Fed adopts tough capital rules for foreign banks

Tue, Feb 18 2014

By Douwe Miedema

WASHINGTON (Reuters) - The Federal Reserve on Tuesday adopted tight new rules for foreign banks to shield the U.S. taxpayer from costly bailouts, ceding only minor concessions despite pressure from abroad to weaken the rule.

Foreign banks with sizable operations on Wall Street such as Deutsche Bank and Barclays had pushed back hard against the plan because it means they will need to transfer costly capital from Europe.

The Fed, which oversees foreign banks, gave them a year longer to meet the standards, and applied it to fewer banks than in a first draft, but the rule was largely unchanged from when it was first proposed in December 2012.

A Test Europe’s Banks Mustn’t Fail

By FRANCESCO GIAVAZZI and ANIL K. KASHYAPFEB. 17, 2014

The New York Times

Europe is lurching toward an overhaul of its banking system. Later this year, the European Central Bank is set to assume the authority to supervise the 130 largest banks in the euro zone — a momentous process of centralizing financial regulation in Frankfurt aimed at preventing another round of the bank failures that contributed to the 2007-8 global financial crisis.

In preparation for the handoff, the E.C.B. will conduct a “stress test” to gauge how the banks would fare if economic conditions deteriorated. But the central bank’s point person for these efforts, Danièle Nouy, appears to have misdiagnosed the problem, suggesting that “insufficient transparency regarding the balance sheets of the European banks” is the critical problem.

Regling: euro-zone banks in good shape before stress test: newspaper

BERLIN Sun Feb 16, 2014 5:55pm EST

(Reuters) - The head of the euro zone's bailout funds, Klaus Regling, said that he believes banks in Spain, Portugal, Cyprus, Greece and Ireland are in good shape and that there will not be any surprises in European Central Bank stress tests due later in 2014.

Banks in London Devise Way Around Europe’s Bonus Rules

FEBRUARY 13, 2014, 7:32 PM

The New York Times

By JENNY ANDERSON and PETER EAVIS

A battle over banker bonuses is building in this financial capital.

Since the 2008 crisis, regulators around the world have tried to rein in bonuses, worried that big payouts encourage excessive risk-taking by bankers and traders. The European Union has gone further than most, limiting bankers to bonuses equal to one or two times their salaries.

But the bank giants operating in London — including Goldman Sachs, Bank of America Merrill Lynch and Barclays — are seeking to outflank the new restrictions. Responding to the law, they are structuring new pay packages that try to satisfy both their emboldened regulators and their very expensive employees.

Eurozone watchdog says some banks should go under: FT

FRANKFURT/LINKOPING, Sweden Mon Feb 10, 2014 2:04pm EST

(Reuters) - Some of the euro zone's lenders have no future and should be allowed to go under if they fail a health check, the bloc's new banking supervisor told the Financial Times, underscoring a tougher approach to banking oversight.

Daniele Nouy told the newspaper that if any of the region's participating banks fail the European Central Bank's comprehensive assessment then they could be wound down, and that merging them in order to save them was not an option.