Banking Union, update
Dagens Nyheter has:
“But even if he [Finance Minister Borg] says yes to the new bank inspection it will, for the time being, be a ”No, Thank You” for Swedish participation in the Union, as the Euro-zone countries get more influence. Furthermore, there is still vagueness about how to save banks in an emergency and how the depositor’s money is to be protected.
Our evaluation is that Sweden can remain outside without any decisive consequences for the Swedish financial system, borrowing costs of the households, or business financing says Borg.”
When we can’t get clarity about voting rules for the EBA [European Bank Authority] then we can’t accept the Euro-zone countries move on the ECB decision, says Borg.
The tabled compromise suggests double majority is mandatory. One for Euro-countries and one for non-euro-countries.
Just as expected: A blocking by Sweden would mean that both Nordea Bank AB (STO:NDA-SEK) and SEB would have to get out of Finland without delay, as they would come under Finnish banking jurisdiction in Finland. So, in order to keep the Swedish state from being controlled by the EBA, there is one big problem for Sweden.
But it does point in a confirming direction towards the supposition that the real Nordic banking problem is Nordea.
A common bank union and a common bank inspection in the EU, opines Danish PM Helle Thoring-Schmidt.
But whether Denmark should join is still not clear, says PM Helle Thorning-Schmidt (S) on her weekly press conference:
- We support a strengthened Euro and that bank inspection is strengthened in all of Europe. That is clearly in our interest. So we support that, and have told our EU-partners so.
- But I will also emphasise that we have not decided if Denmark itself will participate. That is simply to early to decide, says Thorning.
- I think a sensible solution for the non-Euro-countries are in the making, when it comes to a vote in the deciding organs in this common bank inspection, says Thorning.
- That can only be decided when we see the total proposal for a bank union. Then we will sit down nice and easy and discuss and analyze pros and cons in Danish participation and on that background make our decision.
Comment (or wild speculation):
Yup, it is Nordea! And especially the Danish real estate mortgage banking! The remaining problem is Danske Bank (the other provincial rednecks will be dealt with – curtly), but that should not be insurmountable. The track record is that Danske Bank is getting out of foreign countries – where a picture of Danish Minister for economics talked to her not totally convinced Finnish counterpart. So Danske Bank will probably leave Finland in some semblance of order. That would mean Finland can recapitalize the carcass.
Finland has never really recovered from the Swedish banking crisis 20 years ago.
Nordea Bank AB (STO:NDA-SEK) leaving Denmark as a bank should be reasonably easy, as Danske Bank business in Sweden could (after appropriate amount of howling) be swapped against Nordea business in Denmark. The block has been the real estate mortgage system, which is tethering on the brink of a major collapse.
But after the SAS showdown the real estate mortgage seem to have reached an interim solution.
As to Nordea Bank AB (STO:NDA-SEK) as a bank:
I can see no alternative to a graceful shutting down, which will be totally in line with the current trend in European Banking of disengagement and repatriation.
Stockholm is the second biggest banking center outside the eurozone and Swedish ministers have kept their options open on joining the banking union, while expressing their strong objections to the limited rights given to non-eurozone members.
One big area of contention is the threshold for the ECB to directly supervise a bank, should it decide to do so. Berlin wants supervision to apply to banks with more than €50bn assets, while Paris is pressing for €2.5bn. They are also wrangling over the authority of the ECB to step in when necessary and instruct national supervisors.
A senior official stressed that France fully agreed with Germany that it was important that the governance of bank supervision was set up in such a way to ensure it had no impact on the independence of the ECB’s monetary policy.
“On the proposal to place the supervisory council in Paris, it has been favourably noted,” the official said.
Comment: French bankers do not wrinkle their forehead – it is a BAR-code.
Denmark has endorsed the principle of ECB supervision, but raised questions about the influence of non-euro countries, although it has taken a less hard-line position than Sweden’s center-right coalition.
Comment: Precisely – how to kick out the Swedes. This has nothing to do with left or right – it is splitting up banks – and getting out of foreign CB’s jurisdiction.