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26 November 2009

This week in "Brussels" - with Podcast

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© 2009Jump directly to articles on:-
Financial Services Policy Banking Securities Insurance
Asset Management Corporate Governance Competition: Financial Services Edited Minutes of key legislative Bodies
Financial stability - policy analysis Brief Opinions    
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Articles from 19 November 2009 - 26 November 2009
Financial Services Policy Back to top 

UK Government to implement Walker reforms on bank pay and governance – highest remunerations must be disclosed
Sir David Walker’s report on bank pay and governance, enabling shareholders to monitor risk taking, is to be implemented by the UK government. Investors will need to identify employees, product lines and business units generating abnormal rewards.   View Article

British banks believe final Walker Report hits right targets - shareholders should be active participants
Sir Walker has received widespread support for many changes already implemented since interim report – indeed, banks are already adopting his early recommendations on board composition and responsibilities, Angela Knight BBA Chief Executive said.  View Article

23 Nov ECON Committee: focussed on legal uncertainties about powers and concern about Council diluting the DLG plans
The Strasbourg meeting focused on the first exchange on the Commission’s proposals for a new European supervisory architecture. One of the main issues raised by MEPs was the legal uncertainties concerning the powers of the proposed supervisory authorities.  View Article

Commissioners designated for the next Commission
Centre-right politicians dominate the list of new EU commissioners expected to take office late January. There are nine women on the list - one more than in the current Commission - which, in principle, should please the EP. MEPs will now have to approve them.  View Article

FSA Turner: macro prudential tools vital to future financial stability
Speaking at the CBI annual conference, Lord Turner recalled that we should not just focus on the negative aspects of the pre-crisis financial system. Instead, we should focus on the positive functions which banks and other financial institutions must perform in a successful economy.  View Article

IMF Strauss-Kahn: Take-Off or Holding Pattern? - To sustain global growth, world economy will need a new engine
Strauss-Kahn warned that even if financial conditions have improved, they are still far from being normal. As regards exit strategies, economies should wait until financial stability is completely recovered.  View Article

Trichet: key lesson from the crisis - the complexity of the international financial crisis has put banks in a difficult position
The G20 has made a quantum leap in creating the new premier global economic group. The aspect that impresses him most about this group is the virtually universal consensus on global economic issues such as what constitutes the appropriate response to the crisis.   View Article

Compensation and bonuses must remain contained, Trichet warns at the 19th Frankfurt European Banking Congress
He focused on the essential issues to be tackled in the banking sector, including the need to strengthen banks’ balance sheets and expanding banks’ supply of loans once loan demand picks up in the recovery.   View Article

‘3L3 Convergence from crisis’: third panel at the CEIOPS 2009 Conference
The main issues were the lessons learned from the crisis (including the option of using contingent capital); the Commission’s legislative proposals on European Supervisory Authorities; the quality of current 3L3 co-ordination and EU convergence with global initiatives.   View Article


Banking Back to top 

ECB’s Tumpel-Gugerell: Progress to SEPA: after clarifying interchange fees, cards are leading growth in international payments
The European Payment Services Directive will significantly reduce transaction times to a maximum of three days and requires full transparency on the currency conversion. This will bring significant benefits to all bank customers – consumers and corporates, also in the UK.   View Article

UK Treasury consults on protection for mortgage borrowers as part of the ambitious reform of financial markets
Borrowers whose mortgages are sold on to third parties will be protected by FSA regulations requiring fair treatment of customers. The FSA's remit will be expanded to include the regulation of buy-to-let and second-charge mortgages.  View Article


Securities Back to top 

CESR publishes responses to Consultation on Trade Repositories – 31 comment letters submitted
The European Banking Federation, among other respondents, believes that the basic function of a TR consists in reporting and forwarding collected data. Potential additional functionalities for life cycle events handling are not essential.  View Article


Insurance Back to top 

‘Solvency II – a winning recipe?’ Panel I at the CEIOPS 2009 Annual Conference
Socialist MEP Peter Skinner presented the international perspective on the equivalence of third-country solvency regimes. He said that the US was posing particular challenges in this respect, while the Swiss regime, with its relative comparability to the Solvency II regime, would be less challenging.  View Article


Asset Management Back to top 

BVCA challenges: proposed remuneration restrictions in AIFM
The draft directive's proposals on remuneration for alternative investment funds don't fit the private equity model and could leave investors worse off. Managing remuneration to limit risk is a long-held tenet of private equity, said BVCA CEO Simon Walker.   View Article

AIFMD Rapporteur’s opinion report - national private placement regimes recognised
In his first in-depth report on the AIFMD, Jean-Paul Gauzè's proposed rules through the European parliament set out more than 130 suggested amendments. These will be debated by European lawmakers and combined with changes to be negotiated separately among European Union member states next year.  View Article

‘Occupational pensions – a year in perspective’: second panel at CEIOPS 2009 Conference
All panelists agreed that the single biggest event affecting funded pensions was the financial crisis. Although pension funds have weathered the short-term impact of the crisis well, the crisis has also brought home a number of questions about sustainability and affordability.  View Article

UK Pension Regulator to act on governance - keeping pensions safe is the ultimate goal
The regulator makes clear that trustees responsible for running pension schemes need to be sure that they have the right skills and get the right people to help them - as well as the right processes in place to manage scheme risks.   View Article


Corporate Governance Back to top 

US Office of the Comptroller of the Currency questions IASB's proposed loan-loss accounting standard as potentially too restrictive
US Currency Comptroller John Dugan said accounting-standard setters are heading in the right direction, but he raised concerns about the proposal. ‘If expected loss is interpreted in a way that constrains it so you don't get to look forward, then we will not have made much progress,’ he said.  View Article

IFRIC issues guidance on extinguishing financial liabilities with equity instruments
IFRIC interpretation clarifies the requirements of IFRSs when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s shares or other equity instruments to settle the financial liability fully or partially.  View Article

IASB issues minor amendment to pensions accounting and proposes consequential change for first-time adoption of IFRSs
The amendment is to IFRIC 14, which is itself an interpretation of IAS 19 Employee Benefits. The amendment applies in the limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements  View Article

IPSASB consults on reporting on the long-term sustainability of public finances
The consultation seeks views on how information on the long-term sustainability of government programmes may complement information available in traditional financial statements, thereby increasing transparency and enhancing accountability and decision making.   View Article

IFAC presses for action to adopt and implement global financial standards
IFAC President Bunting: 'There is a need for a level playing field in financial reporting and it is very important to avoid trans-Atlantic accounting arbitrage and political interference in the technical aspects of standard setting.  View Article


Competition: Financial Services Back to top 

Kroes: ensuring compliance with the Commission’s state aid rules is of the utmost importance
At a conference of the Hungarian Competition Authority in Budapest, Kroes said that DG Comp avoided in part the collapse of the EU's banking and financial system by permitting exceptional measures on state aid. The time to restructure is now, she urged.  View Article

Commission takes action to ensure that 10 Member States implement several EU financial services directives
The main infringements refer to the accounting Directive, rules for the prudential assessment of acquisitions in the financial sector and the prevention of money laundering and terrorist financing.  View Article

Commission approves revised Irish guarantee scheme for banks
The revised guarantee scheme excludes subordinated debt and extends to instruments with a maturity of up to five years. Kroes stressed that it will give credit institutions in Ireland access to medium-term state-guaranteed financing.  View Article


Financial stability - policy analysis Back to top 

BIS working paper: ‘Ten propositions about liquidity crises’ – how to address them
The ten propositions include: the growing reliance on funding liquidity in a market-based financial system; the role of payment and settlement systems, and the desirability of putting in place (variable) speed limits in the financial system.  View Article

Nicolas Veron: turbulence ahead for the City of London as EU supervision takes new role in the City
Before the crisis the City was rewarded with generous tax treatment and a light-touch regulatory regime. Now, however, it will be radically affected by the proposed European Supervision architecture. The UK government seems to accept the new regulation more than bankers.  View Article

Senior financial supervisors: how risk management weaknesses and internal controls contributed to industry distress during financial crisis
The report concludes that, despite firms’ recent progress in improving risk management practices, substantial work is required to address underlying weaknesses in governance, incentive structures, information technology infrastructure and internal controls.  View Article

Containing systemic risk: ECON report by Karl Whelan from University College Dublin for dialogue with ECB in December
The report presents initiatives that can be taken to reduce the problem of systemic risk. It shows that a way to increase liquidity ratios would be via the Turner recommendation of a minimum required ratio of “core funding” to total liabilities.  View Article




© Graham Bishop

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