E-News October 2011

<a href="/zh2/22949" title="WAI HTML"><img alt="Cover" src="/cover/co/22949.gif"></a> <div>Serbian Banks Celebrate 90 years of Association The Association of Serbian Banks reached a milestone when it celebrated its 90th Anniversary this year. To mark the occasion at the 32nd Associates’ meeting held in Belgrade in May, EBF Chief Executive, Guido Ravoet, congratulated the Association, its members and its staff for their achievements and expressed a desire for a long and continuing partnership. He remarked that the EBF’s feat of fifty years paled in comparison to that of the SBA, unequivocally the longest standing organisation amongst the Federation’s Members and Associates. “The Association of Serbian Banks has had a remarkably long history in which it has been through much turmoil, both political and economic,” reflected Guido Ravoet. “As such, this makes its 90 years of being all the more praise-worthy. Undeniably, the SBA has withstood good and bad times, has been a force for the economy, and a solid partner for the national authorities, including the Central Bank.” Pictured below, EBF secretariat staff - Guido Ravoet (left) with Viktorija Proskurovska and Gonzalo Gasoso</div> <div>ALTERNATIVE INVESTMENTS The European Banking Federation (EBF) has maintained close involvement with the Alternative Investment Fund Managers Directive (AIFMD) in recent months. Now that the AIFM Directive has been adopted, the EBF contribution has shifted to the all important implementing measures. During the summer, the European Securities and Markets Authority (ESMA) launched two consultations concerning its keenly awaited advice to the European Commission on the formulation of these implementing measures. While the EBF’s perspective and interest is manifold, it has concentrated on responding to the questions concerning depositary issues so that it could be as focused and concrete in its propositions as possible. sised that depositaries cannot be made liable for events outside their sphere of control and influence. In its detailed written response and at the ESMA Public Hearing in Paris, the EBF empha- Joe McHale It also once again reaffirmed its steadfast commitment to investor protection. In relation to the treatment of third country entities, the EBF stressed that there must be a level playing field between the depositaries located in the European Union and the depositaries located in third countries. Depositaries cannot be made liable for events outside their sphere of control and influence. The EBF is now awaiting the presentation of ESMA’s final advice to the Commission and it anticipates that it will continue to contribute strongly to the debate regarding the formulation of implementing measures for this important piece of legislation. There must be a level playing field between the depositaries located in the European Union and the depositaries located in third countries.</div> <div>New Webpage on Market Standards The report produced by the European Commission Expert Group on Market Infrastructures (see article on page 10) emphasises the need to complete the process of removing the inefficiencies in clearing and settlement before launching more ambitious plans towards further integration in the European post-trading landscape. To address these obstacles, first identified by the Giovannini Group, the industry notably developed and endorsed market practices standards for corporate actions processing and for general meetings. These standards aim at streamlining one of the most complex back-office activities. Implementation of the corporate actions standards is well under way. The responsibility resides at national level with all the participants of the securities’ value chain (issuers, market infrastructures for trading, clearing and settlement, custodian banks, investors). The European Banking Federation is very much involved at European level, where it chairs an all-inclusive industry body (called the ‘Broad Stakeholder Group’) that steers, coordinates and monitors the proper implementation of these standards across Europe. This group also reports directly to the Commission on progress achieved. As part of its commitment towards the European regulator and its responsibility in enhancing the cooperation and communication between all parties in the value chain that have different interests, the EBF has launched a dedicated webpage on the market standards. This webpage offers market participants, public sector authorities, academics and the general public a unique and central access point to the many relevant documents related to these standards. It also allows concerned and interested people to be kept informed about the latest developments. Material to explain and inform about the standards should be made available soon. The EBF is also looking into making the webpage more interactive in the near future. ‘The Broad Stakeholder Group’, coordinates and monitors the proper i m p l e m e n t a t i o n of these standards across Europe This should make the process of market standards more understandable and transparent, therefore more efficient and more comprehensive. In this respect, the EBF is working on concrete measures to expand these standards to Central and Eastern Europe and is planning to organise an industry seminar in Budapest (more information in the next newsletter). Christophe Bonte The EBF has launched a dedicated webpage on the market standards.</div> <div>Credit agreement for buying homes will be regulated On 31 August the European Parliament’s Economic and Monetary Affairs Committee published its draft Report on the CARRP Proposal Tatyana Ferragallo Proposal for a Directive on credit agreements relating to a residential property (CARRP). Although the European Banking Federation welcomes the efforts made by all European institutions to facilitate the emergence of an EU mortgage credit market, it notes that the draft Report contains substantive amendments to the CARRP Proposal. The EBF reiterates its position that early repayment and creditworthiness assessment should remain principle-based. Prudential rules as well as rules on remuneration are already covered by existing legislation. Tying, foreclosure procedures, evaluation standards and registers should be tackled, if there is a proven case for intervention at EU level. New rules on portability, switching, payment flexibility and conversion should be carefully evaluated since their introduction might result in increase of the cost of credit. Regulatory policy solutions should be built on the strength of an impact assessment confirming that the proposed measures are necessary, proportionate and cost-effective. The EBF welcomes the fact that the draft Opinion of the Parliament’s Committee on Internal Market and Consumer Protection has reduced significantly the extent of the Commission’s delegated powers and has proposed a new wording for the general conduct of business rules. The EBF voices its concerns in relation to the potential negative effects, in terms of increase in litigation, which the introduction of a legal obligation to deny credit might have over the mortgage credit markets.</div> <div>FATCA IN A NUTSHELL Behind the F.A.T.C.A. acronym, which today frightens every banker, are a number of overwhelmingly burdensome requirements. ‘All Foreign Financial Institutions (FFIs) worldwide have to commit themselves to comply with the requirements of the Foreign Accounts Tax Compliance Act - FATCA’. Failure by an FFI to participate in the new regime, will lead to this FFI being considered a bad, non-participating FFI and to all payments made to it being hit by a 30% FATCA withholding tax. “All Foreign Financial Institutions (FFIs) worldwide have to commit themselves to comply with the requirements of the Foreign Accounts Tax Compliance Act - FATCA” So as to be considered a good, participating FFI, an FFI must identify all direct accounts held by citizens of the United States. This requirement includes the identification of all US Persons having substantial ownership in a Non Foreign Financial Entity (NFFE). The process even involves the application of “US indicia” to non US Persons. It also requires the application of due diligence Roger Kaiser criteria to verify that a FFI has scrutinized all accounts, electronically or manually, depending on the type of accounts. Failure by US financial accountholders to comply with documentation requests or privacy waivers will lead to their classification as ‘recalcitrant account-holders’ Failure by US financial accountholders to comply with documentation requests or privacy waivers will lead to their classification as ‘recalcitrant account-holders’ and to taxation by the FFI at a rate of 30% of all US source income including gross sales proceeds.</div> <div>EU Crisis Management and Resolution Framework Earlier this year the European Commission consulted on ‘Technical Details for a possible EU Framework for Bank Recovery and Resolution’ 1 . The consultation highlighted its ambitious plan for legislative proposals which would introduce the initial mechanisms and tools for early intervention and resolution of banks in distress, paving the way for an eventual integrated EU Insolvency law and Cross-Border resolution framework by 2013-2014. In a global framework, much of the emphasis will need to be on planning, prevention and early intervention. So-called recovery plans will be vital to pre-empt any escalation of financial stress by building up capital and liquidity and divesting oneself of risky business activities. But preparedness by supervisors will also be crucial in crisis management so as to respond quickly and uniformly with other key stakeholders. To this end supervisors will need to ensure the best possible application of the existing capital rules and supervisory review process enshrined in the Capital Requirements Directive. In addition, proposed ‘resolution colleges’ are an indispensible component for facilitating Thimothy Buenker cross-border crisis management, whereby, home and host jurisdictions will need to ensure that agreement on recovery and resolution measures are reached in critical (crisis) situations. The EBF looks forward to seeing the final Financial Stability Board recommendations to the G-20 leaders and the final Commission proposals on how such innovative ideas such as living wills and bail-in mechanisms can work in practice. It is critical that both industry and supervisors provide a credible solution for the question of how to allow Systemically Important Financial Institutions (SIFIs) to fail as other solutions such as SIFI surcharges or breaking up of banks could be the alternative policy option. 1 http://ec.europa.eu/internal_market/consultations/docs/2011/crisis_management/consultation_paper_en.pdf</div> <div>European banks will help implement solutions to sovereign debt The European Banking Federation welcomes the EU Member States’ decisions towards financial stability and solving the current difficulties of the sovereign debts. “European governments have sent out a coherent message last night”, declared Christian Clausen, EBF President and CEO of Nordea Group. “We will take on the responsibility to meet their expectations and support the implementation of the decisions. We hope that the solutions devised will help restore trust and confidence in the Eurozone. In this context, I would like to stress that this crisis is predominantly a sovereign debt crisis, not a banking crisis. We will, however, take our share of the burden, to restore trust and confidence in the markets.” Christian Clausen, EBF President and CEO of Nordea Group. The 50% nominal discount on the Greek debt is indeed a huge and exceptional effort that banks will make. The EBF adds that the extra capitalization of banks to a Core Tier 1 ratio of 9% , estimated at some EUR 108 billion, is another very substantial demand placed on banks, which goes beyond the initial challenging plans put forward by regulators. “Banks will of course take the necessary steps to adapt to the extra capitalization requirements”, said Clausen. “As banks, we will play our part in the general effort. We expect European governments to play theirs too, and to continue implementing budgetary consolidation and improving Eurozone governance.” The EBF insists that the measures adopted in the plan are not – and cannot be compared to – state aids. “It is not governments rescuing banks”, explained Clausen. “It is the banking sector taking on an additional capital buffer. We will, nevertheless, continue to do our utmost to lend to households and enterprises, despite the increasing capital requirements and costs”, he stressed. “Long-term stability and certainty about the new regulatory framework are pre-requisites for banks to play their part and enable growth and prosperity in Europe.”</div> <div>The Future of VAT in Europe May 31, 2011 marked the end of the period provided by the European Commission to submit comments to the ‘Green Paper on the future of VAT – towards a simpler, more robust and efficient VAT system’ launched in December 2010. The objective of the Green Paper was to obtain feedback from stakeholders on the problems caused by the complex and unharmonised current VAT system and the possible ways in which it should be reframed in the future. To this effect, interested parties were presented with 33 questions addressing the entire field of Value Added Tax. Francisco Saravia The European Banking Federation welcome the Commission’s decision to launch the broad based consultation In its response to the public consultation, the European Banking Federation welcomed the Commission’s decision to launch the broad-based consultation as the Federation believes that there is a general need to modernise and simplify the current VAT system. The response further notes existing derogations, different VAT rates and options for Member States that are working against the goal of having the VAT legislation applied in a uniform manner across the European Union. At this stage, the Commission is analyzing the responses they have received and are expected to issue shortly a first summary of responses. Later on, based on the conclusions that can be drawn from the feedback received, the Commission will present by the end of 2011, a Communication identifying those priority areas in which further action at EU level would be appropriate. The EBF will continue to closely monitor developments in this process. EBF Comments on the European Commission Green Paper on the Future of VAT: Towards a Simpler, more Robust and Effective VAT System</div> <div></div> <div>EBF Secretariat staff meet with Japan Finance Housing Agency Reps EBF held its first meeting with the Japan Housing Finance Agency earlier this year. Located in Japan, the Agency provides financial services in order to supply liquidity in the housing finance market. Pictured from right to left: Takashi Yoshihira, Manager, Treasury Deparment, JHF Masashi Niimura, Senior Economist, JHF Seiichi Shimada, former President, JHF Guido Ravoet, Chief Executive, EBF Sebastien de Brouwer, Executive Director, Retail, Legal, Economic and Social Policy, EBF Viktorija Proskurovska, Adviser Economic and Monetary Affairs, EBF</div> <div>Review of MiFID is well underway The European Banking Federation (EBF) welcomes the proposals by the European Commission, published mid-October, to review the regulatory framework for the provision of investment services and activities in Europe under the Markets in Financial Instruments Directive (MiFID). The EBF is supportive of the way the issues are addressed, in particular, the Conduct of Business proposals concerning investor protection. “We find these proposals rather balanced”, declared Guido Ravoet, Chief Executive of the EBF. “It is, however, important that any new rules on investment advice do not restrict the access of retail investors to advice.” The EBF also finds encouraging, the Commission’s call for the removal of barriers and discriminatory practices that can be used to prevent competition in the provision of clearing services. There remain, however, some significant areas of concern that will need Enrique Velazquez more careful consideration to ensure the leg- islation is well adapted to the needs of investors and issuers who use the markets. “We think, for example, that the Commission’s proposal for Organised Trading Facilities (OTF) is likely to need adjustments if this trading venue is to serve current investors’ needs”, commented Ravoet. “The EBF is committed to achieving a high-quality revision of MiFID that serves the needs of European investors and issuers”, concluded Ravoet. “We stand ready to work with the co-legislators and the Commission to meet this objective”. The EBF, in partnership with APCO Worldwide, will stage an interactive cross-stakeholder debate entitled - What is in store for European financial markets? On 8 November in Brussels: Invitation and Agenda</div> <div>SME WG meets in Warsaw for 11th Business Forum The 13th EBF Small and Medium-sized Enterprises (SME) Working Group met in Warsaw on the eve of the 11th Business Forum, which took place on 24 October, organised by the Polish Bank Association (PBA)under the honorary patronage of the President of the Republic of Poland, Bronisław Komorowski. The topic chosen for the Forum –The Financing and Risk Management in the Activities of the European Micro, Small and Medium-Sized Enterprises. Polish Experiences and Proposals against the European Background – reflects the driving force that SMEs represent for the European economy, accounting as they do for almost 99% of all companies, and generating approximately two thirds of Gross Domestic Product. Nonetheless, in these difficult times, there is concern that SMEs should have access to sufficient external financing in order to fuel their growth and enable the European economy to recover from the slowdown. This event now represents one of the main fora for the dialogue between the financial sector and entrepreneurs in Poland. Indeed, it is a major event of its kind in the European Union, drawing together senior policy-makers and financing experts from around the EU, and enabling institutions such as the EBF to participate in discussions of SME policy at the highest level. When Krzysztof Pietraszkiewicz, President of the Polish Bank Association (pictured right) was broached on the significance of the Forum, he replied; “serious problems in the global economy, decline in business confidence, but also concerns about the stability of many States, reduces the propensity of SMEs to undertake development projects. Many people remain without work… How to rebuild trust?...What should the authorities at European and national level do?...What can banks and businesses do to return gradually to growth? The aim of the 11th Business Forum was to answer these questions.” Alison Bell</div> <div>Capital Requirements chewed over a CRD IV to strike balance between stability and growth The European Banking Federation has pledged to work with EU legislators to ensure that the CRD IV package transposing Basel 3 into European legislation strikes the right balance between financial stability and economic growth. A letter which it forwarded to the European Parliament Rapporteur, expressed against this backdrop the EBF’s surprise about the proposed Regulation allowing national supervisors to disregard the phasingin arrangements that Basel 3 had included in respect of the capital requirements, thus ignoring the joint findings of the Financial Stability Board and the Basel Committee that implementing the capital ratios within a shorter timeframe would imply a greater negative impact on the level of GDP as well as on annual growth. The letter, moreover, emphasized, in particular, that further work was needed to pay close attention to level playing field considerations. This means firstly that the Capital Requirements Directive (CRD IV) should not put the competitive position of the European industry at risk. It should, more particularly, not overlook that the implementation of Basel 3 in Europe will have a more severe economic impact than elsewhere because of a range of European specificities, including the structure of Europe’s financial markets, the importance of Small and Medium-size Enterprises for the European recovery and growth, the lack of government-sponsored institutions such as Fannie Mae and Freddy Mac in the United States whose functioning alleviates the balance sheets of US banks, the lack of alignment of accounting practices. As a consequence, CRD IV needs to transpose the Basel 3 Package in a flexible way to take those specificities into account. It is, furthermore, inappropriate for CRD IV to include requirements which are not only earlier but also stricter than were presented in the Basel 3 package, If not, CRD IV will only increase the uneven level playing field with other jurisdictions.</div> <div>VAT Reform for Financial Services The proposal first presented in November 2007 set out to modernise both the law and definitions for VAT exemptions within the financial services industry. The draft law and regulations, now known as the VAT Financial Services Directive, have been worked on by many members and Presidencies of the Council of the European Union over the last four years and agreement amongst Member States for a large part of the text has now been reached. However, there are four areas where agreement cannot be reached at working member level and these four areas have now been pushed up to ministerial level in order to try to reach agreement so that progress can be made on the Directive. Ministers are due to meet in order to discuss these these matters at the end of October 2011. The European Commission has been reviewing the law on Value Added Tax in relation to financial services since 2007 The intention of the Directive is to simplify the law and to modernise it to encompass new products, services and the everchanging market place. The Directive also intends to provide clarity through the use of regulations to further define those services which qualify for exemption and those that do not. It is hoped that the Directive will get agreement amongst all the members during 2011 and that the Commission can implement the law ready for members to transfer into their national legislation over the next two years. It is hoped that the Directive will get agreement amongst all the members during 2011 Alex Miller Chairman of the EBF VAT Working Group HSBC VAT Manager Europe and Group</div> <div>Investor Compensation Scheme Directive The European Banking Federation (EBF) has continued to engage constructively in the legislative adoption process for Investor Compensation Scheme Directive (ICSD). Drawing on the extensive financial and technical expertise of its members, it has shared its insights and recommendations with all the key decision makers. The European Parliament adopted their legislative resolution at their plenary sitting on 5 July 2011. Amongst other things, MEPs propose to increase the coverage level from EUR 50,000 EUR to EUR 100,000 and extend the scheme to cover against so called ‘bad advice’. In the Council, however, many of the Member States have concerns about the affordability of increasing the coverage to EUR 100,000 while the European Commission has advised the Parliament that the ISCD is not the correct legal vehicle to tackle the issue of ‘bad advice’. The EBF shares the concerns of the Member States and the Commission regarding these issues and it has clearly communicated its views on all the key issues to the rapporteur Olle Schmidt and other leading MEPs. With the Parliament having completed its first reading, attention has now shifted to the Council where the Polish Presidency is working hard to find a compromise, especially with respect to funding principles. The EBF will continue to offer the co-legislators its encouragement and any expertise it can bring to the debate. Joe McHale In the Council, many of the Member States have concerns about the affordability of increasing the coverage to EUR 100,000</div> <div></div> <div>EUROPEAN POST-TRADING LANDSCAPE: THE ROAD AHEAD Often referred to as the ‘plumbing’ of the financial system, post-trading was probably the less visible, and remains; for sure the less glamorous part of it. Paradoxically, it is because the market infrastructures supporting this post tradinghad performed well during the 2008 financial crisis that they are now Christophe Bonte facing significant regulation for the very first time. Policy-makers and regulators have indeed realised how essential these infrastructures are for the stability and efficiency of the markets. The focus is now clearly on safety and robustness. The focus is now clearly on safety and robustness. The requirement by the G20 world leaders to force over-the-counter derivatives trades to be centrally cleared and reported will be met by the European market infrastructures regulation (EMIR) covering Central Counterparty clearing (CCPs) and trade repositories, to apply by end-2012. A European Commission proposal to regulate Central Securities Depositories (CSDs) is expected to be released at the end of November this year. Planned for spring next year, the Securities Law Directive should provide a harmonised framework and legal certainty for holding and making use of securities cross-border, impacting the role of both infrastructures and custodians. Planned for spring next year, the Securities Law Directive should provide a harmonised framework and legal certainty for holding Parallel to these legislations addressing the governance and operations of European post-trade infrastructures, an expert group on market infrastructures (EGMI) chaired by the Commission has reflected on the need for further actions. It has become clear that the first step would be to complete the unfinished work of removing the inefficiencies in clearing and settlement (the so-called Giovannini Barriers). While this was so far mainly the task of the industry, public authorities need also to meet their responsibilities if progress is to be achieved. Only then, could the more ambitious and visionary scenarios discussed by the experts materialise. The final EGMI report is available on the European Commission website. It has been presented at a public conference organised by the Commission on 24 October in Brussels, under the title ‘European Post-Trading Landscape: The Road Ahead’.</div> <div>On 20 October 2011, the Fiscal Committee held its 93rd meeting in Brussels under the chairmanship of Marie Rosvall, pictured with Roger Kaiser (left) and Francisco Saravia . The Committee’s priorities currently include the US Foreign Accounts Tax Compliance Act (FATCA), the proposed Directive on Financial Transactions Tax (FTT) and the numerous developments in the field of VAT. In addition, the Committee closely monitors the work of the OECD and the Commission on withholding tax procedures (TRACE and T-BAG), the proposed Directive on a Common Consolidated THE FLAWS OF FATCA The Foreign Account Tax Compliance Act (FATCA) imposes extremely onerous requirements on financial intermediaries, deviating substantially from the OECD and EU initiatives to eliminate fiscal barriers affecting the post-trading environment. This is the case of the disproportionate requirement to screen the whole client base so as to identify all direct and indirect US accounts and to look-through the National Federation of Federal Employees that have an account to determine whether a substantial US owner has interest in this entity. These disproportionate measures may encourage many Foreign Financial Institutions (FFIs) to opt out and may put those who will opt in at a competitive disadvantage against other financial institutions, namely US financial intermediaries. The United States does not consider it necessary to negotiate the modes of enforcement of FATCA since those FFIs who will not comply will be penalised by the FATCA withholding tax. The United States seem to ignore the fact that FATCA has an extraterritorial scope and, as in many aspects, it conflicts with domestic law, FFIs may have great difficulties to be compliant. FATCA is a unilateral measure, with no reciprocity, which may encourage other countries to adopt similar, unilateral measures to protect their public finances, increasing further the complexity of financial intermediaries’ activities and by extension, the costs borne ultimately by their clients. Frédéric Batardy, Chairman of the QIs & US tax Issues</div> <div>CRD IV should not put the competitive position of the European industry at risk. Wilfried Wilms needs to transpose the Basel 3 Package in a flexible way should refrain from creating new competitive distortions across the EU. Secondly, CRD IV should refrain from creating new competitive distortions across the European Union. Achieving enhanced regulatory convergence across the EU is essential for a Single Market in financial services as it contributes to promoting a level playing field amongst institutions and reducing the administrative burden incumbent on institutions that provide financial services on a cross-border basis. The EBF, therefore, strongly welcomes the objective set by the European Commission to create a Single Rulebook and concur with the view taken that a Regulation is an appropriate legal instrument to achieve that goal. At the same time, however, the EBF is disappointed to note that CRD IV intends to introduce additional national discretions for Member States. t EBF Financial Fridays lunch The revision of the Capital Requirements Directive (CRD IV) created a lively discussion at the EBF Financial Fridays event, which took place in September in Brussels. Some 30 interested individuals, including bank representatives, trade association advisers and parliamentary assistants, attended the lunch debate at Eccetera restaurant, Place Jourdan. They exchanged views with, Mario Nava, Head of Unit, Banking and Financial Conglomerates – DG Internal Market, European Commission, who presented the topic.</div> <div>Back to the drawing board with tax proposals The European Banking Federation is calling for further dialogue over the proposals published by the European Commission to raise a significant amount of new revenue by taxing the financial transactions of all operators located in the European Union. Guido Ravoet, Chief Executive of the European Banking Federation: “No taxation measure should be detrimental to growth, impede European competition and end up driving business out of Europe” European banks believe that the introduction of a Financial Transaction Tax at European level is not the right approach since, depending on the scope of the regulation, it could generate a shift of some business activities to other parts of the world, with negative impact on the funding of the European economy and finally on employment. “No taxation measure should be detrimental to growth, impede European competition and end up driving business out of Europe”, declared Guido Ravoet, Chief Executive of the European Banking Federation.“In adopting a Directive, EU legislators need to carefully look at ways to prevent such a tax from seriously damaging the European economy.” The EBF is concerned that imposing a Financial Transactions Tax would also have an impact on the liquidity of instruments at a time when any additional cost on funding would be better avoided. Finally, European banks insist that the evaluation of the proposed measures should be discussed with the industry prior to their potential adoption.</div> <div>EBF President in the spotlight at Euro Finance Week The President of the European Banking Federation, Christian Clausen, will be speaking at the 14th Euro Finance Week, 14-18 November next. Christian Clausen, CEO of Nordea Group, who took the helm of the Federation in January of this year, will give delegates his perspective on the emerging European financial landscape. His speech entitled ‘Balances in New Normal’ will be presented at the conference ‘Finance meets Media - Media meets Finance’ on Wednesday 16 November. With more than 500 speakers and 10,000 visitors from 60 countries, expected to attend, the Euro Finance week is said to be Europe’s largest meeting point for the finance and insurance industry. In approximately 40 specialised conferences with 100 panel discussions, the annual event provides a comprehensive overview of issues that are currently topical to the industry. Numerous evening events, receptions, and award ceremonies complement the week’s programme and offer additional networking opportunities. EBF Chief Executive, Guido Ravoet, will also speak at the Lead Conference - Economic and Financial Stability in Europe - Crisis Resolution Management on 15 November and will moderate a Discussion Panel on ‘Reforming the European Financial Supervision System - Scope and Limits’. Website: www.eurofinanceweek.com The week’s event takes place at Congress Center Messe Frankfurt, Germany. For further information see Conference Programme</div> <div>European banks call for a fresh look at risk disclosures The European Banking Authority (EBA) has recently published its report calling for banks to improve their disclosure information about risk exposures. The European banking supervisory community has been undertaking a review of banks’ risk disclosure practices for some time now (2008). Supervisors had acknowledged from the outset that meeting the market’s expectations would be an evolutionary process Supervisors had acknowledged from the outset that meeting the market’s expectations would be an evolutionary process and, more particularly, that it would take some time before Pillar III disclosures would reach a satisfactory outcome as banks need to gain experience with such types of disclosures and the way in which they need to communicate to the markets. The European Banking achieving Authority report confirms that, as in previous years, progress is constantly being made in the right direction. The EBA’s call for further efforts to be made for a greater harmonisation of the disclosures provided by the firms are well noted. The European Banking Federation has encouraged the European supervisory community in the past to bring this matter up at the Basel Committee which has “Within the European Union, there are a range of obstacles to comparability across Europe” introduced those reporting requirements and which has taken the view so far that promoting comparability across institutions is not a priority. It has also drawn the attention of authorities to a report it has produced which revealed that, even within the European Union, there are a range of obstacles to achieving comparability across institutions, amongst which the different regulatory requirements which are being imposed by Member States. Furthermore, the EBF has made the Financial Stability Board aware that there is a lack of sufficient focus and clarity of objectives and scope of the disclosure requirements which are being imposed on banks, which causes difficulties for preparers. It has, therefore, suggested that the Authority should provide transparency on the precise objectives and scope of each disclosure requirement in its future work – without any success so far, however. Feedback from regulators is welcome to allow banks to review future practices. However, it should not be overlooked that risk disclosures are primarily meant to inform market participants. It is worrying to note against this backdrop that banks’ risk disclosures do not seem to attract much attention from market participants, which illustrates that a fresh look may need to be taken at the current disclosure framework. Wilfried Wilms</div> <div>The European Banking Federation congratulates the Banking Association (under the Economic Chamber) of the Former Yugoslav Republic of Macedonia, on becoming the EBF’s 14th Associate. To mark the occasion, the Macedonian Banking Association (MBA) organised a ‘kick-off’ conference in Skopje on 19 September 2011. A number of prominent speakers present congratulated the Banking Association on the step taken, including Mr Dimitar Bogov, Governor of the Central Bank of Macedonia, Ms Violeta Stojanovska-Petrovska, State Adviser for the Financial System in the Ministry of Finance, and Mr Guido Ravoet, Chief Executive of the European Banking Federation. The conference focused on the benefits which the national banking association will achieve and on the ways in which the MBA can learn from other EBF Associates, as well as full EBF members, in order to become an effective organisation. The European Banking Federation remains committed to serving its Associates in providing access to the EU-level networking platform of experts and banking sector representatives, to supplying information and analysis of the EU legislation in the field of financial services, and assisting the national banking associations in making their respective banking sectors more modern, well-equipped with information and operated by well-trained staff.</div> <div>EBF Export Credit Working Group develop links with OECD The input of the European Banking Federation to the Organisation for Economic Cooperation and Development - OECD process has not been limited to lobbying in its strict sense. The Working Group has appreciated the opportunity to report on market conditions, and give advice on the extent to which the rules reflect the sometimes changing market realities. Since the global financial crisis, it has reported regularly on the market’s ability to meet the need for financing, in terms of volume, tenor and pricing, at the annual stakeholder consultations held by the OECD export credit committees. Added to the bankers’ fundamental pragmatism, is the recognition that rules should be guided by broad principles of public policy, particularly evident in the OECD’s work to minimise adverse environmental effects from export credits, to promote renewable energies and to combat bribery. Of note too, is the broadening of EBF policy contributions to include consideration of the global social and economic Elena Letemendia importance of support for trade, a step beyond the early technical focus. This approach rightly reflects the development of banks’ business strategies, in which Corporate Social Responsibility is being given increasing weight. Similarly, our recent lobbying on the potential effects of the latest bank regulatory proposals of the Basel Committee focuses on the unintended consequences for international trade and ultimately global growth, a subject that remains at the top of the EBF agenda. Within the banking community, we look forward to future collaboration with the OECD, public authorities and other stakeholders, to ensure that private and public sectors can complement each other as effectively as possible. This piece is drawn from a longer EBF article published in the OECD publication ‘Smart Rules for Fair Trade – 50 years of export credits’, issued this year to celebrate the OECD’s 50th anniversary 1 . 1 “The European Banking Federation and OECD Export Credits”, by Elena Letemendía, Senior Adviser, EBF</div> <div>Crisis may lead to initiatives Euribor-EBF, following direction from its members, is currently working on three main axes aimed at improving the handling of knowledge and evolution of interbank/debt markets: A new REPO index, overnight meaning securitized, should be delivered by January 2012. Close cooperation with the European Central Bank to develop new statistics tools to better answer Asset Managers needs in Short Term debt market. The ECB has announced that, starting as of 1 January 2012, the MFI (Monetary Financial Institutions) could again issue short term debt STEP programs, non regulated market like STEP being eligible. The Euribor USD project test phase, whichwill end in December 2011.If approved by the Steering Committee Members and Euribor-EBF General Assembly, Euribor USD</div> <div>SEPA End-Date Regulation: Desperately scrutinising the horizon....? Years ago, the European banking industry answered positively to the different consultations of European policy-makers on the opportunity to set an end-date for the existing national euro credit transfers and direct debits. The idea was to finally allow the migration from the old national payment schemes to the new pan- European ones The idea was to finally allow the migration from the old national payment schemes to the new pan-European ones to enable the setting-up of an internal market for payments: the Single Euro Payments Area (SEPA). The text of the proposal of the European Commission of December 2010 has been reviewed by EU Member States - who agreed on a general approach in June 2011 - and the European Parliament – whose lead committee, ECON, adopted a report in July 2011. Trialogue negotiations (between the European Commission, the Parliament and EU Member States) started on 29 September for a potential final agreement by the end of this year. The current draft proposal is probably different from what the European banking industry was originally expecting but the adoption of a final agreement would definitely reassure financial institutions which have been, for a long time, waiting for the green light to migrate to new pan- European schemes. The adoption of a final agreement would definitely reassure financial institutions The European Banking Federation will in any case continue to carefully scrutinize the developments of the legislative process to ensure that the concerns of European banks are duly taken into account for the final steps of the process. Séverine Anciberro</div> <div>Protecting the consumer In 2010, the G20 Leaders first called on the Financial Stability Board (FSB) in co-operation with the OECD, to report back on options to advance consumer finance protection. In 2011, the G20 Finance Ministers called, in particular, for common principles on consumer protection in the field of financial services. The Organisation of Economic Co-operation and Development (OECD) established the common principles and the FSB published a report; both endorsed by G20 Finance Ministers in October. They have also called for further work on implementation issues, which will be presented to the G20 leaders in November. Consumer protection oversight bodies should be perceived as unbiased In August of this year, the International Banking Federation (IBFed) coordinated the drafting of a common position to the OECD consultation on the draft principles. While broadly supporting the principles, IBFed noted that consumer protection oversight bodies should be perceived as unbiased, i.e. they should ensure a balance between the interests of consumers and regulated entities. Furthermore, a requirement to assess clients’ financial capabilities, situation and needs prior to the conclusion of a contract should depend on the product concerned. This might be inappropriate for standard retail banking services (e.g. current account). In this context, financial capability is understood as the capacity, based on knowledge and skills, to access and manage financial resources effectively. Standardised pre-contractual disclosure practices can improve better product comparability but should not impair product diversity, as products with different features are only comparable to a limited extent. In general, financial education is a lifelong learning process and governments and regulatory authorities should work in collaboration with stakeholders. The non-binding principles complement and do not substitute existing international principles or guidelines and will apply across all financial services sectors. Tatyana Ferragallo Standardised precontractual disclosure practices can improve better product comparability but should not impair product diversity,</div> <div>New anti-money laundering standards in the pipeline New anti-money laundering (AML) standards are nearly there: The Financial Action Task Force (FATF) is reviewing its standards - the 40+9 Recommendations - on money laundering and terrorist financing. A new version of the standards is expected by February 2012. At the same time, the European Commission is reviewing the third EU AML Directive 1 with a view to publish an application report early 2012. Key concepts of the third EU AML Directive are currently at stake: The Financial Action Task Force (FATF) is reviewing its standards on money laundering and terrorist financing the Risk-Based Approach - according to which procedures of customer due diligence should depend on the nature of the risks with the purpose of focusing on the real money-laundering risks; the identification of Beneficial Owners , a challenge for European financial institutions, in particular for companies with complex multi-layered structures; the definition and identification of Politically Exposed Persons-persons exercising a prominent public function as well as their close family and associates. The European Commission is reviewing the third EU AML Directive 1 In addition to its own review, the European Commission is expected to incorporate the changes resulting from the FATF review in a fourth EU AML Directive and a revised EU Fund Transfers Regulation 2 . In this context, the FATF is inter alia, considering requiring financial institutions to include on all cross-border electronic transfers full originator information (name, account number or unique transaction reference number, and address) and full beneficiary information (name, and account number or unique transaction reference number). The European Banking Federation answered the European Commission and the FATF consultations to ensure that the concerns of European banks are duly considered for the next steps of the process. Séverine Anciberro 1 Directive 2005/60/EC 2 Revision of Regulation (EC) 1781/2006</div>