Banks

RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Financial

Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Currencies

Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Categorized | Economy

ECB chief economist calls for ‘more ambition’ on banking union


Posted on November 24, 2016

The eurozone must create a continent-wide deposit insurance scheme for its banks and have more sharing of risk between taxpayers and creditors to protect the financial system against “panic and contagion”, the European Central Bank’s chief economist has said.

Speaking in Vienna on Thursday, Peter Praet called on EU policymakers be “more ambitious” in their attempts to finally complete plans to create a Banking Union, first launched in the wake of continent’s debt crisis in 2010.

Mr Praet touched upon controversial areas including a joint deposit scheme for the banking system which has been fiercely resisted by Germany – the eurozone’s largest creditor nation – before more risk-sharing measure are put in place.

“The current incomplete banking union is asymmetric: while decisions on liquidity waivers are taken at European level, the relevant risk-sharing mechanisms are still national”, said Mr Praet, adding:

In each country, bank depositors are protected by the national guarantee scheme. If a bank fails and the Single Resolution Fund does not have sufficient resources available to finance its resolution, which may well be the case for some time.

The chief economist warned that without such bold moves to have a fiscal backstop to helped troubled banks in times of stress, Europe’s financial system would be vulnerable to “panic and contagion”.

He said:

We cannot expect to have a fully integrated banking sector that can share risks without common institutions that can also share risks, namely for deposit insurance and bank resolution. Without such institutions, there is a real prospect that the banking system will remain fragmented, and that is ultimately to the benefit of no one in the euro area.

Image courtesy of Getty