Banking Union Speeches Post author By Philip Lane Post date December 2, 2013 From today’s IIEA event: Constancio – here Honohan – here Noonan – here Categories In Uncategorized 26 Comments on Banking Union Speeches ← Balance Sheet Assessments → Data releases 26 replies on “Banking Union Speeches” two very intersting elements PH : “If I have conveyed a picture in which a handful of large multinational players actively caters to the larger firms and to those requiring more sophisticated financial services, alongside a handful of nationally controlled banks focusing mainly on delivering to the needs of the middle-market, while several dozen mutually-owned community banks are operating at county or large enterprise level, then this was my intention. ” So the MNC sector will get further isolated from the rest of the country. PH paints a balkanisation of banking picture throughout this piece. And, coming on the day that the Three Bears of Irish Banking produced their latest epistles on how hot/cold they are, Minister Noonan “The toolkit underpinning the Single Resolution Mechanism is provided for in the bank recovery and resolution proposal (BRR) which was agreed last June in Council under the Irish Presidency. The proposal provides a common framework of rules and powers to help EU countries manage arrangements to deal with failing banks at national level as well as cross-border banks, whilst preserving essential bank operations and minimising taxpayers’ exposure to losses. There are three pillars to the BRR framework to facilitate a range of appropriate actions by authorities: – Preparatory and preventative measures including reinforced supervision and robust recovery and resolution planning for major institutions; Early intervention which would include supervisory powers, implementing recovery plans and appointing a special manager; and Resolution tools including sale of business, bridge bank and asset separation tools and also the use of bail-in mechanisms.” So Bail-in is here to stay. And thats our legacy to the banking world. Brian, bail-in was always there – remember BCCI, British & Commonwealth Bank etc. The Irish, in bailing out Anglo, PTSB, AIB etc and blue-tacking a State Guarantee to everything they could think of, had a go at leaving a legacy of risk-free banking. I attended the first half of the conference. The main vibe I got was consolidation is a) inevitable and b) desirable. The cost of fragmentation on SME’s in particular is very damaging to the real economy. (Alan Ahearne and Pat McArdle were strong on this point). Also, on SRM, there’s a lot to be agreed upon; these stress test to get through, and that’s still before the fund has a chance to build up. In other words, parent governments still on the hook, at the very least, to god knows what conditions from EFSF. Next year going to be fun. @grumpy ‘… a legacy of risk-free banking.’ Lovely turn of phrase that! And the fools, the fools, are assuming this odious risk. Really losing the plot: Purity Pride: Germany Wants World Heritage Status for Its Beer By David Crossland Germany’s brewers are so proud of their 500-year-old beer purity law, which states that it must consist only of water, malt, hops and yeast, that they want it inscribed in UNESCO’s World Heritage list — alongside the pyramids, the Taj Mahal and Flamenco dancing. http://www.spiegel.de/international/zeitgeist/german-brewers-want-unesco-world-heritage-status-for-purity-law-a-936843.html#ref=nl-international Banking union is the final ace in the hole to spread PIIGS contagion into Germany and France etc. and flatten Europe economically so it can be bought up by mega-bank backed China. Goldcore have a new research note out on bail-in thinking across europe. Its available here http://brianmlucey.wordpress.com/2013/12/03/bail-in-research/ The Central Bank of Ireland seems to be losing an awful lot of staff at all levels since the Governor volunteered them for all the Haddington Road cuts. Hopefully the Central Bank won’t collapse altogether before banking union is implemented! http://www.irishtimes.com/business/ireland-ranks-21-out-of-177-countries-on-corruption-index-1.1615524 21? They obviously didn’t look at the constant low level corruption in Ireland e.g. the school teacher job being given to the daughter of a friend, the political candidate meetings being packed with family newly joined the party that week, etc. etc. Or does that sort of thing not pass as ‘corruption’ these days? Of course, you won’t find a trace of corruption in Irish banking…. Austerity Here We Go Again 03/12/2013 by Simon Wren-Lewis 1) Government embarks on austerity, to try and maintain the confidence of the bond markets. We must preserve the AAA rating for our government’s debt, says the finance minister. 2) Austerity reduces demand, helping create flat or negative growth. 3) As a result, deficit targets keep being missed. Additional austerity is imposed, and growth declines again. 4) Country loses its AAA rating, and the credit rating agency gives concerns about poor growth as an important factor for the downgrade. 5) This confirms our fears, says the finance minister. We must redouble our efforts to reduce our debt. This will sound familiar to UK ears, but it is also what has just happened in the Netherlands. http://www.social-europe.eu/2013/12/austerity-go/ And the fools, the fools, go marching on … @DoD Exactly what about the above scenario is supposed to be familiar to UK ears? The UK is now experiencing rapid growth across all sectors (check out this week’s incredible PMI numbers), record employment, a rapid deficit reduction and record low gilt yields. @ JF “The UK is now experiencing rapid growth across all sectors (check out this week’s incredible PMI numbers), record employment, a rapid deficit reduction and record low gilt yields.” When is it due to regain the level of economic activity it had the weekend before Lehman went under? “Record low gilt yields” are a sign that the country is still on a very shaky scraw, along with the rest of Christendom. @seafóid In the next 5 years… bet you can hardly wait to break out all the Union Jack bunting you bought for the Queen’s Jubilee. Argentina seems to be falling apart. Strikes at public clinics and hospitals, security personnel (police/soldiers) strike leads to widespread looting of supermarkets in Cordoba (2nd largest city). Such a lovely country saddled by inept governments. But then the elections are fair and it is not Martians that vote them in. Seafoid, Record low gilt yields signify nothing more than more buyers than sellers. The BOE is one buyer who will hold to maturity . The other buyers one predumes are market professionals who have been known to be wrong, in my working life I have seen them buy Nokia on a P/e of 100 and sell Irish gilts on 15% yields. Besides which, they are not at record lows. The 30 year bottomed at 2.85 and is now up to 3.64. If you had bought them at the doom porn lows in 2012 you would be sitting on a near 10% loss while against a gain on equities of 30% . Remember Jeroen Dijsselbloem the Dutch apostle of austerity and President of the Board of Directors ESM, who was opposed to any break for Ireland. Well we now have an opportunity to experience schadenfreude. The Nederlands credit rating cut from AAA to AA, property values down 20% and falling, economy down 0.1%, deflation knocking on the door. blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100026116/downgraded-netherlands-is-another-victim-of-emu-money-mess/ Prefs away. Padraic Halpin and Laura Noonan seem to have had a corp fin briefing. http://www.reuters.com/article/2013/12/04/us-ireland-banks-investment-idUSBRE9B309Y20131204 “With government debt set to peak at 124 percent of gross domestic product (GDP) this year and signs of economic recovery still tentative, cashing in on its bank holdings could provide a buffer as Ireland begins to fund itself without bailout cash next year…… .Irish banks passed a Central Bank balance sheet assessment on Monday, but European banking stress test next year will expose Ireland to further risks, since if the state is still the main owner of AIB and PTSB it will likely be the only port of call if either needs to raise more capital.” Cashing in on its bank buffers…. as in Bank. Cos AIB/PTSB is worth the square root of damn all. @ JF In the next 5 years. So a high possibility of a lost decade in Blighty then. @ Tull Very low gilt yields mean financial dysfunction is in the driving seat. Weak animal spirits. Companies hoard money rather than invest. Because they are afraid. Or because they know asset prices are rather high and it’s going to be hard to generate a decent ROE on anything invested . Low gilts mean mortgage rates are cheap and dumb money will get shafted when rates rise. The Private equity model struggles with such a flat yield curve as well. It’s not ideal. @ Seafoid Blighty is an appropriate word to describe GB. Having worked there my opinion is that Class is a bone deep malignancy which will continue to cripple them for generations. That being said the lace curtain Irish are not far behind. The difference is that our unwashed do not fully accept their lot in life gratefully. I still cannot figure out why our boysheen bawns and colleen mavourneens have not hit the bricks. Meanwhile Michael Noonan is depicted as the wrecking ball the poster boy of “bail-in’s”. This poster can be filed away by the government press office for about 18 months. http://dzswc0o8s13dx.cloudfront.net/goldcore_bloomberg_chart1_03-12-13.png This article is much more palatable than the articles promoting the ejection of Germany from the EZ. http://www.testosteronepit.com/home/2013/11/24/french-megabank-germany-should-leave-the-eurozone.html Original from French bank Groupe BPCE. The bank was established in 2009 through a government bailout and a near-simultaneous merger between the Caisse Nationale des Caisses d’Épargne and the Banque Fédérale des Banques Populaires. These vast cooperative bank networks continue to exist with their separate brands. And that’s what consumers see. BPCE has €1.15 trillion in assets and owns about 20% of the retail banking market. It’s huge. These are cooperatives which accounts for the unorthodox approach. Google Chrome and Translate does a reasonable job except for tables which can be easily read in the original. cib.natixis.com/flushdoc.aspx?id=73799 @Seafoid Seeing is believing but I had to rub my eyes and read it a second time. This is from Canada’s newspaper of record. http://www.theglobeandmail.com/globe-debate/britain-has-an-ethnic-problem-the-english/article15792740/ I should mention that we are once again living up to the stereotype. “In measures of alcohol abuse, “trouble with police while drinking” and lawbreaking, they (the English) outrank any other ethnic group in Britain (except the Irish). “ Comments are closed.