Follow Us

Follow us on Twitter  Follow us on LinkedIn
Free Tweetmail

Contact Details:

To request more information please call +44(0)1424 777123
or email us at:
enquiries@grahambishop.com

 

Print Page




 

Welcome to Graham's Public Blogs

These  quick commentaries are written by Graham on events and developments in European politics, finance, economics and budgets. They are part of his pro bono work.  Click through to see how you can support this work.

Continuing Profesional Development Many finance professionals will find that society requires you to be Knowledgeable and Competent when MiFD II came into force in January 2018. We have launched our CPD Weekly "10 Minute Read 'n Verify" to give 7.5 hours of structured CPD annually. Full Details

(Graham has "his cake and eats it" at the 100th Brussels for Breakfast)

Any comments on my blogs? Contact me: Email / Tel: 0044 1424 777123 / Mob: 0044 7785 323483

Want to be notified about new blogs? Follow me on twitter: @GrahamBishopcom


3 July 2019

153rd Brussels for Breakfast – CPD Notes

Highlights from the “Brussels for Breakfast” meeting

The extraordinary turns of events at the European Council’s `jobs summit” took up most of the discussion – but there were also a number of key items for EU finance.

  • Attention focussed on the Council’s decision to appoint German Defence Minister von der Leyen as Commission President. She was not the EPP’s nominated Spitzenkandidat and her record at the Defence Ministry is widely criticised. So it is not yet certain that she will be able to gain the support of an absolute majority of Parliament.
  • The appointment of Christine Lagarde to the ECB Presidency also came as a surprise – especially as both the President and Vice President would not have long experience in central banking. Does that matter in such a highly politicised role?
  • Charles Michel as Council President is the second Belgian to hold the post… but perhaps multi-lingual, multi-party coalitions are a good training ground for consensus-building.
  • As the meeting ended, S&D Sassoli from Italy was elected President of the Parliament – giving the Socialists one “job”. The mandatory timing of this election actually forced the hand of the European Council if they were to avoid the Parliament unilaterally making an appointment that would reduce their room for manoeuvre. [...]

Full article available for Friends

Full article available for consultancy clients


14 May 2019

151th Brussels for Breakfast – CPD Notes

Highlights from the “Brussels for Breakfast” meeting

Brexit fatigue may have set in, but the flow does not stop – as evidenced by FCA chief Andrew Bailey giving speeches. What should be the City’s relationship with the EU after Brexit (assuming it happens)? First, any customs union will not help banks, so we fall back on the much-discussed questions of mutual recognition and/or equivalence. Bailey highlighted the strong need to come to a common agreement on the rules of the game – and the European Shadow Financial Regulatory Committee was in strong agreement. But the question is what rules? Bailey seemed to be advocating a more principle-based system with the outcome used as the test of equivalence. But he went on to say that British regulation unfettered by the EU would probably differ from the current system.

However, participants pointed to the UK habit of gold-plating more liberal EU directives. The financial conduct regulators might be able to agree but the prudential regulators may take a very different of inadequately capitalised branches on their territory. The debate has a long way to run! [...]

Full article available for Friends

Full article available for consultancy clients


30 April 2019

Announcement

Graham Bishop is honoured that the European Commission has recently awarded him a contract to study "Factors driving investor demand for European sovereign bonds.

 


29 April 2019

Thoughts for a third EU Referendum: Revoke Article 50 OR Leave with “a” deal

The Government has held a re-negotiation of our relationship with the EU that promises - at least in the short run – to make everyone worse off, less secure, and diminished in the eyes of the world. Emotionally, we have already `left’ the EU, so the pro-Europe campaign must set out a positive case to answer the question of why we want to `join’ Europe.

  • Analysing public opinion on matters of concern: the broad conclusion is that UK and EU27 citizens currently share the same concerns about policy set at the Union level (other than Brexit). Can Europe help fulfil our aspirations in policy areas where it has a say? (NB: Education, housing, roads, railways etc. are nothing to do with Europe. Leaving Europe cannot solve these problems.) The EU is evolving rapidly to tackle these concerns. We should remain a full member if sharing the EU’s policies in the near future make it more likely that Britain can deliver its own commitments to its own people.
  • Understanding the detailed implications of a future relationship:Once Parliament is finally persuaded to vote for “a” deal, it must be carefully checked to see if it might be accepted by the EU27. Its peoples also have a “will” and the evidence is that they will not tolerate any unwinding of the single market that would give the UK frictionless trading access to their market.
  • Parliament as a whole should provide electors with a detailed, comparative report on the deal.Each elector would be sent an easy-read summary of a major Parliamentary report comparing and contrasting the assessment of the future relationship versus staying as we are. No-one could then say they were not informed about the actual choices.
  • Recognition of an “unfavourable” deal: In the first, 1975 referendum, the negotiation of a “favourable” deal produced a rapid, decisive swing in the opinion polls toward staying in. The final result was a 66:33 vote to stay.  What will an increasingly obvious demonstration of the proposed current “unfavourable deal” do?What will be the impact on public opinion if the economic data in the months before a People’s Vote suggest that “the experts” are indeed turning out to be right? The Parliamentary Report (above) is likely to expose the bland statements by the Leavers in 2016 and amplify the detail of the likely damage shown by the Government’s existing analysis.
  • National healing:There must be a crash programme to alleviate the problems explicitly identified with localised migration problems. The finance would come from a temporary `solidarity’ tax surcharge until the next General Election in 2022. (Note: 1p on income tax would raise about £20 billion in this period). We need to identify how other EU states deal with the problems such as benefit tourism under the existing Treaties and implement corresponding policies in the UK.

Whatever the result of the Third Referendum, a formal decision would then be made by Parliament within a few days to Leave OR, to revoke the Article 50 notice of intention to leave. That would end the damaging uncertainty immediately. 

 

Open article

Full article available for Friends

Full article available for consultancy clients


10 April 2019

Reuters: Settling bills? Pooled eurozone debt could be trialed in quick bites

Graham Bishop was quoted on a Reuters piece in which he explained his proposal for a Temporary Eurobill Fund.

[...]A proposal for short-dated euro Treasury bills was first aired in 2011 by Graham Bishop, a consultant on European Union (EU) financial regulation who had been appointed in 2013 by then Commission President Jose Manuel Barroso to an expert group advising on possible joint issuance of debt. The group was dissolved in 2014.

Bishop said the short-term nature of his proposal, which involves setting up a new body, dubbed the Temporary Eurobill Fund, made it an ideal testing vehicle. Under his proposal, a common bill with a maturity of two years would be issued. He is working on another version with a maturity of six months.

“Simply, governments have to commit their short term funding under two years via the fund – perhaps by treaty commitment,” said Bishop, vice chair of the European Movement in Britain, a group which campaigns for greater European integration and for reform of the EU.

“The bill is made up from a pool of bills from the euro area and then reissued.”

Under Bishop’s proposal, member states which break EU fiscal rules would be excluded from the Fund and member states would not be liable for the debt obligations of others.

Analysts said euro Treasury bills made sense, particularly for banks, which need high grade sovereign debt to fund their operations and are concerned about a dwindling supply as Germany and the Netherlands, both triple A rated sovereigns, issue less.

“Given the political opposition to a euro bond, a safe euro zone bill full stop would be seen as a good step in the right direction,” said David Owen, chief European economist at Jefferies in London. [...]

Bishop said the idea of a euro bill would be easier to sell to skeptical states now than it was 10 years ago because the yields of short-dated bills have converged, so the cost of participating for the likes of Germany, whose Bunds are considered the safest European assets of all, would be low.  [...]

Full article on Reuters


12 March 2019

149th Brussels for Breakfast – CPD Notes

History is probably being made today as there is not much road left for the Prime Minister to kick the can down. So debate turned to the scope for delaying Brexit – assuming the other 27 all agree and President Macron (amongst others) has suggested there needs to be a good reason. The EU 27 seems to have a settled opinion that if the UK is a member of the EU when the European Parliament elections are held on May 23-26, then the UK must also hold elections. However, UK commentators seem to wilfully ignore this view. So we debated the possibilities of a technical delay up to say mid-May versus anything longer – and especially up to 2021 (being the end of the transition phase).

The EP elections are very important to financial services as the Parliament is a co-legislator in our field. Assuming Brexit, the number of MEPs will fall to 705. On current projections from Parliament’s own services, the EPP will fall to 174 seats and S&D to 135 so around 50 seats short of a majority. ALDE is currently projected to hold 68 seats – so a three-way grand collation would hold the majority. But the Greens current projection of 45 seats would not provide a majority. Eurosceptic parties could win 250 seats – well short of a majority even in the very unlikely event that they could agree to co-operate. [...]

More for Friends

Full article available for consultancy clients


13 February 2019

Running down the ‘atomic bomb’ clock

Paula Martín Camargo

Officials in Brussels were appalled to see the deal they have been toiling on for two years crushed by MPs in the heaviest defeat for a government in UK parliamentary history, only to be brought back to life by a slim margin after PM Theresa May caved in to Brexit hardliners’ demand that she goes back to Brussels in search of changes to the Irish backstop – the most loathed part of the deal. May was condemned in Brussels as untrustworthy and, what’s worse, willing to put her party unity above her country’s interest.

The PM made her way back to Brussels with nothing to offer in return except a bleak threat of a crude divorce in just over a month -  an ‘atomic bomb’ Brexit “everybody dreads”, as the Maltese Finance Minister recognised.

The EU didn’t play ball. Top EU Brexit broker Michel Barnier said firmly that the backstop was needed “as it is”, while Donald Tusk said the core parts of the agreement were “not open for renegotiation”. The European council president Donald Tusk’s remarks that there should be a “special place in hell” for those who promoted Brexit without a concrete plan drew Brexiteer’s outrage, but for the first time he sounded reconciled to the fact the divorce would happen. He recognized that there’s “no effective leadership for Remain.” Barnier praised Labour’s leader Jeremy Corbyn’s letter offering May Labour’s support for her Brexit deal if she made five binding commitments, including joining a customs union – the PM declined the offer but asked for a meeting soon with the opposition leader, in what has been seen as aimed at quelling another rebellion within Tory ranks.

A sci-fi solution to the Irish border conundrum remains an impossible task on which the EU will not budge, but officials are considering offering May a plan on technological fixes to their proposal in order to avert a cliff-edge Brexit that might be blamed on the Irish issue – something’s got to give!, Barnier said. Whatever the insurance solution against a hard border on Irish soil, MEPs warned they would veto a Brexit deal without a backstop. A world leading expert on customs reminded that checks on both sides of the Irish border would be ‘mandatory under a no-deal Brexit’, which could spur an Irish unity poll, several cabinet ministers told the BBC. The push could jeopardize UK trade talks with the US, officials at Washington warned.  [...]

More for Friends

Full article available for consultancy clients


12 February 2019

148th Brussels for Breakfast – CPD Notes

As the UK Parliament agonises over Brexit, a sombre mood descended on the Breakfast as it became ever-more clear that irreversible damage has already been done to the City. ESMA published various notices on dealing with CCPs, CSDs and trade reporting continuity via MoUs with the Bank of England. But the drumbeat of news about yet more billions of euros of trading books moving out of the UK underlined that the profitability of the residual UK operations would come under pressure – inevitably leading to job losses. However, the more immediate hit to the UK may come from the removal from the UK of the foreign exchange revenues flowing from these books. Moreover, the SSM is already the world’s largest bank regulator and the swelling numbers of supervised banks will only re-enforce its role in international fora.

For the future of UK trade with EU, analysis of the newly in-force EU/Japan trade deal makes depressing reading. It underlines the EU’s intention to set the tone of international trade deals – to preserve its values and rules. For financial services, there is a specific article on the “prudential carve out” that maintains the ability of a receiver of financial services to refuse them if the other party’s rules are deemed inadequate.

The European Parliament elections in late May are likely to be a pivotal moment as the new Parliament will meet on July 2nd. If Brexit has been delayed, will the UK be obliged to hold elections so that UK MEPs can influence the choice of the next Commission President etc? Will the extreme `populists’ of left and right be able to combine to thwart business? [...]

More for Friends

Full article available for consultancy clients


24 January 2019

May’s Deal = “Vassal State” OR “Deferred Crash Out”

Only a Government of National Unity (GNU) can solve this now

Graham Bishop - Vice Chairman European Movement UK

  • Look beyond the Irish backstop problem: The May `deal’ leads inexorably to a `vassal state’ OR a `crash out’ deferred to 2020.
  • The EU27 has made it plain that it will maintain its `autonomy of decision making’: ask EEA/EFTA/Switzerland what this means in practice.
  • A Government of National Unity (GNU) must ask EU27 for a timetable extension to work thoroughly through the options. Then Parliament decides OR puts it back to the people.
  • The GNU would have two prime tasks:

1.     Set up a Parliamentary Commission of the whole of Parliament to examine in full detail all the implications of each option that commands any reasonable support in the House of Commons. If there is no clear `winner’ in the House voting, then Parliament should ask the people to choose between the top two options – having sent each elector a summary of the Parliamentary Commission’s comparison of the two options.  

2.     Begin the national healing: identify the areas where EU migration has deprived the indigenous population of proper access to public services; start a crash programme of sorting it – funded by a temporary `solidarity’ tax surcharge until 2020 (Note: 1p on income tax for four years = £20 billion).

  • Who should lead this GNU? The Father of the House – Ken Clarke – has an unrivalled breadth of experience in 24 years in government/50 years in the House. Mrs May should step down and recommend the Queen to call on him to form a GNU. That would answer Her Majesty's call to find "common ground".

More for Friends

Full article available for consultancy clients


11 January 2019

78 days to Brexit: UK Parliament is the only British institution so far to have ‘taken back control’

Paula Martín Camargo

The UK Parliament started the New Year taking back the driver’s seat of the Brexit battle in Britain after a series of raucous parliamentary skirmishes that have laid bare the strength of the opposition to a cliff-edge withdrawal from the EU among lawmakers. An extension of the official departure date seems now a plausible option and has been floated to EU officials, who are open to the idea but dismiss further concessions that would make the plan more palatable to British Parliament members.

MPs managed to pass a key amendment which will force PM Theresa May to come back to Parliament with an alternative plan just three sitting days after the deal she agreed in Brussels last month is rejected next Tuesday – as it is widely expected to be. This controversial tweak limits May’s supposed strategy to run down the clock right to Brexit eve so MPs are left with the binary choice of staring right into the no-deal abyss or voting the PM’s proposal.

The clash is therefore set for next week with a vote on the 15th that will most probably see May’s deal rejected – the deadline for May’s alternative motion would then be January 21. The Tory leader will then have to propose a motion that will be amendable, which could see MPs testing options such as a so-called Norway plus model or even a second referendum – a People’s Vote on the final deal the majority of Britons now want, as shown in the widest poll on the issue to date. The whole Brexit process could ultimately be cancelled if a majority in Parliament or a landslide popular vote calls for it: the EU top judge ruled that the UK can unilaterally withdraw Article 50. [...]

The EBA published its annual report on risks and vulnerabilities in the EU banking sector, which found  further improvements in EU banks resilience but highlights challenges connected to profitability, funding and operational risk. The Banking Authority’s updated risk Dashboardshowed that EU banks have further improved their resilience, but profitability remains weak. It will run its next EU-wide stress test in 2020, in line with its previous decision to aim for a biennial exercise.

The impact and implementation of IFRS 9 was thoroughly assessed by the EBA in its first observation report, while the Chair of the IASB Hans Hoogervorst addressed financial industry concerns that the new accounting model might exacerbate procyclicality and discussed current risks in the global financial system.

The ECB announcement that it has appointed temporary administrators to the troubled Banca Carige to safeguard the bank’s financial stability was the first time the European Central Bank used these powers - Graham Bishop assessed whether Carige is a foretaste of a new dimension of the slow-burning EU banking crisis, and if this is the first bank where, paradoxically, the final nail in the coffin may be IFRS 9. The ECB announced that it will directly supervise 119 banks this year. [...]

More for Friends

Full article available for consultancy clients


10 January 2019

147th Brussels for Breakfast – CPD Notes

As political history unfolds at Westminster, it was inevitable that Brexit took up much time. News from the ECJ topped the agenda as the Court moved at lightning speed to rule that the UK could indeed unilaterally withdraw its Art 50 notice --- BUT it must be done in a proper constitutional manner and must “not involve an abusive practice”. The European Council met in its Art 50 formation and reconfirmed its November conclusions about the agreement but “It is not open for renegotiation.”

The Commission has started its process of implementing its “no deal” planning with just 14 measures. These include a strictly limited equivalence decision of 12 months for CCPs and 24 months for CSDs. There was also a regulation for 12 months to facilitate novation for OTC contracts moving into EU 27 from the UK. This was announced at the very last moment to forestall announcements about giving notice to UK contracts. The tight time frames triggered a surprising discussion about Switzerland’s troubles with the EU that resulted in a 12 month equivalence decision for the Swiss stock exchange. However, this was extended for a further 6 months even after the Swiss government postponed their decision on the EU’s “institutional framework” proposal. [...]

More for Friends

Full article available for consultancy clients


8 January 2019

Banca Carige: an inauspicious start to 2019?

On the first working day of the New Year, the ECB announced that it has appointed temporary administrators to the troubled Banca Carige – Italy’s tenth largest bank – to safeguard the bank’s financial stability. This was the first time the ECB used these powers so is Carige a foretaste of a new dimension of the slow-burning EU banking crisis? Is this the first bank where, paradoxically, the final nail in the coffin may be IFRS 9 – the accounting standard designed to be the solution to lax accounting before the Great Financial Crash (GFC)? Is the cure worse than the disease? Or is Carige’s new round of problems just an uncomfortable part of the transition to the new world where no bank is too-big-to-fail?

Carige’s lack of profitability puts it at the extreme end of the spectrum in the EU. However, the EBA Transparency Exercise continues to report for the whole banking EU system that “Profitability remains low on average and has not yet reached sustainable levels.”  Shareholders may look nervously at the way that Carige is treated and wonder whether they should throw good money after bad at other banks. According to Reuters, the 27.6% owners – the Malacalz family - has invested more than €400 million since 2015. That is now worth little and the family has baulked for the moment at contributing to a further €400 million – the specific trigger for the ECB’s decision. [...]

More for Friends

Full article available for consultancy clients


Graham Bishop - Consultant on EU Integration - Political, Financial, Economic, Budgetary


Archives

2018

2017

2016

2015

2014

2013

2012

2011



Monthly assessments



Documents associated with this article

Acumen_EP.JPG