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27 February 2013
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News on the global financial markets

  Morning Bell 
  • EBA expresses concerns about risk-calculation variations
    The European Banking Authority has warned banks that the manner in which they calculate risk on their balance sheet might need to change. Interim results of an examination of 89 banks show large differences in risk calculation stemming from varying regulatory approaches and financial modelling. "Greater disclosure could go some way to appease the concerns raised by investors and market analysts," EBA Chairman Andrea Enria said. Reuters (26 Feb.), Bloomberg (26 Feb.), Financial Times (tiered subscription model) (26 Feb.) LinkedInFacebookTwitterEmail this Story
  Industry News 
  • Europe lags far behind Americas in M&A market
    Buyout houses have struck $72.6 billion in deals this year, up more than 200% compared with the same period in 2012. By value, 10.6% of the deals have been in Europe, while the Americas have accounted for 86.8%, according to Thomson Reuters data. "Europe has never been able to keep up with the US and will not in the future," said Joerg Rockenhaeuser, head of Permira Germany. Reuters (27 Feb.) LinkedInFacebookTwitterEmail this Story
  • ASX plans to hire to bolster derivatives work
    Australian exchange operator ASX plans to add 25 to 30 employees in 2013 for its derivatives-clearing business, as equity volume decreases. "The main increases we're seeing are ... in the post-trade services of clearing and collateral management," CEO Elmer Funke Kupper said. "We're seeing more of a shift toward those new investments." Bloomberg Businessweek (27 Feb.) LinkedInFacebookTwitterEmail this Story
  • JPMorgan looks to shed almost 7% of staff by 2015
    JPMorgan Chase is prepared to cut 17,000 jobs by the end of 2014 as it rebalances its workforce by dropping employees responsible for home loans gone bad. While the company plans to add workers in banking departments, the hiring will not offset jobs shed. As regulatory changes encourage banks to build equity, many lenders are accumulating significant amounts of capital, CEO Jamie Dimon says. "I don't think it's just JPMorgan," he said. "I think all banks will have too much capital in 2½ years. And they're not going to know what to do with it." Reuters (27 Feb.), Bloomberg Businessweek (27 Feb.), The Wall Street Journal (26 Feb.) LinkedInFacebookTwitterEmail this Story
  Regulatory Roundup 
  • UK regulator says bonus caps have drawbacks
    Andrew Bailey, head of the UK Prudential Regulation Authority, says capping bankers' bonuses could do more harm than good. He is concerned that the EU proposal would "make the cost base inflexible and make it more difficult to retain earnings and build capital". Bailey's preference: "Clawing back unvested remuneration when things have gone wrong is a big part of what we are pushing for. We favour longer time periods for vesting." Bloomberg (26 Feb.) LinkedInFacebookTwitterEmail this Story
  • Barnier seeks plan for handling failing banks
    EU Internal Market Commissioner Michel Barnier has called for a bank-failure plan that would receive blocwide support. "We need to make proposals that will be accepted, and we know the reservations of countries such as Germany," Barnier said. Under his proposal, each nation would have a rescue fund, paid for by imposing a fee on lenders. "You have to differentiate between what's possible today and what's ideal tomorrow," he said. Bloomberg (26 Feb.) LinkedInFacebookTwitterEmail this Story
  • Regulators want public feedback on benchmark rates
    The US Commodity Futures Trading Commission says it will seek more public input on how to repair financial benchmarks, such as the London Interbank Offered Rate, before releasing a report in late spring or summer. "What we're collectively looking at is how to enhance the rules around conflicts of interest, governance, submitters, administrators," Chairman Gary Gensler said. Meanwhile, regulators aim to settle with some banks regarding Libor manipulation by the end of summer, sources say. Reuters (26 Feb.), Bloomberg Businessweek (26 Feb.), The Wall Street Journal (27 Feb.) LinkedInFacebookTwitterEmail this Story
  Spotlight on China 
  • China aims to bolster asset-backed securities
    The China Securities Regulatory Commission says it will make it easier for financial companies to develop asset-backed securities. The rule relaxation might increase liquidity in the fledgeling market. There is no timetable yet for implementation. Bloomberg (26 Feb.), Reuters (26 Feb.) LinkedInFacebookTwitterEmail this Story
  • Cheaper rates draw Russian banks to yuan bond market
    Russian banks are diversifying sources of capital and saving on interest expenses by going into the offshore yuan bond market. Bond buyers have a strong appetite for such bonds because they offer exposure to China's currency, deliver attractive yields and are issued by prominent banks that have backing from the Russian government. The Wall Street Journal (26 Feb.) LinkedInFacebookTwitterEmail this Story
If you want to truly understand something, try to change it."
--Kurt Lewin,
German-American psychologist

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