Financial Regulatory Forum

Global financial regulation overhaul seen in 2010

By Kevin Drawbaugh and Huw Jones

WASHINGTON/LONDON, Jan 6 (Reuters) – Global financial regulation has changed little since the 2008 banking crisis, but that won’t be the case much longer.

U.S. and EU authorities are expected to hammer out the definite shape of a new regulatory order in 2010 that will fundamentally change how world banks and markets operate.

Stricter limits on leverage and capital will emerge, leading eventually to slimmer profits for banks, policy analysts said. Formerly unregulated off-exchange derivatives markets will have to conform to new procedures.

Lenders’ power to package and securitize mortgages and other forms of debt will face new limits, while hedge funds — once the darlings of high finance — will face new scrutiny.

Procedural hurdles remain to be crossed by reform advocates. In the United States, the Senate has not yet approved a reform bill, but the House of Representatives has.

EU Commission throws WestLB aid, bad bank into doubt

BRUSSELS, Dec 22 (Reuters) – The European Commission said it doubts that WestLB’s plans to set up Germany’s first “bad bank” complies with EU rules on state aid, granting only temporary clearance for the rescue plan.

“I am surprised about the level of the additional aid required and will make sure that the new aid is fully compatible with EU state aid rules,” Competition Commissioner Neelie Kroes said in a statement on Tuesday.

The Commission said it doubted the measures taken by the German government to rescue the stricken lender were compatible with state aid rules for impaired asset relief.

ANALYSIS-Inefficient systems keep European brokers behind the price curve

By Jane Baird

LONDON, Dec 18 (Reuters) – Europe’s fragmenting stock markets could cost investors profits unless brokers smarten up systems that currently fail to find the best price in 15-20 percent of trades.

Brokers use so-called smart order routing (SOR) to compare prices across the myriad platforms for a client’s order, chop the order into pieces and dribble them into trading venues to have the least possible impact on price.

Systems in Europe are often inefficient and are struggling to keep up with the pace at which markets are changing.

EU approves Lloyds restructuring plan

A pedestrian passes the head office of the Lloyds Banking Group in central London August 5, 2009.   REUTERS/Stefan Wermuth (BRITAIN BUSINESS) BRUSSELS, Nov 18 (Reuters) – Plans by British lender Lloyds Banking Group Plc to sell parts of its operations in return for billions of pounds in state aid were approved by European Union competition authorities on Wednesday.

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EU to extend Ireland deficit cut deadline to 2014

DUBLIN, Nov 10 (Reuters) – The European Union is set to give Ireland a one-year extension until 2014 to reduce its budget deficit to the EU’s 3 percent of gross domestic product limit, Irish media and a governing party official said on Tuesday.

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UK expects “satisfactory” deal on new EU watchdogs

A video grab image shows Britain's City minister Paul Myners speaking at a Treasury Committee in London March 17, 2009.      By Huw Jones
LONDON, Nov 4 (Reuters) – Britain said on Wednesday it expects a satisfactory deal on setting up new European Union watchdogs for banks even though a key decision by the bloc’s finance ministers is less than a month away.

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EU “cookie-cutter” bank overhaul policy under fire

European Commissioner in charge of Competition Neelie Kroes delivers a speech at a conference on State Aid Private Enforcement in Brussels October 19, 2009. REUTERS/Sebastien Pirlet    By Edward Taylor and Kirstin Ridley
FRANKFURT/LONDON, Nov 3 (Reuters) – Neelie Kroes’s campaign to shrink banks and launch vast asset sales has angered bankers, who accuse the firebrand European competition commissioner of kicking the industry when it’s down.Investment bankers close to some of the bailed-out lenders blame Kroes for undermining attempts to rebuild the once-lucrative industry by forcing massive, near-simultaneous asset sales, while banning acquisitions.

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Britain’s top retail banks set for shake-up

  LONDON, Nov 3 (Reuters) – Britain is set to announce on Tuesday a long-awaited deal with its bailed-out banks, including a record rights issue for Lloyds Banking Group and hefty disposals for Royal Bank of Scotland to appease the EU competition regulator and boost competition.

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Royal Bank of Scotland likely to sell insurance arm, other assets-source

A customer uses a Royal Bank of Scotland (RBS) cash machine in Edinburgh, Scotland August 7, 2009.  REUTERS/David Moir    (BRITAIN BUSINESS BANKING)  LONDON, Oct 30 (Reuters) – Royal Bank of Scotland, which is majority owned by the British government, is likely to sell its insurance units and other assets including branches and some investment banking operations, a British government source told Reuters on Friday.

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Ireland sees EU support for “bad bank” valuation

A pedestrian passes a branch of Allied Irish Bank in London August 14, 2009. (File Photo) REUTERS/Luke MacGregor   (BRITAIN BUSINESS)   DUBLIN, Oct 30 (Reuters) – The Irish government said the European Commission supports the valuation of its 54 billion euro “bad bank” plan, as it moved a step closer to becoming law, boosting shares in the main Irish banks.

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