Brussels, 19/02/2015 (Agence Europe) - On Wednesday 18 February, several political groups of the European Parliament and interest groups commented on the presentation of the European Commission's consultation on the capital markets union (CMU), which aims, amongst other things, to reduce the weight of banking intermediation in the financing of the economy in Europe (see EUROPE 11256 and 11254).
On behalf of the ECR group, Kay Swinburne of the UK welcomed the areas for reflection identified by the Commissioner for Financial Services, Jonathan Hill, to promote the expansion of a “vibrant” capital market. In particular, she welcomes the approach of the Commissioner who is, she believes, “absolutely right not to push for another centralising regulatory solution, but for simple and effective measures”. Sven Giegold (Greens/EFA, Germany), on the other hand, feels that Hill should “seize this opportunity to reform the finance market in order to make it compatible with European values”, instead of setting in place a CMU “with a one-sided and short-term focus on shareholder value”. However, he welcomed the proposals to simplify financial products aimed at small investors. He believes that the CMU should promote long-term investments which prioritise social and environmental criteria and that there should be an accompanying reinforcement of the European financial supervision authorities.
The organisation BUSINESSEUROPE, which welcomes the Commission's proposal, stresses the five areas which would help to improve investment: applying banking union, striking a balance between financial stability and support for investment, developing an alternative to bank finance, bringing in a supportive tax environment for businesses and making the best use of public money to leverage private investment. On behalf of Insurance Europe, Olav Jones expressed his hopes that the CMU will be the opportunity to lift barriers to long-term investments. Similar satisfaction was voiced by EUROCHAMBRES, which feels that the Commission is addressing the right issues: driving high-quality securitisation, relaxing capital requirements for investment in infrastructure, streamlining prospectus requirements for businesses wishing to raise capital on the markets and tackling the longer-term goal of dealing with highly diverging tax and insolvency regimes.
The IFRS Foundation, which is responsible for the governance and oversight of the International Accounting Standards Board, which develops the international financial reporting standards (IFRS), believes that a single regime for accounting standards can play a “fundamental role” in the creation of a CMU which provides “comparable and transparent” information, that allows investors to make informed decisions.
The French banking federation (FBF) stresses that the transition to a new balance between bank and market finance is already a reality which is taking shape at different rates, depending on the size of businesses. In France, 40% of corporate financing comes from the capital markets, the Federation points out. Among the measures it recommends are the creation of a “solid and transparent” securitisation market through the creation of a “shared label” and the use of “public-provided guarantees”, if required.
Not all of the comments made were quite as positive. Although UEAPME does not deny that the CMU can play a role in the financing of start-ups and fast-growing SMEs for which bank lending is not an adequate form of finance, it warns against seeing the CMU as “a solution for all access to finance problems for SMEs”. The vast majority of these depend mainly on bank finance and the organisation therefore calls for measures to increase the ability of banks to lend to SMEs, particularly at local level.
The organisation Finance Watch, which defends general interests against the financial sector, is “sceptical” about key parts of the CMU. “It is not clear that capital markets need to play a larger role in channelling financing to the economy”, it states. According to the organisation's Secretary General, Christophe Nijdam, “by promoting the investment and universal banking model via a revival of securitisation, the CMU might promote the model that required a bailout during the crisis and whose vulnerabilities have yet to be comprehensively addressed”. “Transferring risk to institutional investors such as pension funds might create an additional moral hazard”, he notes. On a positive note, Finance Watch supports the announced revision of the 'prospectus' directive and the boost to the private investment markets, as well as the creation of a “strict” regulatory framework ruling out the possibility of 'tranching' in securitisation operations (see EUROPE 11246). Lastly, the organisation calls for measures to support the demand for credit, with the Commission to focus in particular on finance available. (Mathieu Bion)