Cyprus plans to overhaul banks, subject big depositors to levy | Deposits of less than €100,000 must be guaranteed, ESRB says | ECB supports initiatives to revitalise interbank market
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22 March 2013
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News on the global financial markets

Morning Bell
GFMA urges holistic approach to securitisation proposals
GFMA is encouraging the Basel Committee on Banking Supervision to reconsider its starting assumptions as it revises its securitisation framework. "We believe that the proposals focus too narrowly on the credit losses, price declines and decreases in liquidity associated with subprime [residential mortgage-backed securities] during the financial crisis in 2008," according to GFMA. "While this is perhaps understandable ... they are not representative of the performance of securitisations globally, are unlikely to recur ... and do not mean that high quality securitisation in general is not a sound financing technique." Structured Credit Investor (U.K.) (21 Mar.)
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Industry News
Cyprus plans to overhaul banks, subject big depositors to levy
Cypriot leaders have announced a plan to revamp the banking sector and to implement a levy on bank deposits of more than €100,000. "The banking system needs restructuring; otherwise, it will go bankrupt and it needs to be done immediately," said Panicos Demetriades, governor of the Central Bank of Cyprus. The plan follows the European Central Bank's announcement that it is ready to withdraw funding for Cyprus. Meanwhile, Standard & Poor's has downgraded the country's long-term foreign-currency credit rating from CCC-plus to CCC. Reuters (21 Mar.), Financial Times (tiered subscription model) (22 Mar.), (21 Mar.), The Wall Street Journal (21 Mar.)
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Deposits of less than €100,000 must be guaranteed, ESRB says
A controversial proposal to subject Cypriot bank depositors to a levy has prompted the European Systemic Risk Board to emphasise the importance of guaranteeing deposits of less than €100,000. "The ESRB shares the Eurogroup's view on the importance of fully guaranteeing deposits below €100,000 across the European Union," according to the ESRB. "Increased legal certainty for bank creditors regarding the priority of their claims would reinforce the resilience of the financial system." Reuters (21 Mar.), The Wall Street Journal/Dow Jones Newswires (21 Mar.)
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ECB supports initiatives to revitalise interbank market
The European Central Bank is backing industry-supported efforts to ease collateral requirements in the interbank market, lessening banks' reliance on central bank funding. "The Chairman noted that the ECB encourages these market initiatives aimed at mobilisation of collateral if these help to revitalise the interbank market and to facilitate refinancing of these assets in the market," according to a published summary of a meeting of the ECB's money market contact group. Reuters (21 Mar.)
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Italian exchange capitalises on rules with bond platform
Borsa Italiana has introduced bond-trading platform ExtraMOT PRO to help domestic businesses gain access to funding under new rules. Corporate bonds, project bonds and letters of credit can be traded on the platform. "In order to benefit from the tax treatment, securities issued by unlisted companies must be traded," said Paola Leocani of Allen & Overy. Reuters (21 Mar.), The Wall Street Journal/Dow Jones Newswires (21 Mar.)
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Exec discusses launch of LSE's high-growth segment
The London Stock Exchange is preparing to debut a high-growth segment. Alastair Walmsley, head of primary markets, says the segment for high-growth companies is part of an effort to increase investor confidence. "There's no doubt that 2012 was pretty quiet for UK [equity-capital markets]," he said. "Sending the message that we're open for business is a very important one." International Financial Law Review (20 Mar.)
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Spain sells €4.5 billion in bonds
The Spanish Treasury saw healthy demand at a bond auction Thursday. The sale of more than €4.5 billion in short-, medium- and long-term bonds indicates that investors' confidence remains relatively strong, despite concerns about Cyprus. "It is our view that the Cypriot [hiccup] won't infect other euro-zone countries," KBC Bank analysts said. Reuters (21 Mar.), The Wall Street Journal/Dow Jones Newswires (21 Mar.)
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Regulatory Roundup
ICE, NYSE Euronext submit proposed merger to European Commission
NYSE Euronext and IntercontinentalExchange have asked the EU to assume jurisdiction and approve their $8.2 billion merger. The next 40 workdays are crucial to the deal. By submitting the deal directly to the European Commission, ICE and NYSE Euronext will avoid separate reviews by officials in the UK, Spain and Portugal. Bloomberg (21 Mar.), Financial Times (tiered subscription model) (21 Mar.), The Wall Street Journal (21 Mar.)
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As head of UK watchdog, Wheatley seeks dialogue with industry
Martin Wheatley, head of the UK Financial Conduct Authority, has downplayed comments by his predecessor at the Financial Services Authority about the industry needing to fear the regulator. "You won't hear from us a 'be afraid' tone. We want a discussion with senior officials. We have to have a dialogue," Wheatley said. "It's about having a balanced approach. It's important there is individual accountability. That will be a priority." Reuters (21 Mar.), Bloomberg (21 Mar.)
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Early-bird registration is open: AFME 6th Annual European Post-Trade Conference
Registration is open for AFME's 6th Annual European Post-Trade Conference, scheduled on 23 May at the Lancaster London hotel. This event brings together eminent speakers from across the industry, including senior operations executives and key regulators, and offers insights into crucial developments in the post-trade space and their impact on the industry.

Register to secure your place.
  • Early-bird member rate (available until 11 April): £299
  • Early-bird nonmember rate: (available until 11 April): £609
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If we were all given by magic the power to read each other's thoughts, I suppose the first effect would be to dissolve all friendships."
-- Bertrand Russell,
British philosopher, mathematician and historian
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