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into Libor rigging allegations were significantly from seven to 16 institutions, as the Lloyds group, Bank of America, Bank of Tokyo, Mitsubishi UFJ, Credit Suisse, Rabobank, Royal Bank of Canada, Société Générale, Norinchukin and West LB joined Barclays, Bank of Scotland, HSBC and others under the spotlight.
BANKING... ...is it finally getting somewhere? It seems it’s never too late to give up hope after all.
Jose Manuel Barroso and Angela Merkel don’t quite see eye to eye
Months of wrangling over the future shape of Europe’s banking system came to an apparent end on 19th October, as France and Germany finally hammered out a compromise deal that will allow the transition of the European banking system toward direct supervision by the European Central Bank. January 2013 will see the creation of the legislative framework, and the new supervisory system should be in action some time next year. Well, that’s the theory. The October deal is important not so much because of what it is, but rather because of what it will now allow to happen. And let’s stress, by the way, that this is a Eurozone matter that doesn’t impact immediately on the Bank of England or the UK banking system at all. (But see also below...)
What It’s All About So, where shall we start? Well,
if you cast your mind all the way back to July, you might remember that the euro zone’s leaders hammered out a new bank stabilisation pact, the so-called European Stability Mechanism, that would allow the EU to issue unlimited quantities of so-called euro bonds, backed by the ECB, which could be offered to struggling banks in Spain, in Greece and perhaps in Italy, on the strict condition that their governments grovelled before Brussels and formally requested assistance. The trouble was that, at that time, there was no way that the ECB could issue any bonds because it didn’t have any proper supervisory authority over its member countries’ banks. France’s new president, the socialist François Hollande, wanted a quick ‘solidarity’ resolution that would encompass all of the Eurozone banks, but Germany’s Angela Merkel was holding out for a tighter solution that applied only to the biggest ones. To tell you the truth, they still haven’t go that issue sorted, but everyone is aware that time is pressing and that the market’s enthusiasm for the rescue is waning fast. So Frau Merkel agreed, vaguely, that “banks
N E W S R E V I E W C O M M E N T A N A LY S I SN News.indd 8
14/11/2012 12:43