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Graham Bishop/Paula Martín
Organised by the Centre for the Study of Financial Innovation (CSFI) with co-presenterHans Hack (FTI Consulting)
This blog covers the key subjects since our last meeting that I hoped to cover but, as always, we ran out of time to deal with them all. As a Friend, you can watch the 28th `structured’ CPD web-cast with CISI. These Notes may be read to record a further 30 minutes of `structured CPD’, including a dipping into the links to the underlying stories.
“471 days until we go over the cliff” again dominated the discussion – unsurprisingly in the light of the agreement that the Brexit negotiations have made “sufficient progress”. The full implications of DEXEU Secretary Davis’ subsequent comments on this agreement not being “binding” proved contentious but the EU reactions is key: first sort out a transition (or is it a prolongation?) and only then move to discuss the trade deal in March. Given the lags in the EU’s legislative process, and possible Treaty ratifications, it is easy to see that the trade deal needs to be struck by the autumn – giving credibility to Barnier’s comment that there will only be time to do a deal similar to the Canada CETA trade agreement. For the City, this would be deeply unsatisfactory as the “prudential carve-out” may create a very bad outcome.
However, the same analysis of the legislative process underlined that time is running out for new legislative initiatives as the shadow of the April 2019 dissolution of the Parliament and October termination of the Commission is now darkening the outlook. That makes the comprehensive Commission proposal on Completing EMU all the more surprising – especially in the absence of a German Government.
However, that should not detract from the potential progress on many parts of the November 2016 Banking Package of Risk Reduction Measures. Progress is now underway with ECON reports on CRD and CRR proposals, and the Presidency is attempting to create a Council consensus. However, the key discussion focussed on the issue of NPLs – heavily reflecting the travails of Italy. The mechanics of the “expected losses” thrown up by IFRS9 coming into force yet the losses being public information - correctly – but only progressively reflected in regulatory capital bemused participants. But that should not obscure the real progress on the ECB’s push for quick recognition of “new” NPLs and possibly a platform or European “asset management company” to trigger a genuine market.
In the spirit of CPD, we finished by discussing Governor Carney’s speech on two years of the Fair and Effective Markets Review which included comments on the FSB’s “misconduct action plan”. An initial fruit of this is the ESCB’s statements of commitment to the FX global code but the lawyers present argued that unless banks actually incorporate the code in their contractual `Ts and Cs’, it would not be enforceable in UK courts – so what is the point?
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