EU Flash: Eurogroup, Bank capital rules, Long-term financing of the European economy (Weekly update 25-29/03/2013)

28/03/2013

The Eurogroup agrees on the way forward for Cyprus

On 25 March, the Eurogroup has reached an agreement with the Cypriot authorities on the key elements necessary for a future macroeconomic adjustment programme. The Eurogroup welcomes the plans for restructuring the financial sector. More in particular, Laiki will be resolved immediately based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework and the Bank Of Cyprus will be recapitalised, with full contribution of equity shareholders and bond holders.

These measures will form the basis for restoring the viability of the financial sector. In particular, they safeguard all deposits below EUR 100.000 in accordance with EU principles. There will be an appropriate downsizing of the financial sector, with the domestic banking sector reaching the EU average by 2018. In addition, the Cypriot authorities have reaffirmed their commitment to step up efforts in the areas of fiscal consolidation, structural reforms, anti-money laundering and privatisation.

The Eurogroup requests the Cypriot authorities and the Commission, in liaison with the ECB, and the IMF to finalise the Memorandum of Understanding at staff level in early April. The Eurogroup expects that the ESM Board of Governors will be in a position to formally approve the proposal for a financial assistance facility agreement by the third week of April 2013.

Find the official press release here: http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/ecofin/136487.pdf

Commission publishes green paper on long-term financing of the European economy

On 25 March, the Commission adopted a green paper that launches a three-month public consultation on how to foster the supply of long-term financing and how to improve and diversify the system of financial intermediation for long-term investment in Europe. The consultation runs until 25 June 2013.

The financial crisis has affected the ability of the financial sector in Europe to channel savings to long-term investment. Therefore the paper calls for a close monitoring of any cumulative effects of prudential regulatory reforms to ensure that they achieve their goals of greater macro-financial stability and global regulatory convergence, in a way that minimises negatives for financing productive long-term investment.

Other important questions are on the efficiency and effectiveness of financial markets to offer long-term financing instruments, the cross-cutting factors enabling long-term saving and financing; and the ease of SMEs to access bank and non-bank financing.

More information can be found on the Commission’s webpage: http://ec.europa.eu/internal_market/finances/financing-growth/long-term/index_en.htm

Council confirms agreement with European Parliament on bank capital rules

The Permanent Representatives Committee (COEPER) approved, on 27 March, a compromise text on the "CRD 4" package amending the EU's rules on capital requirements for banks and investment firms.

They are aimed at transposing into EU law an international agreement endorsed by the G20 in November 2010. The "Basel 3" agreement, concluded by the Basel Committee on Banking Supervision, strengthens bank capital requirements, introduces a mandatory capital conservation buffer and a discretionary countercyclical buffer, and foresees a framework for new regulatory requirements on liquidity and leverage, as well as additional capital surcharges for systemically important institutions.

Negotiations between the Council and the Parliament started in May last year, after the two parties established their respective negotiating positions. Following this approval of the compromise, if the Parliament approves the texts as agreed in plenary (15-18 April 2013), the Council will also approve them without further discussion, once they have been finalised in all official languages.

The new rules will apply from 1 January 2014 if publication takes place in the Official Journal by 30 June 2013.

The official press release can be found here: http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/ecofin/136581.pdf

Meer over: