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Push comes to shove in EU-Dutch bank spat

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EU-INTEL/Push is coming to shove in a stand-off between the European Commission and the Dutch government over the future of state-rescued banks. The outcome has implications for the whole of Europe.

Markets should watch Brussels’ actions on ING, ABN AMRO and Fortis Bank Nederland carefully because they will set a precedent for forthcoming decisions about British, German or Irish banks that could reshape the European banking landscape. They may also determine whether, and when, taxpayers can expect to recover their investments in the banking sector.

EU competition czar Neelie Kroes this week withheld approval of a government guarantee for the bulk of a 28 billion euro portfolio of ING bad loans. The European regulator, whose job is to ensure state aid does not distort competition, said the guarantee required further investigation because the Dutch
government may have illegally subsidised the bank by overvaluing the assets.

Compounding the Dutch problems, Deutsche Bank has pulled out of a deal to buy some of the operations of ABN AMRO, the Dutch lender. Brussels had originally ordered the sale when it allowed Fortis to buy ABN AMRO’s Dutch retail banking operations in 2007. Though Fortis has since been broken up, the Dutch government still wants to merge the two retail banks, both of which are now under state control.

Re-elected Barroso faces market challenge

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bozoJose Manuel Barroso promised the European Parliament that as re-elected president of the European Commission he will have more authority to fight for Europe and defend its single market against economic nationalism.

But after five years of toadying to the big member states, he will need to show more spine to enforce state aid and competition rules on Germany, Britain and France in the teeth of strong national financial or commercial interests.

Give your favourite UK NED the nod

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FILM-OSCARS/Non-executive directors — particularly at certain British banks — are not exactly flavour of the month.

There has been widespread questioning of what precisely it is many non-execs actually do, other than take home a sometimes handsome reward for attending a scattering of board meetings.

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