Banks are suddenly exuding confidence on possible loan losses from a recession twice as deep as the 2007/9 GFC but the regulators want proper disclosure. Moreover, they may give quite some time for a rebuilding of capital buffers but have yet to explain where the new capital will come from. The wave of responses to the Commission consultation on the Non-Financial Disclosure Directive (NRFD) has underlined that this will be a major tool in pushing sustainability.
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Articles from 12 June to 18 June 2020
General Financial Policy
European Council President Charles Michel: invitation letter ahead of video conference on 19 June 2020 : The central theme of the meeting will be the Multiannual Financial Framework and the Recovery Plan...It is now time for the members of the European Council to discuss the package in depth.
Bruegel: The EU’s recovery fund proposals: crisis relief with massive redistribution : Poorer European Union countries and those hardest hit economically by the COVID-19 crisis could obtain up to 15% of their GNI in grants and guarantees from the EU’s proposed recovery instruments.
The Economist: Why are bank bosses sounding more optimistic about loan losses? : They were hyper-prudent in April. Now the worst-case scenario might be off the cards.
Banking Union
SRB: MREL - the next steps : It is realistic to expect that banks with less performing business models and low profitability will be under more pressure, and that non-performing loans will increase. So a strong resolution framework that prepares for and can manage bank failures is a key element in mitigating the current crisis.
Basel Committee meets; discusses impact of Covid-19; reiterates guidance on buffers : All members reaffirmed their expectation of full, timely and consistent implementation of all Basel III standards based on the revised timeline endorsed by the Group of Governors and Heads of Supervision.
Capital Markets Union
EFAMA: Final Report of the High-Level Forum on Capital Markets Union : “Europe needs more than ever a well-functioning CMU to support its economic recovery and provide alternative sources of financing, putting the financial well-being of European citizens at its centre. We commend the High-Level Forum...” says EFAMA’s Tanguy van de Werve.
Protecting Customers
BETTER FINANCE - BEUC letter on Collective Redress - HLF CMU: : Better Finance/BEUC reaffirm the necessity of creating a pan-EU collective redress mechanism that does not exclude European citizens as financial consumers and individual investors and enables them to obtain compensation for the damages incurred.
Environmental, Social, Governance (ESG)
IOSCO encourages issuers’ fair disclosure about COVID-19 related impacts : The Board of IOSCO issued a public statement highlighting the importance to investors and other stakeholders of having timely and high-quality information about the impact of COVID-19 on issuers´ operating performance, financial position and prospects.
ESMA responds to European Commission consultation on revision of NFRD : The response recommends standardising disclosure requirements, widening the range of companies required to report and ensuring consistency between legislative initiatives on sustainable finance.
EIOPA responds to the European Commission’s consultation on the revision of the Non-Financial Reporting Directive : EIOPA welcomes the initiative... Insurance undertakings and pension funds are at the forefront of pushing long-term, sustainable investments and the integration of environmental, social and governance (ESG) factors.
Fin Tech Regulation
EURACTIV: Commission charts new competition tool ‘fit for the digital age’ : A new competition tool ‘fit for the digital age’ is set to be unveiled by the European Commission before the end of this year, which has prompted stakeholders to begin analysing the wider impact that it could have on fostering competition across the EU’s market economies.
Economic Policies Impacting EU Finance
POLITICO: US is only country blocking deal on digital tax, says French finance minister : "All the others have rallied around [the OECD] proposal,” Le Maire said told hearing in the French Senate, referring to the Organization for Economic Cooperation and Development, where countries are negotiating a deal on taxing digital companies.
Brexit
POLITICO: Brexit deal’s last hope: Germany : Chancellor Angela Merkel’s pragmatism could help rejuvenate talks as Berlin takes on the EU presidency, politicians on both sides say.
Speech by President von der Leyen at the European Parliament Plenary on the preparations for the European Council of 19 June 2020, and the n : The Prime Minister confirmed that he does not want to extend the transition period beyond the end of this year.We, on our side, have always been ready to grant an extension.But it takes two to tango.
EU-UK debate: MEPs will not back a deal at any cost : Parliament will not back a deal at any cost, warned several MEPs commenting on the ongoing negotiations about the future relationship between the EU and the UK. They rejected the UK’s intention to select certain policy areas on which to negotiate while ignoring others.
Federal Trust: UK-EU Summit: Fishy : The key development is claimed to be a weakening of the European negotiating mandate with regard to fishing.
EPC: Towards an ambitious, broad, deep and flexible EU-UK partnership? (New book) : Brexit is an irreversible fact. Everyone will be worse off. But what are the exact ramifications, for the UK, the EU, and the partnership between the two?
