CEE urges EU to seize on Macron victory to kickstart reforms

The CEE greeted the defeat of Marine Le Pen by Emmanuel Macron with relief and as an opportunity for policymakers to seize the opportunity to resolve the structural economic problems that have bedevilled both Old and New Europe

  • By Elliot Wilson, Lucy Fitzgeorge-Parker, Phil Thornton
  • 09 May 2017
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Emmanuel Macron’s victory in the French presidential race has given Europe’s political leaders a final opportunity to deliver long overdue reforms to economic and political failures that had dragged down economic growth across the continent, CEE bankers and economists told GlobalMarkets at the EBRD annual meetings in Nicosia.


In interviews with GM on Tuesday, many warned the victory of the strongly pro-EU candidate had only bought European Union and CEE leaders more time to help reverse meagre economic growth that had fuelled the rise of nationalism across Europe that had almost propelled Front National leader Marine Le Pen into the Elysée Palace.

Chawki Karam, assistant manager, business development, at the National Bank of Egypt, summed up the mixed verdict, saying: “This is just the beginning, not the end, of a long journey of problems and obstacles. With the UK, Brexit is ahead of the game — European countries will see what the UK is about to go through, will see the UK as a trial. This isn’t over.”

The CEO of a leading Armenian bank said European politicians needed to “prove their wisdom” and solve problems that until now, no one could solve. “Europe’s problems are still just starting, and to pretend [otherwise] would be [stupid].”

One head of a European bank who declined to be named, said: “It postpones the inevitable by several years. Europe is an abomination of bureaucracy dominated by Europe. France is a sick second-string player. France is highly diseased.”

THE CLOCK IS TICKING

Mario Holzner, deputy director of the Austrian think tank WiiW, said following the surge in nationalism seen with Brexit, France and Germany had four years after the German elections in September to bring forward solutions to the continent’s economic and social problems. “This is a last chance to change policies with regards to the euro and taxation.”

He said the rise of the Front National and other right-wing parties across Europe had put in doubt the continued commitment of western European EU member states to free movement of labour and West-East fiscal transfers on the scale of the past decade. “This is very welcome. The main issue is that the existence of the EU is less endangered than before.”

Liam Carson, emerging European economist at Capital Economics, said fiscal transfers were “incredibly important”, and in 2015 had been worth 2%-4% of GDP for many CEE economies. “The election of Macron perhaps removes some of the risk hanging over fiscal transfers.”

ACCESSION ACCELERATION?

Macron’s victory may also accelerate the path for accession countries wishing to join the EU — although the former investment banker has not talked about the issue. Sergiu Cioclea, governor of the National Bank of Moldova, said a stronger EU project would be more appealing to neighbouring countries. “When there is doubt in the main capitals of Europe it distracts from the project and prevents the formulation of a unified neighbourhood policy. If Euroscepticism is rising in historical EU members, it’s always disadvantageous for potential new candidates.”

Regional financial markets gave a cautious welcome to the news with the Czech crown and the Polish zloty strengthening by 0.4% on Monday, with the crown hitting a four-week high and the zloty touching 20-month highs. Stock markets rose on Tuesday after falling on Monday.

“Macron will lead in the long term to more stable market conditions, investments will gain more and it will trigger more consumption,” said Sakir Somek, assistant general manager, international financial institutions, at Istanbul-based ABank.

Carson said Poland, Hungary and the Czech Republic would gain from their status as open economies. “The manufacturing sectors in particular are well integrated into the eurozone,” he told GlobalMarkets. “The election of Macron is good for free trade and I would say it is an encouraging development for the CEE as a whole.”

George Handjinicolaou, chairman of Piraeus Bank said under Macron, France could establish a more equal partnership with Germany, and rebuild a more harmonised and focused Europe. But he added: “It’s going to take time.”

However others said any rally was less a celebration of Macron’s victory and more relief Le Pen had not become the figurehead of the eurozone’s second largest economy.

“If Le Pen had won, Europe would have become broken,” Somek said. “For now, the European project as many before dreamed it — a harmonious project — is possible, one that brings together richer states with the CEE region [states]. For now.”

  • By Elliot Wilson, Lucy Fitzgeorge-Parker, Phil Thornton
  • 09 May 2017

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
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1 Citi 244,235.70 910 8.87%
2 JPMorgan 223,767.95 1021 8.13%
3 Bank of America Merrill Lynch 211,276.97 750 7.68%
4 Barclays 166,062.82 634 6.03%
5 Goldman Sachs 162,877.27 537 5.92%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
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1 HSBC 25,385.87 103 7.10%
2 Deutsche Bank 25,125.19 81 7.03%
3 Bank of America Merrill Lynch 22,023.57 59 6.16%
4 BNP Paribas 18,766.65 109 5.25%
5 Credit Agricole CIB 18,157.63 105 5.08%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
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1 JPMorgan 12,578.87 55 8.17%
2 Citi 11,338.07 71 7.36%
3 UBS 10,682.06 44 6.93%
4 Goldman Sachs 10,419.53 53 6.76%
5 Morgan Stanley 10,194.88 57 6.62%