Breakingviews

Guest view: Euro zone needs workable banking union

By Guest Contributor
January 12, 2016

The 19 member states have so far failed to put in place a full regime of bank oversight, argues former Citi exec William Rhodes. As U.S. and euro zone interest rate policies diverge, this is a big risk. To complete banking union, agreement on proper deposit insurance is a must.

New Greek opposition leader may cause instability

By Hugo Dixon
January 11, 2016

The election of Mitsotakis, a liberal reformer, as leader of the centre-right New Democracy party means PM Tsipras now faces a credible opponent. While this is in Greece’s long-term interests, it raises the risk of short-term clashes between Athens and its euro zone creditors.

Dixon: EU enters brave new world of bank bail-ins

By Hugo Dixon
January 4, 2016

Europe has wasted too much taxpayers’ money rescuing failing lenders. So it is right to try to get investors to help foot the bill in future. But the tough new regime carries political risks which could make the rumpus caused by recent bail-ins in Italy and Portugal look minor.

Banks’ low UK tax bill hands ammo to EU exit camp

December 23, 2015

Seven big investment banks paid just $31 mln of UK corporation tax on profit of $5.3 bln in 2014, Reuters has found. Historic losses reduced the bills, and taxes paid by employees remain chunky. But the revelations will help those agitating for Britain to quit the European Union.

Dixon: EU could fall apart without flexibility

By Hugo Dixon
December 21, 2015

Brussels’ knee-jerk reaction to crises is to ask for more power. Its latest series of problems has fuelled right-wing populism, which feeds off the idea that the EU already has too much influence. Unless the bloc adopts more decentralised solutions, it could unravel.

Euro banks’ post-Fed good cheer looks short-lived

December 17, 2015

European bank shares are up after the U.S. rate rise, aided by hints that future increases will be gradual. But EU rates won’t follow anytime soon, and $9.8 trln of non-U.S. dollar credit could get harder to service. Nor is the pace of future Fed hikes set in stone.

Mario Draghi is central banking’s tragic hero

December 3, 2015

Despite new easing measures, the ECB chief’s fight to revive inflation looks doomed. Forces beyond his control, such as oil prices, are too strong. Markets are moving against him. Draghi is admirably determined, but will probably be remembered for trying rather than succeeding.

Bank rule zealots will be forced to back down

December 2, 2015

Basel-based standard setters are finalising capital adequacy reforms that banks call “Basel IV”. But they clash with European policymakers’ growth plans and their Anglo-Saxon counterparts’ push for regulatory easing. The Bank of England’s newfound leniency will embolden others.

ECB has bright idea for targeted bank-bashing

November 26, 2015

Imposing a staggered penalty on banks that hoard cash is one of many ways to ease policy being discussed by the European Central Bank. Such levies have drawbacks. But at least a split-level charge would encourage the biggest hoarders to boost cross-border lending.

German open-door isolationism is unsustainable

November 26, 2015

Angela Merkel has ignored domestic calls to shut out refugees. But she will find it harder to brush off French calls for the same. Alienating a key ally would undermine the union Merkel wants to save, and threaten economic integration.