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Response to the EU’s proposal for changed capital adequacy rules
April 26, 2010--The recent financial crisis has revealed a number of weaknesses in the existing capital adequacy rules. It is therefore important to impose stricter capital adequacy requirements for the banks, stress FI, the Swedish Ministry of Finance and the Riksbank (Sweden’s central bank) in a joint response to the EU Commission's Capital Requirements Directive, CRD.
The Swedish authorities would also like the new capital adequacy rules within the EU to be secured in harmony with the framework agreed upon by the Basel Committee on Banking Supervision.
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Source: Finansinspektionen
Bank of Ireland seeks to raise €3.4bn
April 26, 2010--Bank of Ireland is to raise up to €3.4bn to meet new regulatory standards and restore capital buffers that have been hurt by property loan losses in the wake of the housing crash.
The bank will raise the funds by a combination of a placing, a rights issue and a debt-for-equity exchange.
The move is part of an industry wide recapitalisation in line with stricter capital adequacy requirements set by regulator Matthew Elderfield last month.
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Source: FT.com
Gross domestic product-preliminary estimate-1st Quarter 2010
April 23, 2010--The chained volume measure of gross domestic product
(GDP) increased 0.2 per cent in the first quarter of 2010.
The increase in output was due mainly to increases in business services and finance and manufacturing.
Output of the service industries increased 0.2 per cent.
Output in the production industries increased 0.7 per cent.
GDP decreased 0.3 per cent in 2010 Q1 compared with 2009 Q1.
Contributions to Growth
Business services and finance was the largest
contributor to the positive growth this quarter. Total
production, transport, storage and communication and
government and other services also contributed to the
increase. This was partially offset by a decrease from
distribution, hotels and restaurants and construction.
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Source: Office for National Statistics
Greece crisis takes toll on euro
April 23, 2010--The euro tumbled to a one-year low against the dollar and a three-month trough against the pound this week as concerns over Greece’s finances intensified.
Those fears were ignited on Thursday after the European Commission revised Greece’s budget deficit higher to 13.6 per cent of gross domestic product. This was almost a full percentage point higher than the Greek government’s projection of 12.7 per cent.
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Source: FT.com
ECB moves to restore confidence in securitisation
April 23, 2010--Managers of asset-backed securities held by the European Central Bank will have to provide far more data on the loans backing the bonds under a new system designed to restore confidence in the market.
Investor appetite for ABS withered during the financial crisis when fears that all mortgage-backed bonds might be infected by poor-performing US subprime loans paralysed the market, sending prices plunging. As a result of its collateral-backed loans to banks during the crisis, the ECB is now by far the single biggest holder of European ABS.
Securitisation, which essentially frees up lenders’ balance sheets for new loans by repackaging existing consumer loans from mortgages to credit card debt into new bonds, is considered crucial to economic recovery by boosting the supply of credit to the real economy.
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Source: FT.com
IMF aid for Greece a eurozone first
April 23, 2010--The International Monetary Fund prepared Friday to aid a eurozone member for the first time since the 16-nation bloc was formed more than a decade ago, after Greece formally asked for an IMF loan.
The Fund began its preparations several months ago as officials in Athens found themselves mired deeper in a budget crisis that has threatened to spread to other eurozone members.
IMF head Dominique Strauss-Kahn said in a statement that the Fund would "move expeditiously" in response to the Greek request.
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Source: EUbusiness
Report on the lessons learned from the financial crisis with regard to the functioning of European financial market infrastructures
April 23, 2010--On April 19, 2010 the ECB released the Report on the lessons learned from the financial crisis with regard to the functioning of European financial market infrastructures
EXECUTIVE SUMMARY
This report considers issues relating to the impact of the financial crisis on the functioning of European fi nancial market infrastructures (FMIs), including systemically important
payment systems, central counterparties, and
securities settlement systems. It reflects the outcome of bilateral interviews conducted by the Eurosystem 1 central banks, the Bank of England
and Sveriges Riksbank with a representative
sample of FMIs and financial institutions
participating in these FMIs.
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Source: ECB
Eurosystem launches preparatory work on the establishment of loan-level information requirements for ABSs in its collateral framework
April 23, 2010--The Governing Council of the European Central Bank (ECB) has decided that work should begin on the establishment of loan-by-loan information requirements for asset-backed securities (ABSs) in the Eurosystem collateral framework. Having analysed the positive feedback received in the public consultation on the matter, the Governing Council decided that the ECB and the 16 national central banks of the euro area would proceed with the preparatory work for the establishment of loan-level information requirements.
On 23 December 2009 the ECB launched a public consultation on the establishment of loan-by-loan information requirements for ABSs. The consultation ended on 26 February 2010 and over 50 responses were received from a broad range of market participants. The vast majority of respondents support the initiative, as it would increase transparency, contribute to more informed risk assessments and help to restore confidence in ABS markets.
The preparatory work will begin immediately and should be completed by September 2010. It will address further the loan-level information requirements, as well as the technical implementation aspects covered by the public consultation. Subject to the approval of the Governing Council, market participants would have 12 months before the obligation to submit loan-level ABS information comes into force.
State Street to provide investment services for Marshall Wace ETF
April 23, 2010--State Street Corporation (NYSE: STT), one of the world’s leading providers of financial services to institutional investors, announced today that it has been appointed to provide investment services to hedge fund group Marshall Wace for its new equity-neutral exchange traded fund (ETF)– MW TOPS Global Alpha. According to Marshall Wace, it is the first ETF targeting an absolute return from a single investment strategy and the first ETF in Europe to be run by a dedicated alternative asset manager.
The innovative fund, listed on the London and Frankfurt stock exchanges, provides exposure to a range of investment strategies, comprising mainly large-cap equities and equity-related securities. State Street’s operations in Ireland will provide a comprehensive range of custody and fund administration services to the new fund.
Marshall Wace’s decision was guided by State Street’s experience in the ETF servicing marketplace, its global presence and local leadership in investment servicing, and its demonstrable expertise in supporting a complex, high volume, UCITS compliant, daily valuing fund.
“We are delighted to have been selected by Marshall Wace to provide investment services for this innovative new product,” said Gavin Nangle, vice president and Head of Business Development for State Street in Ireland. “Marshall Wace is one of the leading forces in the alternatives segment of the market and we look forward to building a meaningful and long-term partnership with them.”
Since its entry into the Irish market in 1996, State Street has grown to be one of the country’s largest fund administrators and custodians.
State Street has approximately 2,000 employees in Ireland and has offices in Dublin, Drogheda, Kilkenny and Naas.
Source: State Street
ETF Landscape: European STOXX 600 Sector ETF Net Flows, week ending 16-Apr-10
April 21, 2010--Highlights
Last week saw US$35.1 Mn net inflows to STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Industrial Goods & Services with US$26.6 Mn and Retail with US$20.0 Mn while Basic Resources experienced net outflows of US$41.2 Mn.
Year-to-date, Media has had the largest net inflows with US$339.9 Mn net new assets, followed by Utilities with US$76.6 Mn YTD.
Telecommunications sector ETFs have had the largest net outflows with US$256.5 Mn YTD. In total, STOXX 600 sector ETFs have seen US$39.1 Mn net inflows YTD.
The assets invested in the ETFs are greater than the open interest in the corresponding futures contract in 18 out of 19 sectors. The data required to produce the flow analysis is available by Tuesday evening which means the earliest this publication can be distributed is on Wednesdays.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
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