Friends 'Weekly' Newsletter

07 September 2017

Capital requirements, European bank profitability, MREL, post-trade in a Capital Market Union, CCPs management of conflict of interest, Solvency II review, IFRS 9, Northern Ireland after Brexit, May's plan for EU citizens' rights, CCP location, UK customs relationship with the EU and more.

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  Articles from 27 July 2017 - 07 September 2017

  Banking Union
 
 
EBA updates list of public sector entities for the calculation of capital requirements
The European Banking Authority (EBA) published an updated list of public sector entities (PSEs) that may be treated as regional governments, local authorities or central governments for the calculation of capital requirements, in accordance with the EU Capital Requirements Regulation (CRR).
IMF: More action needed on European bank profitability
European banking has made considerable progress in the past few years: Banks have built up capital, regulation is stronger and supervision has been enhanced. But profitability remains weak, posing risks for financial stability, the latest Global Financial Stability Report states.
EBA reports show that banks funding plans paint an optimistic outlook for growth whilst NPLs remain a drag on EU banks new lending
The reports aim to provide important information for EU supervisors to assess the sustainability of banks' main sources of funding. The results of the assessment show that banks plan to increase their lending and to expand deposits as well as market based funding.
EBA publishes final technical standards on MREL reporting by resolution authorities
The EBA published its final draft implementing technical standards specifying templates and procedures resolution authorities should follow when informing the EBA of the minimum requirement for own funds and eligible liabilities (MREL) that have been set for institutions under their jurisdiction.
Deutsche Bundesbank: Failing or likely to fail? Putting the European banking union to the test
Deutsche Bundesbank's Andreas Dombret addresses the question of whether the European banking union actually works by examining four recent examples of institutions running into difficulties in the European banking sector.
BIS: Memorandum of Understanding signed by the Basel Committee on Banking Supervision and the IFRS Foundation
The Basel Committee on Banking Supervision (BCBS) and the IFRS Foundation have announced a new cooperation agreement to foster long-term financial stability, enhance market discipline and further develop sharing of information.
EBA publishes Final Guidelines on major incident reporting under PSD2
The Guidelines are addressed to all payment services providers and competent authorities in the 28 EU Member States, and contribute to the objective of the PSD2 of minimizing disruption to users, payment service providers and payment systems.
 
  Capital Markets Union
 
 
European Commission consultation on post-trade in a Capital Market Union: dismantling barriers and strategy for the future
The consultation discusses the main trends and challenges faced by post-trade services providers and their users, and seeks to determine the existence and scale of remaining or new barriers, the risks associated with such barriers and the best ways to address them.
ECMI - Developing EU Capital Markets for SMEs: Mission impossible?
The European Commission’s renewed activities to develop market-based financing need to be stepped up in order to develop a credible capital market to finance SMEs in the EU, writes Apostolos Thomadakis.
Responses received to ESMA's consultation on CCPs management of conflict of interest
ESMA published the responses received to its Consultation on guidelines on CCPs conflict of interest management.
 
  Insurance
 
 
European Commission boosts consumer protection for insurance products
The Commission has laid down rules for an Insurance Product Information Document (IPID), which will have to accompany all non-life insurance policies from 2018. These new rules will allow consumers to have all information necessary to make an informed decision when buying insurance products.
Insurance Europe: Response to consultation on first batch of EIOPA advice on Solvency II review
Insurance Europe has responded to a European Commission consultation on the first batch of advice that it received from the European Insurance and Occupational Pensions Authority on the upcoming review of Solvency II.
 
  Asset Management
 
 
Investment & Pensions Europe: Commission consults on mediation of investor, public authority disputes
The European Commission has launched a consultation to help it decide whether there is a need for an EU framework for the amicable prevention and resolution of disputes between public authorities and investors.
 
  Corporate Governance/Accounting
 
 
EBF response to the FSB consultation on sound compensation practices
The European Banking Federation has responded to the consultation of the Financial Stability Board on “Supplementary Guidance to the FSB Principles and Standards on Sound Compensation Practices.”
GPPC: The auditor’s response to the risks of material misstatement posed by estimates of expected credit losses under IFRS 9
The paper is addressed primarily to the audit committees of systemically-important banks, although much of its content will be relevant to other banks and financial institutions, and aims to promote the implementation of accounting for expected credit losses to a high standard.
EFRAG requests comments on its draft endorsement advice on IFRIC 23 Uncertainty over Income Tax Treatments
EFRAG is consulting on its assessment of IFRIC Interpretation 23 Uncertainty over Income Tax Treatments against the endorsement criteria in the IAS Regulation, including the technical criteria and whether IFRIC 23 is conducive to the European public good.
Corporate governance reform: UK government response (White paper)
This document summarises the responses received to the UK Government's consultation on its Green Paper on the UK’s corporate governance framework and sets out the proposals which the government now intends to take forward.
 
  Financial Services Policy
 
 
BIS: The FinTech Opportunity
This paper assesses the potential impact of FinTech on the finance industry. The author argues that the current regulatory approach is subject to significant political economy and coordination costs, and therefore unlikely to deliver much structural change.
EBA publishes a Discussion Paper on its approach to FinTech
FinTech has the potential to transform the provision of financial services. For this reason, public authorities in the EU and beyond have started to investigate the impact FinTech is having on the financial system and its regulation and supervision.
 
  Friends Services
 
 
May to climb down - rather than crash over - the Brexit cliffs by end-September? Probably, a historic crash over!
It looks as though Prime Minister May’s `major statement’ apparently planned for later in September may have to be a massive climb down - rather than crash over - the cliffs. Sadly, the omens are not good.
 
  Political
 
 
Bertelsmann Stiftung: Germans are more optimistic about their future than their European neighbours
The refugee crisis, Brexit, growing populism – recently there has been a spate of events and trends that have completely transformed the political landscape in Europe. But in Germany, these changes predominantly seem to be fostering the need for stability, as shown in the new "eupinions" study.
Bloomberg: Poland to EU: No second-class members (and mind your own business)
The European Union may ultimately fall apart if some of its members pursue deeper integration faster than others, Polish President Andrzej Duda said.
 
  Brexit & UK
 
 
POLITICO: European Parliament slams UK’s Brexit stance on citizens’ rights
MEPs said London would not sufficiently protect families from being divided by residency restrictions, would cast EU citizens living in Britain into a sea of legal uncertainty, and would create a tangle of unnecessary red tape, according to a report by the Parliament’s Brexit steering group.
The UK in a changing Europe: Brexit necessitates an agreement-plus for Northern Ireland
If the UK Government wants to really get to grips with the consequences of Brexit for the peace process, it needs to consider the unique needs of the territory and people of Northern Ireland – not just the line of the border around it.
Andrew Duff: Brexit: Dealing with withdrawal symptoms
Andrew Duff reviews the problematic first phase of the Brexit negotiations and suggests ways to make progress on the three key issues: citizens’ rights, finance and Ireland.
The Guardian: Leaked document reveals UK Brexit plan to deter EU immigrants
Britain will end the free movement of labour immediately after Brexit and introduce restrictions to deter all but highly-skilled EU workers under detailed proposals set out in a Home Office document leaked to the Guardian.
Michel Barnier: ‘No decisive progress’ on key Brexit issues
The EU’s chief negotiator is pessimistic about the prospect of moving to trade talks in October.
ISDA: Brexit – CCP location and legal uncertainty
The vast majority of EU clearing currently takes place in London, but there are suggestions that EU regulators might introduce a location policy for euro-denominated swaps to be cleared in the EU.
Department for Exiting the EU: Position papers published ahead of third round of negotiations
The papers outline the UK’s negotiating approach to goods on the market and to confidentiality and access to official documents.
Financial Times: Davis proposes post-Brexit dispute mechanism on EU relations
David Davis, Brexit secretary, will examine the precedent set by the European Free Trade Association court, which deals with Iceland, Liechtenstein and Norway in their relations with the EU single market.
Department for Exiting the EU: Future customs arrangements: a future partnership paper
A new paper setting out proposals for a future customs relationship with the EU has been unveiled by the Government in the first of a series of papers on the UK’s future partnership with the EU.
The Independent: UK will not become tax haven after Brexit, says Philip Hammond
Britain’s economic model will stay 'recognisable European' after it leaves the bloc, says Chancellor.
Financial Times: Brexit set to raise UK banks’ costs 4% and capital needs 30%
Brexit will push up costs for banks by as much as 4 per cent and their capital requirements will rise by up to 30 per cent, according to the most detailed assessment yet of what Britain’s departure from the EU means for the sector.
23 cities offer to host UK-based EU agencies
The Council has received 27 proposals by the member states, related to 23 cities, to host the EU agencies currently based in the UK. There have been 19 offers to host the European Medicines Agency (EMA) and 8 for the European Banking Authority (EBA).
POLITICO: Majority of Brits support high-skilled EU migration
A large majority of Brits (86 percent) want the number of high-skilled EU migrants to remain steady or increase further after Britain leaves the EU, according to a survey published by the British Future think tank.
The Guardian: Majority of UK public backs Brexit 'transition period', poll finds
Observer/Opinium poll finds nearly half of those asked believe there should be no second referendum on departure terms.
Liam Fox: Britain does not have capacity to strike trade deals now
Britain has turned down countries wishing to strike free-trade deals after Brexit because the government does not have the capacity to negotiate them, the U.K.’s International Trade Secretary Liam Fox said.
UK Trade Policy Observatory: The EU Regulatory Magnet: What Are the Consequences for the UK?
The new EU-Ukraine Association Agreement (AA), entered into force on 1st September, may reveal some lessons for the UK as it seeks new models of trade relationships.
BCC and DIHK: Joint UK-German call to put shared economic interests first in Brexit negotiations
The British Chambers of Commerce (BCC), and the Association of German Chambers of Commerce (DIHK) have called for UK and EU negotiators to put a clear focus on our shared economic interests as Brexit talks reconvene in Brussels.
Keir Starmer: No ‘constructive ambiguity’. Labour will avoid Brexit cliff edge for UK economy
Labour will seek a transitional deal and seek to remain in a customs union with the EU and within the single market.
City AM: UK immigration falls as rising number of EU workers return home after Brexit
Immigration figures have dropped by almost a third in the last year, as EU workers begin to pack up and leave following the Brexit vote.
Institute for Government: A customs deal is necessary but not sufficient for frictionless trade
A deal on customs is important to reducing post-Brexit trade friction, but a new paper from the IfG argues that leaving the EU will disrupt country’s important integrated supply chains in areas like automobile manufacturing. It will create friction in cross-border trade in goods.
Hammond and Fox: We will leave customs union during Brexit transition
Ministers’ joint declaration in The Guardian means UK could strike trade deals with non-EU countries from moment it leaves in March 2019.
Institute of Directors spells out Brexit transition options
The Institute of Directors has called on the Cabinet to come to a collective decision on how to approach a transitional agreement as soon as possible.
AFME publishes new paper on the need for early clarity on a Brexit transition
The paper is intended to explain in more detail the importance and necessity of transitional arrangements and summarises AFME’s views on what such arrangements should look like.
Reuters: UK finance sector to propose 'mutual access' post-Brexit trade pact - document
The UK's financial sector is to propose to the government a "mutual access" trade pact between Britain and the European Union that would allow banks and other firms to continue doing cross-border business after Brexit, according to a draft report seen by Reuters.
City AM: ECB urges banks to speed up Brexit relocation planning: "The clock is ticking"
Sabine Lautenschlaeger, vice chair of the ECB’s supervisory board, said banks are “not as far advanced as we would like them to be” in their Brexit planning.
Financial Times: MEPs seek tougher rules on London euro clearing after UK quits EU
The parliament and national governments will next month begin discussing proposals that would require UK clearinghouses handling large volumes of euro-denominated contracts to comply with EU rules and accept European supervision.
 

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