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04 March 2010

This week in "Brussels" + Podcast

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Competition: Financial Services Financial Services Month in Brussels - Report About this email

  Articles from 25 February 2010 - 04 March 2010

  Financial Services Policy

Michel Barnier: regulatory loopholes on financial services need to be filled
At a British Bankers' Association dinner in London, Barnier stressed that it is essential to restore confidence in financial markets. This requires, among other things, better supervision, well capitalized institutions and stronger risk management systems.  View Article
EP CRIS Special Committee: financial regulation and supervision under spotlight
Banque de France Governor Christian Noyer stressed a need to update CRD, reform credit rating agencies and harmonize definitions of financial instruments. He warned that “To draw up a list of systemic financial institutions could be counterproductive as it would institutionalise moral hazard”.  View Article
CRIS committee on impact of crisis: don't lump all new member states together, experts warn
Experts argued that, on the one hand, the dominant presence of foreign banks contributed to pre-crisis economic growth but, on the other hand, their policies and "aggressive behaviour" were also partly responsible for the build-up of “pre-crisis vulnerabilities” like the huge house price boom.  View Article
ECB: statement on additional measures taken by Greek government
Cutting public expenditure and adjusting public sector wages are key signals both for long-term fiscal sustainability and for substantially enhancing the price and cost competitiveness of the Greek economy. The ECB appreciates the Greek government’s recognition that these measures are imperative.  View Article
Europe 2020: EC proposes new economic strategy for Europe
Europe 2020 aims to get the EU out of the crisis and prepare its economy for the next decade. The EC has identified key drivers for growth such as fostering knowledge, innovation, the digital society and making EU production more resource-efficient, while boosting competitiveness.  View Article
Lord Turner on “too big to fail”: Obama/Volcker proposals are seriously being considered
He presented possible solutions including higher equity requirements for larger banks, using resolution and recovery plans to encourage them to structure themselves into separable legal entities, either by geography or by function.  View Article
Luxembourg Financial Industry Federation (PROFIL) publishes financial sector codes of conduct
Luxembourg suffers from two contradictory reputations. For some, finance is an unregulated realm governed by the free market law of the jungle. For others, it is the regulated sector par excellence. With these new codes, Luxembourg financial centre reiterates its adherence to the business ethic.  View Article
FSA finalizes new framework for financial penalty-setting
The new policy shows the FSA's on-going commitment to the principle of credible deterrence, as well as the improvement of standards within firms in relation to market misconduct and dealings with customers.   View Article
MEP Sharon Bowles speaks out on £1.3 billion RBS bonuses
"It is unacceptable that banks bailed out by the taxpayer continue to pay out bonuses when they are still reporting losses. We need to rethink remuneration policy as a whole, reduce the incentive to take excessive risk and stop rewarding making easy money”, the ECON Chair said.   View Article
BIS Quarterly Review: 'International banking and financial market developments'
It attributes the mid-January to mid-February fall in asset prices, among other factors, to the unevenness of the global economic recovery and concerns about sovereign credit risk in the light of large fiscal deficits.   View Article
IMF rethinks its role in post-crisis world
The IMF has issued a paper on what it should do to promote global stability and how its membership might best support that process. The aim is not to put forward concrete proposals, but to float ideas which will stimulate debate.   View Article
IMF: Europe is learning lessons from the crisis
Director of the IMF’s European Department Marek Belka stressed that the EU must ensure that the extraordinary support provided to banks and other financial institutions does not turn into an addiction. Meanwhile, the need for fundamental reforms in the financial sector should not be forgotten.  View Article
FED: Tarullo on financial regulatory reform
“The regulatory reform will not come to a close once the new legislation has been enacted; the work of containing systemic risk and the too-big-to-fail problem will need to be adaptive. The ideas and criticisms of those outside the regulatory agencies will remain essential to this work”.   View Article


IMF publishes views on EU cross-border crisis management framework for banks
Any future framework must be consistent with the broad objectives of the single market and allow for the consolidation and rationalisation of banks across borders. The report will be considered for upcoming meetings of the Financial Stability Board and the G20.  View Article
Commission asks stakeholders for views on further possible changes to Capital Requirements Directive
The Public consultation on CRD IV covers seven specific policy areas reflecting the commitments made by G20 leaders. These commitments included building high-quality capital, strengthening risk coverage, mitigating pro-cyclicality and discouraging leverage.  View Article
EMF publishes study on non-performing loans
The EMF study on Non-Performing Loans 2010 looks beyond the raw data to reveal significant dependencies between loan performance and macro-economic conditions. It finds that one defining aspect of today’s mortgage markets is the historically low level of mortgage interest rates.  View Article


Wolfgang Münchau: The case against naked CDS
In his article, Münchau argues that naked CDSs have played an important and direct role in destabilising the financial system. They still do. And banks, whose shareholders and employees have benefited from public rescue programmes, are now using CDSs to speculate against governments.   View Article
CESR recommends introduction of pan-European short selling disclosure regime
CESR recognises short selling is key for financial markets as it facilitates risk management activities. But it can also be used in an abusive way to drive down financial instrument prices to a distorted level. A pan-European regulatory approach is, therefore, necessary.   View Article
CESR publishes amended protocol on transparent operation of MiFID database of share trading volumes
The information is targeted for market participants who need the information for recognising liquid shares and for determining the block sizes for waivers from pre-trade transparency requirements and for delayed post-trade publication.  View Article


Geneva Association publishes special report on systemic risk in insurance
This examines the differing roles of insurers and banks in the global financial system and their impact on the crisis. A key conclusion is that, due to the specific features of the industry, insurers’ and reinsurers’ core activities do not pose systemic risk.  View Article
CEIOPS publishes liquidity premium report on valuing insurance liabilities
The report serves as an input for the discussions to be held by the Commission with member states in order to determine the risk-free rate for Solvency II Level 2 implementing measures.  View Article

  Asset Management

Barnier: fully supports AIFMD to regulate hedge funds and private equity
“Hedge funds and private equity are important parts of the financial system; however, in certain circumstances they can act collectively in a systemic way. Therefore, there is a need to regulate them”, he said in London earlier this week.   View Article
Sharon Bowles updates City on AIFMD
"The difficulty, as chair, is to mediate between the political parties in a bid to achieve a consensus view that can then be put to the Commission and Council of Ministers. Given the range and scope of the amendments, this will be a colossal task”, said Bowles at the Euromoney Legal Forum conference  View Article
EVCA: venture capital key to financing EU 2020 “Innovation Union”
The EC met with senior venture capitalists at a closed door conference hosted by the European Private Equity & Venture Capital Association. They discussed how the public and private sector could join together to meet this goal.  View Article

  Corporate Governance/Accounting

Japanese FSA: revision of IFRS designation for voluntary application in Japan
The FSA Commissioner will designate and publish in the Official Gazette the IFRSs published by the IASB that are considered fair and appropriate financial reporting standards from the viewpoint of investor protection and market integrity in Japan (“Designated IFRSs”).  View Article
IASC Foundation publishes second batch of IFRS training materials for SMEs
The training materials are designed to assist companies and accounting practitioners in applying the IFRS. It covers case studies on the IFRS for SMEs and summaries of the main differences between the IFRS for SMEs and the corresponding full IFRS.  View Article
EFRAG publishes advice on IFRS compatibility for SMEs and EU accounting directives
In November 2009 the EC asked EFRAG to clarify in which cases the IFRS for SMEs is incompatible with the EU Accounting Directives. EFRAG has published potential changes to increase the compatibility between both texts, including an accountancy rules definition.  View Article

  Competition: Financial Services

State aid: EC approves Dexia restructuring plan
Dexia will focus on its core banking activities and traditional markets - Belgium, France and Luxembourg. It will reduce its public sector lending activity outside these markets, while its bond portfolio, will be ring fenced within a specific division of the bank.  View Article

  Financial Services Month in Brussels - Report

February 2010 - with Podcast
Graham Bishop’s Overview The situation in Greece continued to dominate financial markets – but as an economic issue, and not yet as  View Article



© Graham Bishop

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