The Ecofin Council creates officially the clan of ‘undead’ banks

From left to right, Jean-Jean-Claude Juncker, Prime Minister and Minister of Economics of Luxembourg, Ollie Rehn vice President of EC, Christine Lagarde general manager of IMF. (EC Audiovisual Services).

From left to right, Jean-Claude Juncker, Prime Minister and Minister of Economics of Luxembourg, Ollie Rehn vice President of EC, Christine Lagarde general manager of IMF. (EC Audiovisual Services).

Today 5 March 2013, in Brussels, without much publicity the Economic and Financial Affairs Council of the European Union, known as the Ecofin Council, is expected to discuss, inter alia, the new draft rules on bank capital requirements (“CRD 4”), including future rules on bankers’ bonuses. Those issues go in pair, in a way that was not all explained in terms that could be understood by the wider public. The mighty publicity machines of the EU institutions promoted the one, about capping bankers’ bonuses, which is easily sellable to the unsuspecting public, to hide the other about the creation of the ‘undead’ banks.

This last and more important issue is about a number of largely privately owned Eurozone banks, which are to be elevated legally to the ‘undead’ status. The Ecofin will presently create the categories of systemically important financial institutions (SIFIs), global systemically important institutions (G-SIIs) and the EU or domestic systemically important institutions (O-SIIs). As it usually happens in cases like that, the initial idea to elevate some banks to the category of “cine qua non” needs elaboration. It is like in heaven where there are many categories or regiments of Cherubims, Seraphims etc.  It couldn’t be differently because not all banks are equal. How can the giant Deutsche Bank be equal to a Cypriot or a Portuguese lender? There have to be distinctions in this new heavenly universe of banks.

New banking universe

In short the Ecofin Council today is about to create another layer of gentry within the establishment. This one will be made up of by bankers and bank owners, who will be living from now to eternity on the sweat of ordinary people. It will be exactly in the same manner as some national and the European bureaucracies have become “systemic”, thus ‘undead’.

In detail, according to an EU Council background announcement, the Ecofin, {will be called on to broadly endorse a compromise reached with the European Parliament on 27 February on two proposals – the so-called “CRD 4” package – amending the EU’s rules on capital requirements for banks and investment firms. The latest round of negotiations between Council and Parliament focused on five issues:

– Requirements for national systemic risk buffers and buffers for systemically important financial institutions (SIFIs);

– Flexibility for member states to impose stricter national measures to address increased macro-prudential risks to financial stability;

– Reporting requirements for banks on a country-by-country basis;

– Restrictions on bankers’ bonuses;

– Additional own-initiative mediation powers for the European Banking Authority (EBA)}.

There is more explanation of how the banks will be categorised in first, second or third rate systemic (or rather untouchable?) ones. Exactly as the EU bureaucracy is structured and functions, primarily serving its own interests and causes. The text the Ecofin Council is about to endorse continues like that:

{The main elements of the compromise with the Parliament are as follows:

1. SIFI buffers and systemic risk buffer

The buffer requirements specific to systemic institutions will be mandatory for global systemically important institutions (G-SIIs), but voluntary for other (i.e. EU or domestic) systemically important institutions (O-SIIs). Buffers will apply on a consolidated basis for G-SIIs and on an individual, sub-consolidated or consolidated basis for O-SIIs. The O-SII buffer is capped at 2%. The systemic risk buffer and buffers for G-SIIs and O-SIIs will generally not be cumulative and only the highest of the three buffers will apply. However, if the systemic risk buffer only applies to domestic exposures, it can be added to the SIFI buffer}.

In all those texts it is not yet clear who is going to pay for those buffers to safeguard the banks in the difficult times. It is certain however that the cost to crate them will be borne by the people who sweat in the real economy. In short the European Union is about to create a new category of “systemic” financial institutions, which will continue to produce financial crisis. Whenever those ‘undead’ banks are going bankrupt, the buffers will intervene and restore their capital to previous levels. Exactly as Count Dracula sucks the blood of the living, to perpetuate his own existence.

And all that under the publicity coverage of the EU institutions, which promoted the capping of bankers’ bonuses, to hide the creation of a new banking universe of ‘undead’ firms.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

‘Ghost fishing’ is threatening our oceans. Here’s how we can tackle it

Realise the beauty of unity in diversity

How powering food storage could end hunger

MWC 2016 LIVE: 5G to embrace unlicensed bands and Wi-Fi

99 per cent of intravenous drug users lack access to health, ‘social services with dignity’ says UNAIDS chief

Parliament approves €500 million for schooling of refugee children in Turkey

Germany’s strong anti-bribery enforcement against individuals needs to be matched by comparably strong enforcement against companies

We need to change the fast fashion model. Here’s how

5 surprising ways major cities are going green

Central African Republic: UNICEF outlines key actions so fresh peace deal can make real difference for children

How AI is bringing the ‘dark matter of nutrition’ to light, unlocking the power of plants

Summer pause gives time to rethink Eurozone’s problems

Africa: Urgent action needed to mobilise domestic resources as tax revenues plateau

Fairer food supply chain: Agriculture MEPs clamp down on unfair trading

Japan should reform retirement policies to meet challenge of ageing workforce

German egotistic inward turn to badly hurt Europe after Merkel’s exit

5 things to know about the Western Balkans

Amsterdam is getting a 3D-printed bridge

Asymptomatic, pre-symptomatic, symptomatic: what is the difference?

Is poor generational intelligence holding you back at work?

Rule of Law: The Commission opens a debate to strengthen the rule of law in the EU

All for equality – 2020 is a pivotal year for Gender Equality

Antitrust: Commission fines Google €1.49 billion for abusive practices in online advertising

Alexis Tsipras ready to test Eurozone’s political sturdiness; Up to what point?

COP21 Breaking News_05 December: Carbon Price Needed for Climate Change Success

A ship with containers at the port of Rotterdam. (Copyright: European Union. Source: EC - Audiovisual Service. Photo: Robert Meerding)

US follows the EU in impeding China market economy status in WTO

Germany resists Macron’s plan for closer and more cohesive Eurozone; Paris and Berlin at odds

Chinese Premier Li Keqiang’s speech from World Economic Forum’s Annual Meeting of New Champions

COVID-19: What the evidence so far means for containment

Questions and answers: Commission proposes SURE, a new temporary instrument worth up to €100 billion to help protect jobs and people in work

Youth2030: UN chief launches bold new strategy for young people ‘to lead’

TTIP: why it is worth not to pull the covers over your head?

Will the Greek economy ever come back to growth?

5 ways to be a better humanitarian

G20 LIVE: “Re-envisioning the economy to enable women to reach their full potential” live from Antalya Turkey

Universal basic income is the answer to the inequalities exposed by COVID-19

To build the workforce of the future, we need to revolutionize how we learn

Why the Fourth Industrial Revolution could spell more jobs – not fewer

UN human rights ruling could boost climate change asylum claims

MWC19 Wrap Up, in association with The European Sting, GSMA’s Brussels Media Partner for the 6th Consecutive Year

Parliament wants binding rules on common chargers to be tabled by summer

Do you dare to go to China?

Cholera surges, children in urgent need one month after Cyclone Idai slammed southern Africa – UNICEF

Juncker Plan exceeds original €315 billion investment target

Scotland in United Kingdom: It’s either the end or the beginning of the end

“Smoking steam instead of tobacco, are the E-cigarettes a safer alternative?”

Now is the time to seize ‘unprecedented opportunity’ of the Sustainable Development Forum, says ECOSOC President

Trade marks: Commission decides to refer Romania to the Court of Justice for not transposing the Trade Mark Directive

What are the greatest global health threats?

5 things you might not know about Leonardo da Vinci

COVID-19: EU co-finances the delivery of more protective equipment to China

Delhi Declaration: Countries agree to make ‘land degradation neutrality’ by 2030, a national target for action

Why do humanitarian crises disproportionately affect women?

Do men and women really have different leadership styles?

A silent killer: the impact of a changing climate on health

Step up action to protect the planet during wartime: UN environment chief

Silk Road Unlimited

You will be eating replacement meats within 20 years. Here’s why

These are New York Public Library’s 10 most borrowed books

An ECB banker wants to change the European social model

More Stings?


Speak your Mind Here

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s