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HSBC is the ultimate test for the international rules on total loss-absorbing capacity (TLAC). If they don’t work for that shop, then how can anyone be certain they will work elsewhere? That’s why it is worrying that the bank has had to compromise its TLAC plan.
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The chair of the supervisory board of the European Central Bank, Danièle Nouy, is absolutely correct in regretting that so much European financial regulation has been done in the form of directives. -
The UK has some of the world’s best regulators, but has ended up with some of the most poorly designed regulation. John Vickers’ criticism of the Bank of England shows why politicised regulation can be a problem.
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The best lack all conviction, while the worst are full of passionate intensity.
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The sell-off in European banks is terrifying and baffling, all at the same time. GlobalCapital would be first to admit there are still issues — poor growth, weak balance sheets, non-performing loans, defered tax assets, complex forms of untested capital cooked up in regulatory labs – but the continent’s biggest banks aren’t going anywhere. For one thing, they are still too big to fail.
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Europe’s banks, with a few notable exceptions, have yet to be hit hard with claims of unethical dealing. But that is likely to change. Thanks to a quirk of the European regulatory system, supervisors need to find some misselling before it is too late.
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BNP Paribas has impressive targets for cutting costs and increasing capital, after outshining some of its major competitors by posting a full year profit. But it needs to tell a compelling story about how it plans to hit them.
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It is no coincidence that Tuesday’s €1bn covered bond from BPCE attracted more investors for a French seven year deal than at any time in the last year. The European Central Bank has started to scale back its purchases.
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Capital market participants tend to keep their heads below the political parapet. Brexit is one issue they must not ignore. It would sabotage the City’s leadership in financial services and be an assault on the fabric of global governance.
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The European Commission's group of ‘experts’ are making welcome steps towards unraveling the complexities of bank capital. But the multiplicity of loss-absorbing instruments exists for a reason — not everything can become tier two capital.
