Financial Regulatory Forum

FACTBOX-State of play on global bank levies pre-UK budget

June 21 (Reuters) – British Finance Minister George Osborne will unveil plans for an extra tax on banks to pay for bailouts on Tuesday as part of a budget expected to be the most austere in 30 years.

He has said the tax will be introduced regardless of whether other countries follow suit. The following is the state of play of plans elsewhere in the world to shield taxpayers from having to shore up banks again.

If Britain adopted a tax similar to the one touted in the United States, it would raise 3.5 billion to 5 billion pounds ($5.19 billion to $7.42 billion), analysts have estimated.

GROUP OF 20

The International Monetary Fund will present its final report on a possible bank tax to G20 leaders in Toronto this week but the group’s finance ministers agreed earlier this month not to pursue a uniform bank levy due to opposition from Canada, Brazil and Japan.

Instead, the G20 — whose members also include the United States, France, Germany and Britain — will agree the principle that banks should pay for their own bailouts in future, leaving the method up to each country.

PREVIEW-Reuters Summit-Banks face pressure to get dull

By Kevin Drawbaugh

WASHINGTON, April 25 (Reuters) – If the U.S. Congress approves financial regulation reform — and that looks likely to happen soon — banking stands to become a duller business.

On the “out” list will be unrestrained trading desks spitting out exotic debt instruments. On the “in” list will be the banker trying to find a solid 30-year fixed-rate mortgage for borrowers with good income.
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HIGHLIGHTS – UK’s Brown on ruling Labour Party manifesto

BIRMINGHAM, England, April 12 (Reuters) – Britain’s ruling Labour Party published its policy programme on Monday for the May 6 general election.

Following are some of the main points made by Prime Minister Gordon Brown and finance minister Alistair Darling in response to reporters’ questions about the manifesto:

* PRIME MINISTER BROWN

SELLING STAKES IN PART-NATIONALISED BANKS

“We will gradually move these companies back into the private sector.

“Every single penny that has gone into the banks will be returned to the people of this country.”

FACTBOX – How does the EU plan to shake up financial services?

BRUSSELS, April 7 (Reuters) – The European Union (EU) is embarking on an overhaul of financial services that politicians hope will send bankers back to their roots of no-frills lending to households and business.

Michel Barnier is the EU commissioner in charge of the shake up on regulations ranging from curbs on banker pay to a clampdown on speculators betting on government debt.

Here is a guide to the overhaul:

* One of Barnier’s priorities is writing a rule book for trading derivatives, a financial instrument whose value is linked to an asset such as a government bond or currency.

SCENARIOS – G20 efforts to agree on a bank levy

By Huw Jones

LONDON, March 31 (Reuters) – France backed Germany’s plans for a bank levy on Wednesday to boost momentum for a global deal among the G20 group of leading countries later this year.

But national differences are emerging over details and some countries oppose the principle of a levy or tax.

NEXT STOP WASHINGTON

The IMF was asked last November to put forward proposals for making banks contribute towards bailouts and will present its recommendations to G20 finance ministers in Washington on April 24-25

BREAKINGVIEWS – UK bank tax could raise up to 3.6 billion sterling a year

– The authors are Reuters Breakingviews columnists. The opinions expressed are their own –

By George Hay and Hugo Dixon

LONDON, March 24 (Reuters Breakingviews) – A UK bank tax of the sort being advocated by both main political parties could raise up to 3.6 billion pounds a year. The exact sum would depend on which parts of the balance sheet are taxed. But one thing is clear: as a proportion of earnings, RBS and Lloyds would be harder hit than Barclays, HSBC and Standard Chartered.

The most basic way of levying the tax would be to follow what President Barack Obama has proposed for the United States. He wants to levy a 0.15 percent annual charge on a bank’s total assets — minus its deposits and Tier 1 capital. Applying that to the five big UK banks would raise 3.6 billion pounds annually, according to Reuters Breakingviews analysis.

EU parliament backs creation of bank crisis fund

By John O’Donnell

STRASBOURG, France, Feb 9 (Reuters) – The European Parliament is set to back a proposal that would force banks to pay into an emergency fund designed to help cope with future financial crises, a document seen by Reuters shows.

Earlier this year, Sweden’s finance minister called on European counterparts to follow U.S. President Barack Obama’s lead with a bank tax to recoup the cost of propping up the industry — an idea that Germany is now considering.

The European Parliament, a powerful institution that will write any new bank tax into EU law, is set to give the idea a thumbs up, according to senior members of the assembly.

G7 wants banks to pay for rescue

G7 on Ice

G7 on Ice

By Louise Egan and Gernot Heller

IQALUIT, Canada, Feb 6 (Reuters) – The idea of a global tax on banks to recapture bailout costs gained ground over the weekend, boosted by the Obama administration’s latest proposals, but there was no agreement on a specific design.

Finance ministers and central bankers from the Group of Seven rich nations called on Saturday for closer study of a UK proposal for a bank levy to cover the cost of the bailouts of 2008 and 2009 that ran to hundreds of billions of dollars.

The ministers, meeting in a remote town in Canada’s Far North, said any tax that result must be internationally coordinated and avoid choking off world economic recovery. Further details are unlikely to emerge for weeks.

BREAKINGVIEWS-Obama reforms could undermine global bank rules

G20/ By Peter Thal Larsen and Hugo Dixon

LONDON, Jan 25 (Reuters Breakingviews) – The overhaul of the global financial system has entered a new, more complicated phase. For two years, a fragile multilateralism has prevailed as the world’s largest economies agreed that changes should be designed and adopted on a global basis. The task of redesigning financial regulation was largely delegated to central bankers, regulators and other technocrats.

That consensus is creaking following President Barack Obama’s double-barrelled attack on Wall Street investment banks. The new tax on banks’ wholesale liabilities and the planned prohibition of proprietary trading by deposit-taking institutions both complicate the aim of getting a new effective global regime for regulating the industry — but in different ways.

Look first at the new tax. In principle, it is sensible to charge large financial institutions for the implicit guarantee they receive from taxpayers when they rely on hot short-term money to fund themselves. But there is already a global push, under the aegis of the G20, to boost the size of banks’ capital and liquidity cushions. This exercise, being masterminded by the Basel Committee, has now entered the “calibration” phase — where the precise numbers are being modelled.

UK’s Brown sees growing support for bank levy

By Keith Weir

LONDON, Jan 25 (Reuters) – British Prime Minister Gordon Brown said on Monday he saw growing support for some form of international levy on banks to fund support for the industry.

A global transactions tax, floated by Brown at a meeting of the Group of 20 nations in Scotland in November, was on the agenda when Treasury Minister Paul Myners hosted officials from G7 finance ministries, the IMF, World Bank and the Financial Stability Board in London on Monday.

“As a result of the advancement by U.S. President (Barack) Obama and the financial secretary Tim Geithner about their levy on wholesale lending, I think the proposals that I made at St Andrews for an international levy … are now gaining currency around the world,” Brown told a news conference.

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