the Commission.  View Article


Financial stability - policy analysis Back to top 

ECB González-Páramo on Eurosystem’s response to the financial crisis and measures needed for a gradual exit from central banks
At the CRIS Committee of the European Parliament he said that the financial crisis has presented central banks with three exceptional challenges: to support the funding liquidity of banks, stabilise economic activity and preserve price stability.   View Article

Bundesbank Weber: central banks have to recognise risks to financial stability earlier and more accurately
In his speech on “Institutional responses to the crisis and thoughts on regulatory issues”, Mr Weber emphasised that the current real challenge is making the financial system more stable without significantly hurting economic productivity.  View Article




© Graham Bishop

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