This week in "Brussels"

07 June 2012



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Articles from 31 May 2012 - 07 June 2012

Banking

European Commission: New crisis management measures to avoid future bank bailouts
The proposals adopted today by the European Commission for EU-wide rules for bank recovery and resolution ensure that in future authorities will have the means to intervene decisively, both before problems occur and early on in the process if they do.  View Article
DG ECFIN: The banking union - a political vision for more EU integration
The European banking union is not a new legal instrument to be drafted. It is a political vision for more EU integration, which will build on recent major steps to strengthen the regulation of the banking sector.  View Article
European Commission: FAQs on bank recovery and resolution proposal
The Commission gives detailed answers to 34 questions on the framework for bank recovery and resolution, which it says is crucial for ensuring long-term financial stability and for reducing the potential public cost of possible future financial crises.  View Article
President Barroso and Chancellor Merkel both in favour of banking union
Beyond immediate actions for growth and stability, a political vision for the future of Europe is needed, and the monetary union should be supported by the creation of an economic union. Barroso and Merkel therefore support the creation of a banking union to reinforce the supervision of European banks.  View Article
ECON Committee: Banks and governance top debate with Mario Draghi
Bank troubles and how to solve them dominated the discussion with Mario Draghi in the ECON Committee on Thursday. Mr Draghi stressed the imperative need for a bank crisis resolution system, and admitted that governments should have heeded Parliament's calls for such a system in 2010.  View Article
EPP/Gauzès: Bank recovery and resolution proposal - an important step for long-term stability of the euro
The EPP Group in the European Parliament has welcomed the European Commission's proposal for bank recovery and resolution, saying real banking union will guarantee the Monetary Union's sustainability in the long term.  View Article
S&D: The EU needs to take stronger steps towards a real banking union
The S&D Group in the European Parliament welcomed the long-awaited proposal to set up a bank crisis resolution system in Europe but stressed that it was not ambitious enough.  View Article
ALDE/Klinz: The crisis shows the need for further integration of eurozone banking and supervision
Wolf Klinz, the ALDE spokesperson on this dossier, said: "It is an important step to complete all previously agreed and ongoing regulatory changes in the banking sector along with the general principle that no taxpayers' money should be used in case of any bank failure".  View Article
Sharon Bowles: "Crisis resolution - both comedy and tragedy"
Following the publication today by the European Commission of the Bank Crisis Management Directive, Sharon Bowles MEP, ECON Committee chair, welcomed the long overdue proposals but said she feared current events may take over.  View Article
AGB: German banks oppose the idea of a European banking union
The German banking industry committee, representing private sector banks, savings banks and cooperative banks, opposes the idea of a pan–European deposit guarantee scheme as suggested by the European Commission.   View Article
EurActiv: Merkel warms up to EU banking union
German Chancellor Angela Merkel suggested yesterday (4 June) that the EU should consider putting its largest banks under Brussels' direct supervision, paving the way to a more centralised oversight of the region's financial sector.  View Article
Bruegel/Pisani-Ferry: The case for a European banking union
A European banking union was discussed by the EU leaders at their last meeting, and it has been endorsed by the European institutions. Pisani-Ferry expands on why he feels a banking union makes considerable sense.  View Article
Wolfgang Münchau: A real banking union can save the eurozone
Unlike six months ago, officials now realise there is no alternative to a banking union, comments Münchau in his FT column. The biggest danger now is that eurozone leaders change their minds.   View Article
S&Ds welcome an active role for the European Stability Mechanism in supporting banks
Following ECB President Mario Draghi's presentation yesterday in the EP and Mario Monti's call for decisive steps to stabilise the eurozone, Socialists and Democrats welcomed the positive developments towards a more integrated European Union and a different economic policy approach.  View Article
ECON Committee: Home loans - better advice for borrowers, more stable markets for lenders
Proposed new rules to ensure that house buyers are properly informed before taking on a mortgage were approved by the ECON Committee on Thursday. These rules should also ensure that buyers are offered mortgages that are tailored to their needs, and that their creditworthiness is properly assessed.  View Article
ECON Committee: Parliament moves to help home owners with their mortgages
MEPs are pushing the finance industry to provide borrowers with high-quality advice about the risks involved in loans, which would make mortgage lending sounder and more transparent.  View Article
EurActiv: Mortgage consumer rules - Safe as houses?
A spat in the European parliament over how much protection should be afforded to consumers buying mortgages reflects ongoing tensions between the right to invest in property and the need to curb the type of easy credit at the origin of the 2008 financial crisis.  View Article
ECON Committee: All EU citizens must have a legal right to a basic payment account, MEPs say
Having a bank account should be made a legal right for the 10 per cent of EU citizens who currently do not have one, said the Economic and Monetary Affairs Committee on Thursday. MEPs called on the Commission to table legislation by January 2013 to tackle this financial exclusion.  View Article
CPSS publishes 'Innovations in retail payments'
In a report published by the Committee on Payment and Settlement Systems (CPSS), central bankers analyse innovations in retail payments.  View Article
BIS: Consolidated and Locational banking statistics - June 2012
The Bank for International Settlements published its Consolidated and Locational banking statistics showing quarterly data.  View Article
UK Treasury Committee publishes terms of reference for inquiry into Bank of England's macro-prudential tools
The Treasury Committee published the terms of reference for an inquiry into the macro-prudential tools that are set to be handed to the Financial Policy Committee of the Bank of England (FPC).  View Article
FSA: Deposit protection - Raising consumer awareness
This Policy Statement reports on the main issues arising from the FSA's Consultation Paper 11/29, 'Deposit protection: raising consumer awareness', and publishes final rules.  View Article
FSA introduces rules telling banks to display depositor compensation arrangements
The FSA will require all banks, building societies and credit unions prominently to display posters and stickers in branches and on websites explaining which deposit guarantee scheme applies to their customers' deposits. These rules will take effect from 31 August this year.  View Article
Vice President Almunia: The State Aid Modernisation Initiative
The proposal of a Resolution Mechanism at the EU level, adopted yesterday by the College of Commissioners under the initiative of Michel Barnier, intends to regulate what until now could only have been tackled using the instruments of State aid control.  View Article
State aid: Commission temporarily approves increase of refinancing guarantee for Dexia SA and DCL and extends investigation
The European Commission has approved a €10 billion increase of the ceiling of a temporary guarantee granted by Belgium, France and Luxembourg to cover the refinancing needs of Dexia SA and DCL. The ceiling is thus raised to a maximal amount of €55 billion.   View Article
State aid: Commission extends in-depth investigation into the orderly resolution plan of the Dexia group
The Commission has decided to extend its in-depth investigation procedure into Dexia SA and its subsidiary, Dexia Crédit Local (DCL), in order to examine formally the orderly resolution plan of the Dexia group submitted by Belgium, France and Luxembourg on 21 and 22 March 2012.   View Article
CFS/Issing: Central Banks - Paradise Lost
Issing analyses how the heyday of central banks developed over time, and how the crisis and its consequences will have an influence on this institution.  View Article

Securities

EBF final comments on ESMA call for evidence on transaction reporting
The EBF believes that ESMA's potential future guidelines should await the outcome of the co-decision procedure on MiFID II before introducing new transaction reporting requirements.  View Article
Reuters: Britain files suit against EU over short-selling rules
Britain has filed a lawsuit against the European Union in a last-ditch bid to thwart giving new European financial regulators the power to ban short-selling shares against London's will. (Includes quote from Graham Bishop.)  View Article
EPC: Making the case for an international non-profit credit rating agency
Bertelsmann Foundation's Annette Heuser argues that having an international non-profit credit rating agency (INCRA) would help to address governance issues arising from the dominance of the traditional 'big three' rating agencies: Moody's, Standard and Poor's and Fitch.  View Article
UK implementation of Amending Directive 2010/73/EU – Simplifying the EU Prospectus and Transparency Directives
This policy statement summarises the responses the FSA and HM Treasury received to CP11/28 and the policy decisions made in light of them. These policy decisions are reflected in the FSA's near-final rules.  View Article

Insurance

Commissioner Barnier: Insurance reforms - Putting the European economy back on the path towards sustainable growth
Since insurers are a force for stability and continuity on financial markets, and especially as they can invest for the long term, they have a key role to play in getting Europe back on track for sustainable growth.  View Article
Insurance Insight: Barnier "hopeful" of political agreement on Solvency II
Despite "rapid progress" being made, Solvency II may not apply from 1 January 2014 if political consensus is not reached in the next few weeks, according to Michel Barnier.  View Article
IAIS: Global systematically important insurers - Proposed assessment methodology
The International Association of Insurance Supervisors (IAIS) released its proposed assessment methodology for the identification of global systemically important insurers, or G-SIIs.   View Article
ABI: A guide of good practice for unit linked funds
The Association of British Insurers' new publication provides a "Guide of Good Practice‟ for insurance companies operating unit linked funds. The Guide establishes standards that the ABI believes all companies managing unit linked funds should aspire to and work towards.  View Article
CRE: Solvency II will not drive up prices but hard market is on doorstep, say experts
Solvency II will not lead to a hike in prices for buyers of commercial insurance but the current soft market cycle is reaching its trough. Rate increases are around the corner for the European market following an upturn in the US, according to leading experts.  View Article
Risk.net: Swedish regulator to conduct qualitative survey on Solvency II to support ORSA development
The Swedish financial regulator, Finansinspektionen (FI), is to examine insurers' readiness for Solvency II in a survey to be conducted later this year. The survey will focus on the qualitative aspects of the new regime as insurers begin drafting their Own Risk and Solvency Assessments (ORSA).  View Article
Tax-news: Bermuda talks Solvency II In Brussels
Bermuda Premier and Finance Minister, Paula Cox, has held a series of meetings with top European decision-makers as part of a new programme of proactive engagement on issues impacting Bermuda in Brussels.  View Article
Risk.net: Targeting currency risks
Solvency II is expected to impose a specific capital charge on currency mismatches between assets and liabilities for European insurers and re-insurers, bringing currency risk under the regulatory spotlight for the first time.   View Article
CRE: Risk management, not transfer, is key to supply chain problems, say experts
Experts at an insurance congress argued that front-end risk management is key to mitigating exposures, as the insurance industry continues to struggle to deliver fit-for-purpose and cost-effective cover with high enough limits for supply chain risks, particularly contingent business interruption.  View Article
FT: Insurers face clash of rules
Regulation is changing the equation for European insurers operating in the US. Regulatory concerns could also push Europeans to sell their US operations in a less direct manner, say analysts.  View Article

Asset Management

IPE: Barnier confirms IORP delay, announces Green Paper on long-term investing
Michel Barnier said that the European Commission will not publish any proposals on the revised IORP Directive before next summer.  View Article
IPE: Industry welcomes 'encouraging' news of IORP delay, study on long-term investing
Matti Leppälä, secretary general of the European Federation of Retirement Provision (EFRP), said he welcomed the revised timeline and argued in favour of an in-depth analysis of the potential quantitative impact the IORP Directive could have on pension funds.  View Article
EFAMA publishes Annual Asset Management Report
Director general, Peter de Proft, said: "This report underlines the important role of the industry in managing long-term savings on behalf of retail and institutional investors. It also confirms the contribution of the industry to the financing of the European economy."  View Article
ECON Venture Funds vote: EVCA voices concern about depositary requirement and missed opportunity to boost SME financing
While the EVCA welcomes the Commission's overall proposal to facilitate cross-border fundraising by VC funds, the EVCA is disappointed about the outcome of today's vote, which sees the adoption of a depositary requirement.  View Article
IPE: Kamp - Existing and new Dutch pension rights to be subject to single framework
Dutch social affairs minister, Henk Kamp, has proposed that the new Dutch pensions system is to become subject to a single financial assessment framework (FTK) for both the existing nominal and future real pension contracts, in order to keep the new rules simple and comprehensible.  View Article
EDHEC-Risk research reveals benefits of diversifying equity portfolios with volatility derivatives
EDHEC-Risk researchers show how volatility derivatives can be used to optimise access to the equity risk premium in a controlled volatility risk environment, and to engineer equity portfolios with attractive downside-risk properties.  View Article

Corporate Governance/Accounting

European Commission: EU adopts amendments to IAS 1 and IAS 19
The EU published the Commission Regulation (EC) No 475/2012 endorsing the amendments to IAS 1 'Presentation of Financial Statements' and IAS 19 'Employee Benefits', published by the IASB on 16 June, 2011.  View Article
EFRAG: Consolidation of Special Purpose Entities under IFRS 10 'Consolidated Financial Statements'
EFRAG published the supplementary study on the impact of IFRS 10 on the consolidation of Special Purpose Entities, which was undertaken by the EFRAG secretariat to serve as input for the impact assessment of IFRS 10 for the EC, in cooperation with the staff of European National Standard-Setters.  View Article
EGIAN: Rebalancing of proposals for much-needed reform of the European audit market
EGIAN published its position paper including the following sections: legislative intervention essential; the problems with the current audit market; key features of a more vibrant market; and support of rebalancing of reforms to facilitate additional firms entering market.  View Article
ECA finds strong demarcation between the management of financial and operational risks in the ECB
The ECA published its specific annual report examining the appropriateness of the ECB's overall risk management framework, and assessing whether the ECB manages operational and financial risks effectively.   View Article
EUobserver: Call to scrap yearly statement on EU budget
At a public hearing organised by the parliament's budgetary control committee, Jan Karlsson, former president of the ECA, said that the EU should scrap the annual Declaration of Assurance on the EU's accounts prepared by the Court of Auditors.  View Article
IAASB sets auditor reporting as top priority and highlights other relevant audit and assurance initiatives
The IAASB will focus on: supporting global financial stability; enhancing the role, relevance and quality of assurance and related services in today's evolving world; and facilitating adoption and implementation of the IAASB's standards over the next three years.  View Article
IASB Chairman Hans Hoogervorst: Primary purpose of financial reporting – transparency vs stability
At the third ECB Conference on Accounting, Financial Reporting and Corporate Governance for Central Banks in Frankfurt, Hans Hoogervorst addressed whether the primary purpose of financial reporting should be to provide transparency, or if it should also serve the goal of stability.  View Article
FASB Chairman Leslie F Seidman: Disclosure overload in financial reports and cost-benefit analysis
Ms Seidman spoke about two major issues - the disclosure overload, and the analysis of costs and benefits in standard-setting, including the consequences of accounting standards, that now confront the FASB.  View Article
FEE commented on the Eurostat's public consultation on the suitability of the IPSAS for EU Member States
FEE supports high quality accounting standards in the public, not-for-profit and the private sector which are based on robust and clearly articulated principles. FEE has also been long supportive of the work of the IPSASB.   View Article
IASB: IFRSs in emerging economies
At its third meeting, the Emerging Economies Group of the IASB (EEG) focused on issues around the application and implementation of IFRSs in emerging economies.   View Article
IASB: Proposed guidance on levies charged by public authorities on entities that operate in a specific market
The IFRS Interpretations Committee published for public comment (until 5 September 2012) the draft Interpretation DI/2012/1 'Levies Charged by Public Authorities on Entities that Operate in a Specific Market'.   View Article
IASB: Proposed guidance on put options written on non-controlling interests
The IFRS Interpretations Committee published for public comment proposed guidance on the accounting for a put option written by a parent entity on the shares of its subsidiary held by a non-controlling-interest shareholder.  View Article
FRC: Actuarial assumptions used in pension scheme projections
The FRC and FSA published a joint consultation paper which sets out proposals to change the assumptions used in projections of the returns from financial products, including pensions.  View Article
FT: IASB doubts rules will ease boom-bust
Adam Jones analyses IASB Chairman Hans Hoogervorst's speech at the 3rd ECB Conference on Accounting, Financial Reporting and Corporate Governance for Central Banks. He highlights loan impairments and expected loss model.  View Article

Financial Services Policy

EPFSF Briefing “Transatlantic financial dialogue - convergence or divergence?”
The European Parliamentary Financial Services say that the recent crisis has provided stark evidence of the need for closer inter-reliance in information-sharing, monitoring, supervision, investigation and enforcement.  View Article

Graham Bishop’s Articles and Speeches

Financial World: UK’s sticking point (Graham Bishop article)
CRD is just one contentious regulatory issue that must be decided in the coming year or so. A proposal for the resolution of cross-border banks could determine whether the euro area becomes a close-knit "banking union" that Britain could find it hard to be part of, writes Graham Bishop.  View Article



© Graham Bishop