📰 EBF Weekly Brief - Friday 24 July

FROM THE MEDIA this week

FT: European banks braced for €800bn of loan losses if pandemic worsens

European banks are facing as much as €800 billion in loan losses and a €30 billion hit to their revenue over the next three years as a result of the coronavirus crisis, according to a report from Oliver Wyman covered by various media. In a scenario with a slow economic recovery and with most countries avoiding a second lockdown bad debts would surge to €400bn, about 2.5 times the level in the prior three years. In the adverse or worst-case scenario that figure doubles and banks’ non-performing loan ratios rise to 10 per cent of their total lending. Read more (€) EUReporter Oliver Wyman Reuters

European banks in the news: UBS, Santander, BNP Paribas

Swiss bank UBS announced a net profit of approaximately €1.06 billion for the second quarter of 2020, down 11% from the same period last year as the coronavirus pandemic weighed on earnings, reports CNBC. According to Reuters, BNP Paribas, the euro zone’s biggest lender, has taken advantage of internal restructurings at European rivals, expanding its balance sheet by 23% to 2.7 trillion euros in the first quarter. BNP reports Q2 earnings on 31 July. Santander Chairman Ana Botin has said that the new EU stimulus plan should help kick-start cross-border consolidation in Europe and complete the European banking union, writes Reuters in another story. UBS BNP Paribas Santander

Deutsche Welle, FT: Unmasking the EU recovery fund

EU leaders this week agreed an historic coronavirus recovery fund for the bloc. But doling out €750 billion in grants and loans will be a tricky task. Paying it back will be even harder, writes Deutsche Welle in a thorough analysis of the plans. The Financial Times also breaks down the fund, looking closer at the financial components of the agreement. In another analysis, Politico zooms in on the negotiation process with EU Council President Charles Michel as chair of the talks. Deutsche Welle FT(€) Politico

Politico: Brexit negotiators will miss July target for outline deal

As the fifth round of talks came to a close Thursday, both sides admitted they were still a long way apart, writes Politico. Negotiators will now miss the July target to agree an outline of a deal, as discussed by the UK and EU leaders. Read more

Bloomberg: EU readies MiFID rollback to increase recovery investment

The European Union is planning to roll back landmark regulations on securities trading and investment research, arguing that softer rules on the finance industry are needed to help the economy recover, says Bloomberg. A plan to be unveiled in the coming days would loosen a key plank of MiFID II that forces investors to pay banks and brokerages for research separately from their trading fees. Read more CNBC FT(€)

FROM THE MEMBERS this week

IBfed: How policy-makers could respond to a probable discontinuity

The International Banking Federation (IBFed) and Oliver Wyman published a joint report titled “Big Banks, Bigger Techs How policy-makers could respond to a probable discontinuity”. The report shows how authorities worldwide face the difficult challenge of ensuring that regulation and supervision protects consumers and systemic stability while capturing the benefits of innovation and competition. Read more

The Netherlands: The future of Sustainable Finance

In 2018, the European Commission (EC) drew up a Sustainable Finance Action Plan. A lot has happened since then. Maryse Hazelzet, Sustainability Adviser, and Robert Jan Prins, Financial Markets Adviser at the Dutch Banking Association (NVB), have been closely involved in the consultation responses to the European Commission and European regulators. Banks make a constructive contribution to the Action Plan. Read more (NL)

Germany: Customer-bank relationship of the 60+ generation

With what is now its second study of senior citizens, the Association of German Banks wants to draw a more precise picture of the financial behaviour and expectations of older citizens towards banks. In the first part, the customer-bank relationship was examined in more detail with a view to the 60+ generation. Read more (DE)

Ireland: Sharp decline in cheque usage with 45% falloff since 2016

The latest figures from Banking & Payments Federation Ireland (BPFI) show that cheque usage continued to decline in Q1 2020 with only 6.6 million cheque payments, down from 7.8 million (-15%) in Q1 2019 and 12 million (-45%)in the first quarter of 2016. Read more

Switzerland: Convert Covid-19 credit programme into ordinary law

The Swiss Bankers Association (SBA) welcomes the fact that the Federal Council wishes to incorporate the Covid-19 credit programme into ordinary law largely unchanged. No subsequent changes to the rules and no extension of the programme are to be made. Read more (DE)

UK: Cards used for half of payments for first time last year

Card and contactless payments continued to increase in 2019, with card payments accounting for over half (51 per cent) of all payments for the first time, according to the latest UK Payment Markets report from UK Finance. Read more

FROM THE EBF this week

European employers reach agreement on job recovery

With this statement, the European Banking Federation and the signatory European sectoral employers express the clear message to public authorities and trade unions at all levels that European employers are committed to make their best efforts to continually employ and create new job opportunities in Europe, highlighting at the same time their needs to be able to do so. Read more

Supporting the EU’s vision for a responsible and strong economic recovery

With a full commitment to mitigating the impact of the Covid-19 pandemic and building a more resilient economy, the European Banking Federation supports the vision of the EU to put into motion a responsible and qualitative economic recovery. The EBF acknowledges the unique milestone reached this morning by EU leadership with a formal agreement of the Multi-Annual Financial Framework (MFF) and the Next Generation EU Recovery Fund (NGEU). Read more

Joint Business Position: Export Credits and Covid-19

EBF joined BIAC (Business at OECD) and ICC (International Chamber of Commerce) in a business position on Covid-19 and Export Credits. Read more

EBF Vacancy: Media & Communications Officer

The European Banking Federation seeks to recruit, for a full-time position based in Brussels, an experienced Media & Communications Officer who will be instrumental in ensuring a solid presence within traditional and digital media and building relations with all relevant stakeholders. Read more

FROM THE INSTITUTIONS this week

Special European Council: Main results

EU leaders agreed on a recovery package and the 2021-2027 budget that will help the EU to rebuild after the pandemic and will support investment in the green and digital transitions. The comprehensive package amounts to a total of €1 824.3 billion which combines the multiannual financial framework (MFF) and an extraordinary recovery effort under the Next Generation EU (NGEU) instrument. Read more Remarks by President Charles Michel

Brexit: Press statement by Barnier following Round 6 of the negotiations

EU’S Chief Brexit negotiator Michel Barnier said there was little-to-no progress made on the main stumbling blocks of post-Brexit trade talks – the level playing field provisions, and fisheries. The UK makes a trade agreement, at this point, unlikely, Barnier said in a press conference, saying that the UK was refusing to commit to conditions on open and fair competition, and to a balanced agreement on fisheries. Read more

ECB: A breakthrough for Europe

ECB President, Christine Lagarde, has given an interview after the announcement of the EU’s recovery package. She found that European banks are much more solid than they were at the time of the great financial crisis. Their equity is strong. Their capital ratios are high. They have buffers to guard against the potential shocks. Read more

ESRB: Analysis of large-scale corporate bond downgrade scenario

The ESRB published a technical note summarising the findings of a top-down analysis that attempts to quantify the impact of a mass bond downgrade scenario on the financial system. Read more

OECD: Advancing the Digital Financial Inclusion of Youth

The OECD Report Advancing the Digital Financial Inclusion of Youth focus on youth reflects the fact that almost half of the world's 1.2bn young people aged between 15-24 remain unbanked. The report examines the factors that contribute to youth financial inclusion and the role of digital financial services in meeting young people’s financial needs. Read more

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INNOVATION AND CYBER THURSDAYS

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ABOUT THE EUROPEAN BANKING FEDERATION

The European Banking Federation is the voice of the European banking sector, bringing together national banking associations. The EBF is committed to a thriving European economy that is underpinned by a stable, secure and inclusive financial ecosystem, and to a flourishing society where financing is available to fund the dreams of citizens, businesses and innovators everywhere.