European Banking Union:
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The EU ended a two day summit on Friday, where the most substantial result of the nightly negotiations was a somewhat equivocal compromise about the establishment of a European Bank Inspection.
EU President Herman Van Rompuy stated at the final press meeting, that a model will be found that secures countries like Denmark influence in the bank inspection – though they are not members of the Euro-zone.
The compromise assumes that the Bank Inspection will not (as the EU-Commission wanted) be ready at the end of the year; but the legal basis will be in place at that time so the inspection can be phased in during 2013.
Now this could be construed as a victory for Danish PM Helle Thorning-Schmidt – as well as Sweden.
Considering that Danske Bank A/S (CPH:DANSKE) (PINK:DNSKY) has already received at loan of 5 billion EUR from the European Stability Mechanism (ESM) it would be difficult to avoid considering that.
Dagens Nyheter (Sweden) has:
The bank union is necessary to achieve stricter inspection and confront a new crisis timely. Sweden wants its own strict rules and would manage to stay out. The consequence could the be a split control of trans-boarder banks like Nordea.
That is exactly the crux of it all!
Nordea Bank AB (STO:NDA-SEK) is a 20% Swedish state owned bank, with large branches in the Euro-zone countries, like Finland, and the Baltic countries, not to mention it is Denmark’s second largest bank. How can you have the ECB inspecting a non Euro-zone bank and a non Euro-zone bank inspection, inspecting a Euro-zone foreign bank?
Well the logical answer is: You can’t! This would mean a European Bank inspection for Nordea inspecting a non-Euro-zone state with its own bank inspection – and according to which standard? You can’t have that either. The answer is: Nordea logically can’t exist. It is a question of which government is liable.
My suspicion is that is the whole point in the exercise; Nordea and Danske Bank are to be chopped up as firewood.
As Helle Thorning-Schmidt seems delighted, and now demands the major opposition party to take a stand, according to JyllandsPosten:
I think I’ll start on that one somewhere else.
Denmark has a parliamentary system, where the executive can’t, at any time, have a parliamentary majority against the government. Fair enough; but Helle Thorning-Schmidt has the further problem of the government agreeing with itself.
The last month has seen a major reform sail through parliament without problems, as the Liberals more or less asked for the dotted line to sign on. However, this reform (and others as well) gave rise to a tiff with the extreme leftist party – to the undiluted delight of the Danish public, as the extreme left was brushed off – and their leader Johanne Schmidt-Nielsen lost any resemblance of decorum in a geyser of fury.
That led to the leftist party IN the government forcing their chairman to resign and electing a new chairperson, Anette Wilhelmsen, who was put through a two day interview by both Helle Thorning-Schmidt and Margrethe Vestager, the center leader and minister of economics.
Having been raised (or curbed) in the 1960’s and 1970’s militant feminism with their demand for a new world order: “When women take over all power things will be different!”
Well they most certainly have become different – I’m not saying better or worse – but VERY different.
The PM has a majority in parliament, but not necessarily within her own coalition government, with its supporting party.
If some Americans have a problem with a black president and where he was born: You haven’t seen anything yet! Trust me! Five women centrist- left party leaders having PMS simultaneously! You’ll long for your idyllic presidential campaigns with houses of different majority!
Jörg Asmussen from ECB board has more perspective and cuts through the politics:
He concludes from the summit:
1) The Central Bank Inspection will inspect all 6000 banks in Europe
2) The Central Bank Inspection will set the standards as to when and how the ESM will be able to rescue a bank.
3) The Central Bank Inspection will secure that a national bank inspection is not to lax in its standards.
But that will NOT deprive the national government of its liability for any loans the ESM extends.
Irish Times has:
Moments after Mr Kenny declared in Brussels that he had achieved solid progress overnight at a tense EU summit, Dr Merkel moved abruptly to curtail the scope of the effort to break the link between bank and sovereign debt.
The chancellor’s intervention, which took high-level EU figures by surprise, has cast a new cloud of uncertainty over the feasibility of Mr Kenny’s demands.
For the first time in public, she backed her finance minister, Wolfgang Schäuble, in his assertion that national bodies must remain responsible for most banking debts.
Again, the Banking Union has in principle nothing to do with the Euro!
If a bank receives aid from the ESM – they are the creditor – and the national government is liable. If banks are not inspected to the Bank Union standard, the option of ESM aid is not applicable.