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FSA Board publishes report into the failure of the Royal Bank of Scotland
December 12, 2011--The Report concludes that RBS’s failure amid the systemic crisis ultimately resulted from poor decisions made by the RBS management and Board. But deficiencies in the global capital regime and liquidity regulations made the crisis much more likely. In addition, flaws in the FSA’s supervisory approach provided insufficient challenge to RBS.
Specifically, the Report concludes that the failure of RBS can be explained by a combination of six factors:
significant weaknesses in RBS’s capital position, as a result of management decisions and permitted by an inadequate global regulatory capital framework;
over-reliance on risky short-term wholesale funding, which was permitted by an inadequate approach to the regulation of liquidity;
concerns and uncertainties about RBS’s underlying asset quality, which in turn was subject to little fundamental analysis by the FSA;
substantial losses in credit trading activities, which eroded market confidence. Both RBS’s strategy and the FSA’s supervisory approach underestimated how bad losses associated with structured credit might be;
the ABN AMRO acquisition, on which RBS proceeded without appropriate heed to the risks involved and with inadequate due diligence; and
an overall systemic crisis in which the banks in worse relative positions were extremely vulnerable to failure. RBS was one such bank.
Exchange Council appoints Peter Reitz to the Management Board of the Exchange – French Futures switched to financial settlement – Report on EUA Primary Market Auction – Election committee appointed
December 12, 2011--In the meeting of the Exchange Council of the European Energy Exchange (EEX) chaired by Dr. Günther Rabensteiner, Verbund AG, in Vienna on 1 December 2011, Peter Reitz was appointed a further Managing Director of the Exchange.
In August of this year, Peter Reitz was appointed the Chief Executive Officer of EEX AG and European Commodity Clearing AG (ECC). As a result, the exchange is now represented by two managing directors again. In addition to Peter Reitz, Oliver Maibaum represents EEX as Managing Director Exchange. He has held this office since 2004 and was confirmed in office by the Exchange Council in 2009.
In the meeting, the Management Board of the Exchange reported on the further development of the French Power Derivatives Market. On 24 November 2011, the exchange switched the physically settled French Power Futures to contracts with financial settlement. The trading participants now have three months to close open positions in the physical contracts and open positions in the new financial contracts via OTC registration. The members of the Exchange Council welcomed the switch of the contracts. These will bring financial trading participants, such as banks and trading houses, to the exchange and, hence, contribute to higher liquidity. The new French Financial Futures have also been tradable for the Eurex participants admitted to EEX since November.
More Europe is the only way out of the crisis
December 12, 2011--On 8 December 2011, at the 476th plenary session of the European Economic and Social Committee (EESC) President Staffan Nilsson, the three interest groups making up the EESC and Jean-Paul Delevoye, President of the French Economic, Social and Environmental Council agreed that deeper European integration was the only way out of the crisis. In the lead up to the European Council, the EESC President's statement tackled key aspects of the crisis such as fiscal discipline, the discussion on stability bonds and regulation of the financial sector.
The plenary session was opened by President Nilsson with a serious warning: "The European Union is in a profound crisis – a financial crisis, an economic crisis, a sovereign debt crisis, a social crisis with almost 23 million unemployed, but also a fundamental crisis of European integration itself". His statement on "Overcoming the crisis – towards a policy programme for sustainable recovery" sets out the Committee's stance on various aspects of the economic crisis and the possible solutions.
According to Mr Nilsson, there is only one way out of the crisis for the EU: to create the right conditions for boosting growth and employment. The Community Method has to be reasserted and the Commission's legislative initiative must guarantee that the crisis is tackled by stepping up integration.
"More Europe, a new Europe will require a fundamental pooling of resources and sharing of responsibilities", said Mr. Nilsson, specifying that this could only be achieved if Member States respected fiscal discipline in the framework of the so-called "six pack", the agreed reform package. However, the austerity/growth deadlock can only be broken if these commitments are accompanied by stability bonds, proper regulation of the financial sector and, crucially, a long-term strategy for assuring sustainable growth. In this regard, the institutions have already developed a tool to generate confidence, not just for the markets, but, what is more important, for citizens: the Europe 2020 strategy, where the focus is on proper implementation.
FSA Board publishes report into the failure of the Royal Bank of Scotland
December 12, 2011--The Financial Services Authority (FSA) has published its Board’s Report into ‘The failure of the Royal Bank of Scotland’ (RBS).
The Report concludes that RBS’s failure amid the systemic crisis ultimately resulted from poor decisions made by the RBS management and Board. But deficiencies in the global capital regime and liquidity regulations made the crisis much more likely. In addition, flaws in the FSA’s supervisory approach provided insufficient challenge to RBS.
Specifically, the Report concludes that the failure of RBS can be explained by a combination of six factors:
significant weaknesses in RBS’s capital position, as a result of management decisions and permitted by an inadequate global regulatory capital framework;
over-reliance on risky short-term wholesale funding, which was permitted by an inadequate approach to the regulation of liquidity;
concerns and uncertainties about RBS’s underlying asset quality, which in turn was subject to little fundamental analysis by the FSA;
view the The failure of the Royal Bank of Scotland: Financial Services Authority Board Report
The Russian economy is recovering, but faster modernisation needed, OECD says
December 12, 2011--The Russian Federation must further modernise its economy to meet long-term development and income inequality challenges, according to the OECD. A combination of sound macroeconomic management, improved business climate, effective social policies and greater energy efficiency is required.
These are key conclusions of two newly published reports – a Review of Labour Market and Social Policies in the Russian Federation and the latest Economic Survey of the Russian Federation – launched in Moscow today by OECD Secretary-General Angel Gurría and Russian Minister of Economic Development Elvira Nabiullina.
view the Overview of the Economic Survey of the Russian Federation
BIS-December 2011 Quarterly Review discusses global market repercussions of euro area sovereign debt crisis
December 12, 2011--The BIS Quarterly Review for December 2011, released today, shows how concerns about sovereign risk in the euro area affected financial markets across the globe.
The December issue also provides highlights from the latest BIS data on international banking and financial activity.
In addition, it features five articles (more detailed abstracts follow):
1.FX trading strategies such as carry or momentum trades exhibit substantial downside risks to investors. One bad month can be sufficient to wipe out one to two years of excess returns.
2.The Chinese policy of boosting the international role of the renminbi could undermine the effectiveness of capital controls while improving the allocation of capital.
read more Euro area securities issues statistics-October 2011
As regards the sectoral breakdown, the annual growth rate of outstanding debt securities issued by nonfinancial
corporations decreased from 4.8% in September 2011 to 4.5% in October (see Table 2 and Chart 4). For the monetary financial institutions (MFIs) sector, this growth rate increased from 2.3% in
September 2011 to 2.9% in October. The annual rate of change of outstanding debt securities issued by
financial corporations other than MFIs increased from -0.5% in September 2011 to 0.0% in October. For the general government, this growth rate decreased from 5.9% in September 2011 to 5.4% in October. London tribunal to shed light on UBS Q3 economic growth at 8.2 pct as CAD dips to $4.2 bln in October Print new notes, avoid panic: a guide to escaping the euro If the currency itself implodes, eurozone authorities could no longer recognise the euro as a common currency, said Paulo Reis Mourao of the University of Minho in Braga, Portugal.
"This would trigger a series of procedures that would require national central banks to issue currencies again," he said. The old currencies have been destroyed, even if Europeans are estimated to have kept a fair bit of the old money in their drawers: the equivalent of 6.8 billion euros in German marks, 1.7 billion euros in pesetas, 1.3 billion euros in lira and 600 million euros in French francs.
December 12, 2011--The annual growth rate of the outstanding amount of debt securities issued by euro area residents was 3.4% in October 2011, compared with 3.3% in September. For the outstanding amount of quoted shares issued by euro area residents, the annual growth rate decreased from 2.0% in September 2011 to 1.7% in October.
New issuance of debt securities by euro area residents totalled EUR 1,082 billion in October 2011 (see
Table 1 and Chart 1). Redemptions stood at EUR 1,015 billion and net issues amounted to EUR 69 billion (see Table 1).1 The annual growth rate of outstanding debt securities issued by euro area residents was 3.4% in October 2011, compared with 3.3% in September (see Table 1 and Chart 3).
December 11, 2011--UBS is braced for more revelations about the inner workings of its London office this week, as a tribunal begins to hear evidence over an alleged $42m fraud that sparked investigations in India and the UK.
Two former UBS employees, including the former head of one of its seven international desks that managed wealthy clients’ portfolios, on Monday begin their appeal against fines that the UK financial regulator wishes to impose.
December 11, 2011--Turks woke up to a bright morning on Monday as official figures suggested their country's economy continued the strong growth it attained following the global financial crisis in the third quarter of this year, coupled with a smaller current account deficit (CAD) in October compared to a month earlier.
According to the Turkish Statistics Institute (TurkStat), Turkey's gross domestic product (GDP) expanded by 8.2 percent in the July-September period, marking the eighth quarter in a row the country's economy has grown. The third quarter growth rate was way beyond the market expectation of 6.3 percent. “That much expansion made us the second-fastest growing economy worldwide, after China, in the third quarter. We expect our economy to grow no less than 4 percent next year,” said Industry, Science and Technology Minister Nihat Ergün, speaking on a program broadcast by a private TV station shortly after the announcement was made.
December 10, 2011--If disaster strikes, how exactly does a eurozone nation hit the emergency escape button on the euro?
Once considered an outlandish scenario, it is no longer taboo among economists.
Whether it is the entire euro project collapsing or just one country jettisoning the single currency, analysts agree on rule number one: Prevent panic.
