The first banker’s reaction to the Liikanen report are in.
Christian Clausen is CEO of Nordea Bank AB (STO:NDA-SEK); but in this context it is perhaps more important that he is also President of the European Banking Federation (EBF).
”Clearly you can’t show solidarity with weak banks in weak countries. That would risk weakening the strong banks ind the strong countries – argues Christian Clausen head of EBF.”
”We generally support what has been suggested, but maybe some of the details and methods aren’t quite fortunate”, says Clausen and he points to especially financing.
”Is it to be a depositor’s guarantee fund, or a Resolution Fund, or is it to the European ESM fund? There the agreement stops”, according to Christian Clausen whose opinion is, that there is not disagreement between the banks and politicians; but the problem is among politicians.
“There is the North-South problem. For as long as the banks aren’t capitalised in “certain parts of Europe” the strong countries with strong banks of course will not pay for weak banks in weak countries”, he says.
On the subject of a European Bank Inspection:
”There is reasonable agreement on that, but the problem is to limit it with respect to countries not members of the Euro-zone”, Christians Clausen says.
” The time is not ripe to a financing of a bank union”, Christian Clausen states, and thinks, that the reason is that the EU is not a union in a way in so far as the different regions in Europe support one another.
”As long as there isn’t a political union it is difficult to make an integration of financial policy. So in reality it has nothing to do with the banks; but how far Europe has com, and where Europe is heading? That is a political issue.” Christian Clausen points out.
Now this is a tricky one and plagued with confusion – some it might even be real.
First an editorial observation: It is an old journalistic trick to point out a person’s other capacities than the one he assumes for the statement to point to a conflict of interest or a hidden agenda.
The point being that Nordea Bank AB (STO:NDA-SEK) is singled out in the Liikanen-report as being a bank with assets twice of the country’s GDP (Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) and Nordea Bank AB (STO:NDA-SEK) are neck and neck on that one). Which Clausen is very well aware of. Clausen then points at two other problems North-South and Euro- and non-Euro zone.
As to North-South the lack of solidarity is not readily apparent. It IS reasonably clear that these countries will have to pay for their own banks. Spain is liable for the 100 bio. EUR loan from the ECB. The visit to Greece by Merkel these last few days was in essence about the EU finding a way to finance an administrative reform in Greece – if you read Frankfurter Allgemeine Zeitung.
This is where I think Christian Clausen is genuinely confused. I don’t think he gets it! What is apparent with respect to banking is that there is little doubt as to who are ultimately going to pay for sovereign nations banks – that is that nation. The problem is to supply the tools. It can be means to go after tax evasion or access other taxable funds.
With respect to solidarity FAZ quotes Merkel saying to Obama (form memory): “We will NOT allow Greece to become a second Lehman Brother – triggering another crisis.”
OUCH – that one really, really hurt! Scarcely above the belt and with the full force of an industrial sized hammer. Small wonder Obama hasn’t been up to par these last few days. American presidents are not used to being told of by little European ladies – and having to like it!
As to Euro and non-Euro countries: Here I think Christian Clausen isn’t really updated. First the pattern is that non-Euro banks are being thrown out of the Euro-zone. Secondly inspection standards are this minute being instituted all over Europe – and this has being going on the past two years: Pension funds institute common standard mortality tables, farm land is evaluated according to agricultural yield, real estate according to reasonable rent value. There are local adjustments, but the template is the same.
We are not talking currency here at all! We are talking something much more serious than that: We are talking ripping open the banks books for inspection and discarding the banks valuation of assets and collateral.
The third factor is that it has apparently been leaked that Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) and Nordea are two of the 10 banks in the sights. From what I’ve read of the Liikanen Report they are not mentioned therein directly as such. What has scarcely been seen is that Liikanen is Finnish and Nordea Bank AB (STO:NDA-SEK) is very large in Finland.
I do think what Christian Clausen isn’t getting: HE IS THE PROBLEM. Him personally as head of EBF and Nordea! The corollary to this is that neither Danske Bank nor Nordea Bank AB (STO:NDA-SEK) are part of the solution, so what Christian Clausen thinks is of small consequence.
These two banks may be “too big to fail” – they most certainly are “too big to survive”. These two banks will not be allowed to drag down three or more Scandinavian or Baltic countries. The real question is how is a European Bank Inspection going to assist these countries?