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FSA implements new powers granted by Financial Services Act 2010
July 23, 2010--The document includes new rules and guidance covering the following areas:
Use of the power to impose financial penalties or public censure on those who breach short-selling rules;
Disclosure of significant net short positions (these will go in a new part of the Handbook covering financial stability and market confidence and the current provisions on short selling in the Code of Market Conduct will be deleted);
Use of the power to suspend firms or individuals by stopping them undertaking some or all of the activities which they are permitted to carry on for a period of time;
Use of the power to impose financial penalties on individuals who have carried out controlled functions without the necessary approval from the FSA;
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Source: FSA.gov.uk
Seven banks fail Europe stress test
July 23, 2010-- Just seven European banks failed a health check and were ordered to raise their capital by 3.5 billion euros ($4.5 billion), much less than expected, confirming fears the continent's long-awaited stress test was too soft.
Results of the test of how 91 banks in 20 countries would cope with another recession was released on Friday in a bid to restore investor confidence after the Greek debt crisis spooked markets earlier this year. But it fell on deaf ears.
"There is little evidence that the tests have been applied consistently and there is a distinct lack of credibility, making this a wasted opportunity," said Richard Cranfield at international law firm Allen & Overy.
While the modest findings cast doubt on the credibility of the bank tests, some analysts said that may not matter because the European economy is improving fast.
The survey also showed how much government bonds are marked down on bank books, with Greek debt discounted the most, at 23 percent.
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Source: Reuters
Strong GDP figures lift sterling
July 23, 2010--The pound advanced this week as a surge in UK growth eased fears that the economy was headed for a double-dip recession.
Figures released on Friday showed the UK economy grew at its fastest pace in four years in the second quarter. The data supported sterling, prompting speculation in some quarters that the Bank of England could move to exit its ultra-loose monetary policy stance sooner than expected.
The UK’s gross domestic product rose by 1.1 per cent in the second three months of the year. This was far greater than the 0.6 per cent rise forecast and took the UK’s annual growth rate up to 1.6 per cent.
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Source: FT.com
CEBS Press release on the results of the 2010 EU-wide stress testing exercise
July 23, 2010--Further to its statements issued on 18 June, 7 July and 19 July 2010, CEBS today releases its summary report on the results of the EU-wide stress test exercise.
CEBS was mandated by the ECOFIN to conduct, in cooperation with the European Central Bank (ECB), the European Commission and the EU national supervisory authorities, a second EU-wide stress testing exercise.
The overall objective of the 2010 exercise is to provide policy information for assessing the resilience of the EU banking system to possible adverse economic developments and to asses the ability of banks in the exercise to absorb possible shocks on credit and market risks, including sovereign risks.
The exercise includes a sample of 91 European banks, representing 65% of the European market in terms of total assets, in coordination with 20 national supervisory authorities. It has been conducted over a 2 years horizon, until the end of 2011, under severe assumptions. The stress test focuses mainly on credit and market risks, including the exposures to European sovereign debt. CEBS has coordinated the exercise and conducted extensive cross-checks over the results, which were submitted to a rigorous peer review process in order to ensure their consistency and comparability.
The report provides details on the scenarios, methodologies and aggregate results of the stress test exercise.
In total, aggregate impairment and trading losses under the adverse scenario and additional sovereign shock would amount to 566bn € over the years 2010-2011.
The aggregate Tier 1 ratio, used as a common measure of banks’ resilience to shocks, under the adverse scenario would decrease from 10.3% in 2009 to 9.2% by the end of 2011 (compared to the regulatory minimum of 4% and to the threshold of 6% set up for this exercise). The aggregate results depend partly on the continued reliance on government support for currently 38 institutions in the exercise.
The aggregate Tier 1 ratio incorporates approximately 197bn € of government capital support provided until 1 July 2010, which represents 1.2 percentage point of the aggregate Tier 1 ratio. As a result of the adverse scenario after a sovereign shock, 7 banks would see their Tier 1 capital ratios fall below 6%.
The threshold of 6% is used as a benchmark solely for the purpose of this stress test exercise. This threshold should by no means be interpreted as a regulatory minimum. All banks that are supervised in the EU need to have at least a regulatory minimum of 4% Tier 1 capital.
view Summary of the 91 bank-by-bank results, by country
view Q&A
Source: CEBS
ECB hails results of EU bank stress tests
July 23, 2010--The European Central Bank on Friday hailed the results of European Union stress tests on major commercial banks, saying the findings confirmed banks could survive severe shocks.
The ECB "welcomes the publication of the results" of tests on 91 banks, which "confirms the resilience of EU and euro area banking systems to major economic and financial shocks," a statement said.
Only seven banks, five in Spain and one each in Germany and Greece, failed the exam.
The London-based Committee of European Banking Supervisors (CEBS) released the results of tests conducted in close cooperation with national supervisory authorities and the ECB to reassure investors that European banks stood on firm financial footing.
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Source: EUbusiness
Analysts talk of bank 'whitewash' but see no 'skeletons'
July 23, 2010-- Banking regulators published "stress tests" on 91 European banks accounting for 65 percent of EU banking on Friday, finding that seven failed and must raise extra capital to survive a new crisis.
A crucial question for the financial sector is the rigour, and therefore credibility, of the way the crash criteria were set for the banks. Here are some comments from financial analysts.
VTB Capital economist Neil MacKinnon:
"In the end, the stress tests do not seem that stressful.
"It looks like a whitewash and the initial reaction is one of scepticism on the part of the markets."
Mark O'Sullivan, director of dealing at foreign exchange firm Currencies Direct:
"What seems to have occurred is a compromise amongst European banking regulators, with many questioning if the bar had been set way too low in testing the European banking sector.
"It seems the tests may have raised more questions than they have answered and in the coming weeks it will be the interbank lending markets that will have the real answer as to whether real confidence has returned to the European banks."
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Source: EUbusiness
Ireland showing best funds growth
July 22, 2010--IRELAND IS the fastest-growing of the major European fund centres, and is now attracting hedge funds away from traditional offshore locations, according to the inaugural Ireland Funds Report.
Ireland’s fund industry has fully recovered from declines suffered during the credit crunch, it says. The report, which is published by Finance Dublin, notes that the total assets of Irish-domiciled funds stood at €856 billion by the end of May, after dipping to €647 billion in 2008.
This recovery can be partly attributed to global growth trends. In the first quarter of the year, all major fund centres in Europe experienced asset growth, except for Italy and Spain.
Istanbul Stock Exchange hits all-time record exceeding 60,000 read more Spain sets up repository for OTC derivatives The first phase will focus on interest rate derivatives, before broadening later this year to include underlying assets such as equities, currencies, commodities and debt. read more European banks on edge over stress test exam
But they have also made clear that any banks failing the tests will be ring-fenced with official support.
Credit rating agency Fitch said it thought that "capital will be made available by governments where the stress tests ... indicate shortfalls and banks are unable to raise capital in the public markets."
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Source: Irish Times.com
July 22, 2010--The ?stanbul Stock Exchange (?MKB) broke new records over the past two days, exceeding 60,000 for the first time in its history in the first session of trading yesterday.
The ?MKB-100 benchmark index on Wednesday registered a closing record of 59,494 points, a 2.18 percent gain over the previous day. The highest closing value the index had ever reached before Wednesday was 59,330, on April 12. The index started off the day yesterday with a drop of 191 points, or 0.32 percent, to 59,303 but quickly started to rise again.
Source: ?stanbul Stock Exchange (?MKB)
July 22, 2010--Spain on Thursday launched a trade repository for over-the-counter derivatives in the first step of a pan-European project to create a reporting system for financial products currently traded off-market.
Bolsas y Mercados Españoles (BME), the Spanish stock market operator, said the repository – called REGIS-TR – had begun a pilot phase after internal testing. BBVA and Banco Sabadell, the Spanish lenders, had signed up to the initial trial period, it said, and other European institutions were expected to join the test “in the near future”.
Source: FT.com
July 22, 2010-- Powerbrokers in European finance expect a few black marks when results of tests on the capacity of European banks to survive new shocks are released on Friday but also count on governments to help the weaklings.
Ministers and top eurozone officials have insisted that overall, the European banking system will pass these critical "stress tests."
Source: EUbusiness
