European Union

Corporate loans can propel Europe’s bank recovery

15 Jan 2018

Lending to companies has seen minimal growth in recent years, official data shows. A raft of positive economic data should provide the catalyst for increased demand. It would be a welcome way for slimmed-down lenders to give revenue a leg-up.

German workers may frustrate ECB’s inflation hopes

9 Jan 2018

Industrial staff in Europe’s biggest economy are striking for higher pay. They may, however, trim wage demands in return for flexible working. If pay pressures fail to flare in such a tight labour market, the European Central Bank can hardly count on them surfacing elsewhere.

Sutherland embodied ups and downs of globalisation

8 Jan 2018

Former European Commissioner, trade chief and BP chair Peter Sutherland, who has died at 71, worked to make it easier for goods, capital and people to cross borders. His triumphs were blotted by corporate failures. Yet his legacy deserves to survive the current backlash.

Greek banks’ sour loans face reality check in 2018

5 Jan 2018

Lenders plan to shrink their bad debts by 37 pct over two years, including through sales. A recovering economy and falling government bond yields should help. But without a clearer picture of what buyers might pay, shareholders have little clarity over how much pain lies ahead.

Anti-euro debate rears its head in Italy

5 Jan 2018

Northern League leader Matteo Salvini has reiterated his opposition to the single currency. Growing Italian discontent with the EU could make an anti-euro stance a vote-winner in upcoming elections. Despite Europe’s economic revival, monetary union remains a political target.

Bank compliance-cost explosion will abate in 2018

22 Dec 2017

Next year watchdogs will finalise big set-piece regimes for capital levels and investor protection. For banks from JPMorgan to HSBC, rampant growth in spending on due diligence, reporting and the like will level off. That in turn should be positive for lending margins.

UK rolls out banking red carpet as EU rolls it up

20 Dec 2017

EU banks can continue to operate as branches in the UK after Brexit, according to Bank of England proposals. Meanwhile looming EU rules on bank holding companies and the bloc’s insistence on bonus caps and the like suggest UK lenders shouldn't expect much leeway in return.

Bond vigilantes will grab power from central banks

18 Dec 2017

Governments’ net debt issuance in 2018 is set to outstrip central bank buying for the first time in four years. That gives investors a welcome chance to hold profligates to account. Bond markets may, however, be prone to over-reaction as they rediscover their rusty powers of discernment.

Review: Why Brexit will ultimately please nobody

15 Dec 2017

Britons voted to leave the EU for myriad and conflicting reasons, according to “Brexit and British Politics”. It’s hard to see a settlement that addresses them all. The risk is that voters see Brexit as another betrayal by politicians, fuelling the disaffection that caused it.

Bank rules wrong way to fill EU green finance gap

13 Dec 2017

The European Commission wants lenders to help plug the 177 bln euro annual funding shortfall for low-carbon projects. Lower bank capital charges for "green loans" is a mistake, though. Fuzzy definitions will lead to loose lending, and capital ratios will become even more opaque.

ECB could use Steinhoff mess to improve QE

13 Dec 2017

The EU central bank risks a loss after acquiring the South African retailer’s securities in its bond-buying scheme. Even investment-grade debt can go bad, and the hit is manageable. But in this case the ECB could have avoided trouble by requiring two credit ratings, not just one.

France and Germany look too alike to bond market

6 Dec 2017

The gap between French and German bond yields this week hit its lowest since 2009. Plans to revamp the way the euro zone works may spur investors to overlook differences between countries’ public finances. But a lack of discrimination is premature, and stores up fresh problems.

EU fight against tax havens has flaws

5 Dec 2017

The bloc has put 17 jurisdictions, including Panama and South Korea, on a blacklist for failing to fight tax abuses. European Union countries, however, are free to decide what steps to take against offenders. A laudable drive can be undermined if some choose a lenient approach.

Brexit deal hinges on enlightened obfuscation

5 Dec 2017

A plan for Northern Ireland to accept some EU rules has met with opposition in Belfast and demands for similar treatment elsewhere. Prime Minister Theresa May's best hope is to fudge tough decisions, and use the threat of a chaotic exit – or another election – to quash dissent.

UK plays weak hand badly in Brexit poker

29 Nov 2017

The country has reportedly bowed to EU demands that it pay up to 100 bln euros when it leaves the bloc. Months of haggling have wasted time and goodwill even before the start of talks on trading arrangements. The outcome shows the UK has a lot less leverage than it pretends.

Northern Ireland is Brexit’s Gordian knot

17 Nov 2017

Avoiding a hard border in the region is an aim of all sides in the Brexit talks. The least-worst fix is for Europe to treat Northern Ireland the way it does Norway. That’s only possible if pro-UK politicians in Belfast can be made to see the economic necessity.

Euro zone boom stimulates reform complacency

14 Nov 2017

From Germany to Italy, growth is picking up in the once-troubled region. Rosy conditions should endure: investment and employment are still catching up after years of crisis. The risk is that politicians avoid tough decisions to prepare the incomplete bloc for the next downturn.

ECB haste risks slowing its bad-loan cleanup

10 Nov 2017

The central bank overstepped its authority with proposals to impose stricter rules on banks for non-performing loans, the EU’s parliament says. The ECB is right to target European lenders’ 840 billion euro mountain of bad debt, but its clumsy move may set back the effort.

Bank of Italy chief’s new term faces uphill start

27 Oct 2017

Ignazio Visco has been reappointed as central bank governor despite political opposition. His first challenge is to quell critics of his handling of Italy’s banking crisis. EU rules are also getting tougher and Mario Draghi’s departure from the ECB in 2019 will remove an ally.

Europe’s MiFID ties tardy SEC in knots

26 Oct 2017

The U.S. agency provided breathing space to financial firms facing conflicting rules on charging separately for research. The belated action is only a band-aid. The SEC could learn from the commodity watchdog, which has already been settling permanent deals with EU counterparts.