12 February 2014

Reuters: EU executive sees personal savings used to plug long-term financing gap

"The economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment," said the document, seen by Reuters.

The Commission will ask the bloc's insurance watchdog in the second half of this year for advice on a possible draft law "to mobilise more personal pension savings for long-term financing", the document said. Banks have complained they are hindered from lending to the economy by post-crisis rules forcing them to hold much larger safety cushions of capital and liquidity. The document said the "appropriateness" of the EU capital and liquidity rules for long-term financing will be reviewed over the next two years, a process likely to be scrutinised in the United States and elsewhere to head off any risk of EU banks gaining an unfair advantage.

The EU executive will also complete a study by the end of this year on the feasibility of introducing an EU savings account, open to individuals whose funds could be pooled and invested in small companies.

The Commission is also seeking to revive the securitisation market, which pools loans like mortgages into bonds that banks can sell to raise funding for themselves or companies. The document says the Commission will "take into account possible future increases in the liquidity of a number of securitisation products" when it comes to finalising a new rule on what assets banks can place in their new liquidity buffers. This signals a possible loosening of the definition of eligible assets from the bloc's banking watchdog.

The Commission will also "review" how EU rules treat covered bonds by the end of this year, the document says, a step that will be welcomed by Denmark with its large market in bonds used by banks to finance home loans.

The document said investors and asset managers also have a role and it will propose a revision of EU rules on shareholder rights to "ensure better disclosure of institutional investors' engagement and voting policies". More controversially, the Commission will consider whether the use of fair value or pricing assets at the going rate in a new globally agreed accounting rule "is appropriate, in particular regarding long-term investing business models".

Full article

© Reuters