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Speech: Meeting the challenge of Europe’s long-term financing needs: a pre-requisite for jobs and growth

Reference: SPEECH/13/308 Event Date: 11/04/2013

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European Commission

Michel BARNIER

Member of the European Commission, responsible for Internal Market and Services

Meeting the challenge of Europe’s long-term financing needs: a pre-requisite for jobs and growth

Eurofi High Level Seminar

Dublin, 11 April 2013

Ladies and gentlemen,

It is always a pleasure to participate in this annual conference on the eve of the Informal Ecofin Council. I would like to thank Eurofi and its president, Jacques de Larosière, for inviting me.

Tonight, I wish to talk about a consultation I recently launched on meeting the long term financing needs of the European economy.

But let me first spend a couple of minutes on our financial regulatory agenda.

Financial regulation and long term investments are linked.

Only a well-regulated financial system will inspire confidence and trust. And provide the right incentives for long-term investments.

When I was appointed Commissioner three years ago, Europe was facing the worst financial crisis the world had seen for over fifty years.

The crisis was largely caused by the absence of proper financial regulation and supervision.

Leaders called for global action.

Europe has acted on its global commitments.

Together with the European Parliament and the Council, we have agreed new rules to make the financial markets safer, more transparent and more stable.

A final agreement was recently found on our CRD IV package for banks.

This is no small step.

It means that Europe is one of the first regions in the world to fully implement the Basel 3 agreement.

And this major milestone came just one day after another breakthrough: the agreement on a Single supervisory mechanism for banks.

Of course, the final agreement departed from the Commission’s proposal in a number of ways.

Those are the rules of the game.

But the agreement delivers on the mandate of the European Council from June last year. It also preserves the Single Market.

This was crucial for the Commission.

So being here in Dublin, I want to take the opportunity to congratulate the Irish Presidency for the excellent work done so far.

However, the Single Supervisor cannot be a stand-alone piece of legislation.

As we have witnessed in Cyprus – transparent and clearly defined resolution procedures for banks are paramount.

Most European banks, like Cypriot banks, have branches and subsidiaries in other European countries.

So we need common rules.

It is becoming truly urgent to adopt, within the next few weeks, our Directive on Bank recovery and resolution.

Some Member States argue that we need much more flexibility and national discretion in the rules.

We disagree.

Yes, every bank and every crisis is different.

But we need to have one set of common, predictable rules.

National authorities need some flexibility. But national discretion must be limited and properly framed.

One word on bail-in in this context: —- This also means they can steal depositers money

Deposits under 100.000 Euros will always be protected. Would not believe the striked out comment.   ? Ltd Company

But shareholders, creditors and all other parties need to know in advance what to expect in case of resolution.

So we need to establish a clear order of claims.————— This means they will be allowed to steal your money after all the banks are just Ltd companies.

 

The Commission proposed that the bail-in tool would be applicable from 2018.

The ECB and others have recently called for an earlier application.

Let me be clear on this point: We are not against an application from an earlier date.

But the bail-in tool cannot be seen in isolation.

In order to avoid fragmentation in the Single Market, all parts of the banking union must be in place.

This includes agreement on the complete tool-kit of resolution tools.

And most importantly, common financial back-stops.

We need to find a swift agreement on all these subjects. I look forward to the discussion tomorrow with ministers and central bank governors.

We will also touch on the second element of the Banking Union – the Single Resolution Mechanism.

The Commission will make proposals this summer.

I believe we need one centralised resolution authority.

It should have a light but efficient and credible structure.

And from a European perspective, it would make sense and be both more coherent and effective, for those countries which belong to the Banking Union to establish a common resolution fund.

As was the case for the Single Supervisory Mechanism, we need to ensure that Member States outside the Euro zone can join the system if they so wish.

I am convinced that we can do this under the current Treaty.

Ladies and Gentlemen,

Let me now turn to long term financing.

New capital requirements, supervision and resolution will bring back financial stability.

But this is not sufficient to restore what Europe needs most: growth and jobs.

Europe’s economy faces massive long-term investment needs. As recognised by the G20, these are essential for innovation, competitive industries, modern infrastructures and green growth.

They require long-term financing. We need to make supply and demand meet.

Europe has strong assets for long-term investment: We have high levels of private savings and foreign investment.

Yet many factors are holding back long-term investment in Europe:

·         general risk aversion in companies

·         lack of confidence of both savers and investors

·         and banks are scaling back on their lending to the real economy.

We need to change this situation.

Banks will continue to play an important financing role in Europe.

But we need to ensure a more diversified system. With higher shares of direct capital market financing. And greater involvement of institutional investors.

Our recent Green Paper on long-term financing launches a public debate in four important areas:

First, the capacity of financial institutions to direct savings towards long-term investment projects

We must seek a good balance between prudential requirements and long-term investment incentives for banks.

We need to reflect on how institutional investors can complement commercial banks in the long-term financing process.

I am thinking about insurance companies and pension funds, as well as national and multilateral development banks.

Second, the effectiveness of financial markets

Corporate bond, equity and securitisation markets in Europe remain relatively under-developed compared to other economies.

The revised MiFID Directive will, once adopted, strengthen capital markets. And reduce short-term and speculative trading activities.

Beyond this, we must think of other ways to develop bond markets in Europe as an alternative to bank loans.

And we must ask ourselves how to revive the securitisation market. without compromising financial stability. We must not repeat the mistakes of the past in this area.

Third, we have to look at cross-cutting factors:

Potential ideas include developing specific saving tools at EU level. To mobilise longer-term savings.

But also tax incentives for long-term investment.

Last but not least, we need to facilitate SMEs’ access to financing

Not all SMEs are destined to become global players.

But all SMEs are important for Europe’s recovery and competitiveness. They are the backbone of the real economy.

The CRD 4 package keeps the current preferential treatment for lending to SMEs.

And the European Parliament and the Council have recently reached an agreement on rules on European venture capital funds.

Such funds will now be able to raise capital from investors and support start-ups all over Europe, based on a single set of rules.

But we need to continue and look for new ideas.

This is why I encourage all of you to participate in our public consultation.

It is by working together that we will find the best ways of encouraging long-term investment.

Laying the groundwork for stronger growth and more jobs in Europe.

Thank you.

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Reference : SPEECH/13/308 Event Date : 11/04/2013

Keywords

INTMARSER, BARNIER, SPEECH, COMDOC

Institution

EC

Publication date

12/04/2013 09:18

Last modification date

12/04/2013 12:18

 

SOMEONE TOLD THE TRUTH,

Monday, April 15th, 2013

SPEECH-13-309_EN

European Commission state aid to spanish banks,

Saturday, January 5th, 2013

European Commission

Press release

Brussels, 20 December 2012

State aid: Commission approves restructuring plans of Spanish banks Liberbank, Caja3, Banco Mare Nostrum and Banco CEISS

The European Commission has concluded that the restructuring plans of four Spanish banks, Liberbank, Caja3, Banco Mare Nostrum (BMN) and Banco CEISS, are in line with EU state aid rules. The in-depth restructuring undergone by the four banks will allow them to become viable in the long-term without continued state support. Moreover, the banks and their stakeholders adequately contribute to the costs of restructuring. Finally, the plans foresee sufficient safeguards to limit the distortions of competition induced by the state support. The restructuring plans were submitted to the Commission for approval as foreseen by the Memorandum of Understanding (MoU) agreed between Spain and the Eurogroup in July 2012. Today’s decisions will allow the banks to receive aid from the European Stability Mechanism (ESM) in the context of the financial assistance programme to recapitalise the Spanish banking sector.

“As planned in the Memorandum of Understanding concluded in July between euro area countries and Spain, we have managed to bring underway a thorough restructuring of eight banks in a matter of just a few months. The restructuring plans of BMN, Caja3, Banco CEISS and Liberbank will make these banks viable again, thereby contributing to restoring a healthy financial sector in Spain, while minimising the burden for the taxpayer” said Commission Vice-President in charge of competition policy Joaquín Almunia.

The proposed restructuring measures will ensure that Liberbank, BMN and Banco CEISS return to long-term viability as sound credit institutions in Spain. By 2017, the balance sheet of each of the three banks will be reduced. As compared to 2010, the reduction will reach more than 40% for BMN, about 30% for CEISS and approximately 25% for Liberbank. Caja3 will be fully integrated into Ibercaja, which will ensure its return to viability within the five-year restructuring period.

In particular, the banks will refocus their business model on retail and SME lending in their historical core regions. They will exit from lending to real estate development – or will only maintain a marginal activity in this field – and they will limit their presence in wholesale business. This will contribute to reinforcing their capital and liquidity positions and reduce their reliance on wholesale and central bank funding. Asset transfers to the asset management company SAREB will further limit the impact of additional impairments on the riskier assets and help to restore confidence.

Spain committed to sell Banco CEISS and to have BMN and Liberbank listed before the end of the restructuring period. Caja3 will cease to exist as a stand-alone entity.

 

Moreover, the absorption of losses borne by the four banks and their stakeholders (i.e. holders of shares and hybrid capital) will ensure, together with the restructuring measures, a satisfactory burden-sharing and an adequate own contribution to the financing of the significant restructuring costs. This reduces the state aid needed by over
€2 billion for the four banks.

All banks committed to divest a number of industrial equity stakes and subsidiaries, the proceeds of which will contribute to finance the restructuring and thus limit the need for further aid. The divestments will further limit the distortions of competition brought about by the aid.

Finally, all banks committed to the following measures:  limitations on remuneration for State-owned credit institutions; a ban on coupon payments until the burden sharing measures on hybrid instruments have been fully implemented; not advertising the state support nor using it for commercially aggressive practises. An acquisition ban will also apply for Liberbank, Banco CEISS and BMN.

Background

According to the MoU, banks revealing a capital shortfall according to the bottom-up stress test conducted by Oliver Wyman in September 2012 and unable to meet those capital shortfalls privately without having recourse to state aid (“Group 2 banks”) needed to submit restructuring or resolution plans, to be approved by the Commission by the end of December 2012. The restructuring plans foresee a series of subordinated liabilities exercises, the transfer of some impaired assets and loans to an asset management company (SAREB) and other management actions, which reduce the banks’ capital needs and bring them in line with new regulatory solvency requirements in Spain as of 1 January 2013.

The final capital needs to be covered by public funds from the programme will be €124 million for Liberbank (from €1198 million identified in the stress test), €407 million for Caja3 (from €779 million), €730 million for BMN (from €2 208 million) and €604 million for Banco CEISS (from €2 063 million).

Altogether, the programme funds for these four banks will amount to €1 865 million, representing less than 30% of the € 6 248 million capital shortfall identified in the stress test. The rest will be covered by the burden sharing exercise (which will provide more than €2 billion in capital), asset sales and other management actions (more than €1 billion) and the transfer of impaired assets and loans to the asset management company SAREB (around €1 billion).

The MoU foresees that ESM resources are paid out to the Spanish Found for Orderly Bank Restructuring (FROB) for the recapitalisation of the banks only after the Commission has approved their restructuring or resolution plans.


Liberbank

Liberbank is a regional Spanish commercial bank operating mainly in Asturias, Cantabria, Extremadura and Castilla La Mancha. It was created in 2011 as the result of the integration of three local saving banks, with total assets in 2011 of €50.7 billion. Liberbank’s focus is on retail banking for individuals and SMEs. However, in the expansion period it broadened its business areas, in particular by investing in the real estate and development sector. Liberbank has not needed state aid in the form of capital in the past. It will benefit from a recapitalisation of €124 million in the form of contingent convertible bonds (CoCos) subscribed by the FROB, as well as from a transfer of its impaired assets and loans into SAREB for an aid amount of around €1 000 million. Additionally, it has benefitted from State guarantees on unsecured senior debt under the Spanish bank guarantee scheme (see MEX/12/0629) worth €3 875 million.

Caja3

Caja3 is a regional bank mainly present in Aragón, Burgos and Badajoz, resulting from the integration of three local savings banks in 2010, with total assets of €20.7 billion in 2011. Caja3 was traditionally focused on retail banking for individuals and SMEs. However, in its expansion period it broadened its business areas, in particular by investing in the real estate and development sector. Caja3 will merge with a bank that has received no state aid, Ibercaja, and will be fully integrated. Caja 3 has not previously benefitted from any public recapitalisation. Caja 3 will benefit from a recapitalisation of €407 million in the form of contingent convertible bonds (CoCos) subscribed by the FROB, as well as from a transfer of its impaired assets and loans into SAREB for an aid amount of around €770 million. Additionally, it has benefitted from State guarantees on unsecured senior debt under the Spanish bank guarantee scheme (see MEX/12/0629) worth €654 million.

BMN

Banco Mare Nostrum is a multi-regional Spanish commercial bank, resulting from the integration of four saving banks in 2010. It operates mainly on the Spanish Mediterranean coast. Traditionally, the bank focused on retail banking for individuals and SMEs. However, in recent years it went through a period of geographical expansion and broadening of its business areas, in particular in the area of real estate development. As from 2010 BMN has benefited from several state aid measures: (i) a recapitalisation of €915 million in the form of convertible preference shares subscribed by the FROB and (ii) State guarantees on unsecured senior debt under the Spanish bank guarantee scheme (see MEX/12/0629) worth €4 424 million. BMN will benefit now from an additional recapitalisation of €730 million in the form of ordinary shares subscribed by the FROB, as well as from a transfer of its impaired assets and loans into SAREB for an aid amount of approximately €2 100 million.

Banco CEISS

Banco CEISS is a large regional bank with national presence in Spain resulting from a merger of two savings banks in 2010. It is present in all main business segments, with total assets of about €42.3 billion in 2011. As from 2010, Banco CEISS benefited from two state aid measures: (i) a recapitalisation of €525 million in the form of convertible preference shares subscribed by the FROB and (ii) State guarantees on unsecured senior debt under the Spanish bank guarantee scheme (see MEX/12/0629) worth €3 193 million. Banco CEISS will benefit now from an additional recapitalisation of €604 million in the form of ordinary shares subscribed by the FROB, as well as from a transfer of its impaired assets and loans into SAREB for an aid amount of around €717 million.

 

The non-confidential version of the decisions will be made available under the case numbers SA.35490, SA.35489, SA.35488 and SA.34536 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News

 

 

Contacts :Antoine Colombani  (+32 2 297 45 13)

Maria Madrid Pina  (+32 2 295 45 30)

 

European Commission press release state aid.

Saturday, January 5th, 2013

European Commission

Press release

Brussels, 21 December 2012

State aid: crisis-related aid aside, Scoreboard shows continued trend towards less and better targeted aid

The European Commission’s 2012 State Aid Scoreboard revealed that the volume of national support to the financial sector actually taken by banks between October 2008 and 31 December 2011 amounted to around €1.6 trillion (13 % of EU GDP). The bulk (67 %) came in the form of State guarantees on banks’ wholesale funding. Support to the real economy on the basis of temporary crisis rules dropped to € 4.8 billion in 2011, a fall of more than 50% compared with 2010, reflecting both a low uptake by companies and the budgetary constraints of most EU Member States.

Total non-crisis aid decreased and stood at €64.3 billion in 2011 or 0.5% of EU GDP and continued to re-focus on less distortive horizontal objectives such as aid for research and innovation, protection of the environment and providing risk capital to SMEs. The Scoreboard also shows Member States recovering illegal aid much faster, with 85% (around €13.5 billion) clawed back at the end of June 2012 thanks to the Commission’s action, probably facilitated by the pressure to consolidate public finances.

Support to banks

Between 2008 and 31 December 2011, €1 616 billion, was actually used to support financial institutions. This was composed of

  • liquidity support: €1 174 billion (9.3 % of EU GDP) average outstanding State guarantees on banks’ funding and other (short-term) liquidity support measures; and
  • measures to support bank solvency: €442 billion (3.5 % of EU GDP) in recapitalisation measures and treatment of impaired assets.

Three Member States accounted for nearly 60% of the total aid used; those are the United Kingdom (19 %), Ireland (16 %) and Germany (16 %).

Aid granted to the real economy – Temporary Framework

To minimise the impact of the tightening in credit conditions, Member States also granted aid to the real economy under a temporary framework adopted by the Commission at the end of 2008. The main support measure used was a one-off subsidy of up to €500 000 per company, which was replaced in 2011 by the normal €200 000 amount that can be granted to a company over three years without prior clearance by the Commission. This was followed by subsidised loan interests or guarantees, reduced interests for environmentally-friendly investments and risk capital aid. The temporary framework expired on 31 December 2011.

 

Between December 2008 and 1 October 2011, Member States made available €82.9 billion under the temporary framework. The amount taken up in 2011 was €4.8 billion, while it was €11.7 billion in 2010 and €21 billion in 2009. This indicates that market funding became more available over that period.

Long-term trends in non-crisis aid

Non-crisis aid decreased and was at €64.3 billion or 0.5% of EU GDP. Aid to industry and services amounted to €52.9 billion or 0.42% of EU GDP of which almost 90% was earmarked for horizontal objectives of common interest. Most notably, the Commission observed a greater focus on aid measures for regional development, research, and environmental protection, all of which contribute to the Europe 2020 strategic objectives of smart, sustainable and inclusive growth.

Almost 90% of total aid is granted through block exemptions or schemes (see IP/06/1765 and IP/08/1110). Once approved by the Commission, such procedures allow Member States to grant aid to individual companies without prior Commission scrutiny, offering Member States a high degree of flexibility and low administrative burden, while compatibility criteria safeguard a level playing field in the internal market. Only 12.5% of the total aid was assessed individually.

The Scoreboard further shows that more than €13.5 billion, representing about 85% of the total amount of illegal and incompatible aid, had been repaid by beneficiaries to the granting authority at the end of June 2012. This marks a further improvement as compared to previous years. 

The Scoreboard including annexes, statistics and indicators for all Member States is available at:

http://ec.europa.eu/comm/competition/state_aid/studies_reports/studies_reports.html

 

 

Contacts :Antoine Colombani  (+32 2 297 45 13)Maria Madrid Pina  (+32 2 295 45 30)

 

Itsfraud, Bank Fraud, and its Big Bank Fraud ?

Sunday, September 2nd, 2012


Federal Reserve Cash Bailout Givaway To Crooks In Suits

 

Bankers.

Looking at the huge sums of money here (Given) to banks it is clear they were all insolvent (Bankrupt?

If not then the financial reports of those below were concocted to get taxpayers money by fraud.

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)  Barclays : They did get bailout out money
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)

The list above of institutions who received money from the Federal Reserve

Can be found on page 131 of the GAO Audit, its fraud, bank fraud.

See the page ( Insurance companies still decieve you),  for pdf.  http://sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf

Update 09 Sept 2012

Now we have European Banks being bailed out again by the ECB (European Central Bank) backdoor.

Business logic, if you go broke! you have to start again from scratch with new money and a new name.

Seems that banks can steal our money, use it to bet on the horses, lose it all, then just ask for more taxpayers money? again and again and again.

WHY NOT JUST TAKE OVER THE BANKS? and put Government accountants in charge. Instead of the DRAGHI CON-TRICK being played out to the Market and its traders/investors.

I wonder with 6000 banks in the EU and DRAGHI stating its up to Governments,,,,, to control the banks. Just who did he think controlled the banks when they screwed up the Worlds Economy.

Wait for the same mess to be recreated again mmm.

Update Britain,, Bank of England, says there is a case for breaking up the Royal Bank of Scotland ??? (Perhaps its costing the Government too much to keep afloat. After all anything of value was sold off before it failed.

Just how much more taxpayers money is going to be put into a bankrupt system of banks. The EU is copying Britain and bailing out banks by the back door, hopeing its citizens don’t notice.

Mmm that seems a bit short sighted.