Brussels, 30/01/2007 (Agence Europe) - On Tuesday 30 January, several MEPs from the economic and monetary affairs committee asked Charlie McCreevy about EU/US relations in the arena of financial services, a theme that is very dear to the heart of the current German presidency (EUROPE 9353). The European commissioner for the internal market had come to give an update on the state of play regarding European financial services, and reiterated his refusal to take action over stock market mergers and European level legislation on hedge funds.
Alexander Radwan (EPP-ED, Germany) mentioned Europe's “naiveté” with regard to the dossier on stock market mergers in Europe (EUROPE 9312 and 9339). He deplored the fact that “We are multiplying seduction measures to attract foreigners and that one day we could become subject to US regulation”. He compared this attitude to the maximum limits on foreign holdings on the stock exchange in Japan and on the “New York Stock Exchange” (NYS), set at 20% and 10% respectively. German Social Democrat Udo Bullmann exclaimed, “the others are paying a lot of attention to protecting their power. Why don't we adopt the same attitude?” French Socialist Pervenche Berès said that, “there is a difference between an open Europe and a Europe on offer”. The president of the parliamentary committee considers that European companies are being hit by a “double whammy”: they face “virulent” competition in the EU from US firms while their access to the American market is limited. Another “competitive disadvantage” can be seen with the Security Exchange Commission (SEC), which according to Berès, benefits from “exceptional powers that do not have a European level equivalent”. Wolf Klinz (EPP-ED, Germany) asked “Do you think that the change in the majority at the US Congress means the beginning of an evolution in the positions of the USA in financial services?”
Mr McCreevy traced the route they had been taking since adoption of the US Sarbanes-Oxley Act in 2002, following the Enron and Worldcom scandals. He gave a number of examples: the road map that is expected to lead to mutual recognition of accounting standards used in the EU and US by 2009, the work on ways that European companies can avoid not being quoted on the US stock exchange, reform of the US' “discriminatory” reform that applies to foreign companies in the reinsurance sector, implementation from 2009 of the “Basle II” rules in the US on capital requirements for credit establishments. He said that transatlantic cooperation on financial markets paid dividends and that they had shown that a partnership approach could achieve tangible results. He said that he agreed with the German presidency that a greater political boost would prove useful. The commissioner repeated his position on stock markets and that it was up to shareholders to decide on the matter. He said that he did not agree with MEPs who thought that there was too much US legislation imposed in Europe. The European commissioner said that they had no chance of having a European monitoring authority and affirmed that he preferred evolution to revolution in this domain.
British Conservative John Purvis sought the opinion of McCreevy on Angel Merkel's concerns about the possible threat of hedge funds on financial markets (EUROPE 9308). The commissioner said that they did not need European legislation for the instant, and that it was false to say that there were no rules in this area, particularly in the United Kingdom, where most of these funds were based. Nevertheless, he was not in favour of these funds being available to the man or woman in the street. Luxembourg Socialist Robert Goebbels said that this clearly revealed the problem of surveillance of these speculative funds because the man in the street was being invited to place his savings in pension funds that can access alternative funds. He made a reference to the Amaranth hedge fund in September 2006 that swallowed up $6bn in speculation over energy prices. Germany has put this dossier on the G8 agenda of the most industrialised countries, a body that it is chairing this year. On Tuesday 30 January Peer Steinbrück, the German minister of finance said at the Ecofin Council, “We simply want to have a discussion on how to tackle potentially systemic risks”.
McCreevy said that an agreement at the Ecofin Council on 27 February on the directive on payment services would be difficult but still remained an objective. He said that he was confident that work on revising safeguard criteria on mergers and acquisitions in the financial sector would produce something in the next few weeks (EUROPE 9353). In spring the Commission will be presenting a communication on its future strategy for the retail financial services market. (mb)