BoE tells banks to raise £25B more in capital | Barclays arranges investor meetings for CoCo issuance | Revamped or new CMBS are in the works in Europe
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28 March 2013
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UK should sue over financial-transaction tax, lawmakers say
The EU Committee in the UK House of Lords says the government should take its opposition to Europe's proposed tax on financial transactions to court. "We exhort you to take urgent legal advice on the case for a legal challenge at the European Court of Justice," committee Chairman Lyndon Harrison wrote in a letter to Greg Clark, financial secretary to the Treasury. Reuters (27 Mar.)
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As trading across multiple asset classes increases, operating in silos is no longer an effective strategy for optimizing post-trade efficiency, mitigating risk and capitalizing on market opportunities. Learn how leading firms are consolidating their operations, data and technology infrastructure to create a center of excellence for multi-asset, post-trade processing.
Industry News
BoE tells banks to raise £25B more in capital
The Bank of England has told lenders that they face a £25 billion capital shortfall but says previously announced plans should cover about half of that. "It's a bit of a damp squib," said Simon Maughan, an analyst at Olivetree Securities. "The banks are going to have until the end of 2013, at least, to do it, and there was no change to the message that they won't need to raise fresh capital or restrict dividend payments." Bloomberg (27 Mar.), The Telegraph (London) (tiered subscription model) (27 Mar.), The Independent (London) (tiered subscription model) (28 Mar.), The New York Times (tiered subscription model)/DealBook blog (27 Mar.)
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Barclays arranges investor meetings for CoCo issuance
Barclays is preparing to sell contingent-convertible notes, after the Bank of England told banks that they need to raise a total of £25 billion. "Barclays is reasonably well capitalised compared to its UK and European competitors," said Paul Smillie, an analyst at Threadneedle Asset Management. "If this issuance helps to open up a market for contingent-capital instruments from the British banks, then it will make it easier for them to issue more in the future." Bloomberg (27 Mar.), International Financing Review (free content) (27 Mar.)
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Revamped or new CMBS are in the works in Europe
Europe's commercial mortgage-backed securities market is a fraction of what it was in 2006, but a series of new or reworked deals is expected to hit the market soon. Financial Times (tiered subscription model) (27 Mar.)
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European lenders see higher funding costs
In the wake of Cyprus' rescue, European banks are finding it more expensive to borrow. On Wednesday, the spread between banks' borrowing costs and Treasury debt hit its highest point since August. "Euro-zone financials are expensive and unattractive," said Andrew Balls, head of European portfolio management at Pacific Investment Management. "And the banking sector in the euro zone remains a source of instability." The Wall Street Journal (27 Mar.)
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Stockholders allow LSE to purchase LCH.Clearnet stake
Shareholders of the London Stock Exchange and LCH.Clearnet Group have approved LSE's acquisition of a 57.8% stake in the trans-Atlantic clearinghouse. The deal also has cleared all regulatory and antitrust obstacles, according to the LSE. Financial Times (tiered subscription model) (27 Mar.), (subscription required) (26 Mar.)
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Regulatory Roundup
Major European exchanges face possible open-access requirement
The Council of the EU's Irish presidency has proposed requiring the biggest exchanges in Europe to allow trade-feed access by clearinghouses. Trading venues with more than €100 billion in annual securities turnover and €500 billion in derivatives would be subject to the rule, proposed under the revised Markets in Financial Instruments Directive. The Trade News (U.K.) (27 Mar.)
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Rule change could hit peripheral banks' capital-raising ability
Peripheral banks could see a fundraising tool closed off because of a proposed change from the Basel Committee on Banking Supervision. The panel is considering adjusting its capital framework to prohibit troubling risk-transfer deals. Reuters/International Financing Review (27 Mar.)
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Japan won't buy foreign debt, BoJ's Kuroda says
Bank of Japan Governor Haruhiko Kuroda says the central bank's easing of monetary policy won't include buying foreign bonds, which could be interpreted as an intervention in currency markets. He says the bank is focusing on purchasing Japanese government bonds and riskier assets. Kuroda also warns that Japan's rising debt is "not sustainable". Market News International (27 Mar.), Financial Times (tiered subscription model) (28 Mar.)
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Spotlight on China
China's 4 leading banks outshine Western rivals
A 21% average return on equity is the 2012 record for China's four largest banks, easily outpacing counterparts in the US and Europe. Regulatory issues and crackdowns on proprietary trading held back Western banks, while Chinese institutions benefited from government interest-rate controls and constraints on foreign-bank operations. Bloomberg (27 Mar.)
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GFMA Asian webinar: "Global LEI Developments and Deadlines" -- 3pm Hong Kong time on 8 April
Join us for the next installment of GFMA's webinar series to help financial-market participants prepare for the critical implementation of a global legal-entity identifier. Recently, there have been important developments from the US Commodity Futures Trading Commission, global regulators and the LEI Regulatory Oversight Committee. Further, important deadlines under the CFTC's reporting and record-keeping rule for swaps are quickly approaching. Participate in this timely webinar to receive expert summary and analysis of the latest regulatory developments and initiatives. The next webinar is co-hosted by GFMA and the Hong Kong Investment Funds Association and is scheduled at 3pm Hong Kong time for Asian market participants.
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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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We owe something to extravagance, for thrift and adventure seldom go hand in hand."
-- Jennie Jerome Churchill,
American-born British society figure
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