Monday 24th April 2017
NEWS TICKER, 24st April: HSBC has secured the advisory mandate for Saudi Aramco’s upcoming IPO, which is expected to be the benchmark deal of this deal, both in terms of pricing, demand and size of offering -- InfraCo Africa will contribute $1.65m to the financing of the 50-MWp Abiba Solar project in Nigeria -- Fiat Chrysler Automobiles UK Ltd has announced a major restructuring of its senior management team. The changes come with immediate effect. Alejandro Noriega has been appointed country manager, Fiat and Abarth, and will oversee retail sales and marketing for the two brands. Noriega was previously head of the Fiat Professional brand and his experience and track record in commercial vehicles equips him well to take on Fiat and Abarth. Richard Chamberlain is the new country manager, Fiat Professional, responsible for all business activities of FCA UK's award-winning commercial vehicle division. Richard joined FCA in November 2016 from Renault Trucks, and has experience at both OEM level and dealer retail, having also worked for Inchcape Mercedes as National Corporate Manager. Lee Titchner has been appointed Network Development Director, responsible for FCA dealers across the UK and Ireland. Lee moves from his previous role as head of FCA UK’s Mopar division to oversee the dealer network, where he is already well-regarded. Also, Sebastiano Fedrigo has been named as the new Mopar Service, Parts & Customer Care Director. Sebastiano previously headed up the Fiat and Abarth brands in the UK and Ireland, and will now leverage his considerable passenger car and commercial experience to grow Mopar, its products and its services, in this country. Previous country manager for Jeep/Alfa Romeo, Damien Dally, has moved to a role in FCA HQ, Turin. His replacement will be announced in due course -- MNI PINCH reports market pricing no chance of a 25bp rate hike at the next meeting on May 3rd, however the probability of a hike in June has risento 66% from 41.5% seen last Wednesday and in July, markets are pricing in a 70% chance of a hike, up from 50%. While the next full 25bp rate hike has been brought forward to September 2017 from Dec, according to MNI PINCH calculations - According to US GovInfoSecurity E news, new documents dumped online by the Shadow Brokers group have revealed apparent NSA programs designed to target SWIFT service bureaus in the Middle East, as well as a slew of exploits designed to infect Windows systems, patched last month by Microsoft – The US is gradually upping the stakes in its attempt to change the terms of trade with selected countries. In the latest salvo by the Trump administration, Secretary of Commerce Wilbur Ross has announced the initiation of a new antidumping duty (AD) investigation of imports of carton-closing staples from the People’s Republic of China. “The Department will act swiftly, while assuring a full and fair assessment of the facts, to ensure that everyone trades on a level playing field,” says Secretary Ross. “The Trump administration is committed to the enforcement of America’s vital trade laws that ensure US businesses and workers have a fair chance to compete.” The petitioner, North American Steel & Wire, Inc./ISM Enterprises, filed a petition seeking relief from the effects of dumped merchandise on the US industry on March 31st. More than 30 Chinese producers of carton-closing staples are identified in the petition. The estimated dumping margins range from 13.76% to 263.43%. In 2016, imports of carton-closing staples from China were valued at an estimated $73.2m -- Private equity-owned ING Life Insurance Korea says it has priced its IPO near the lower end of an indicative range to raise a total of $973.54million. It priced the IPO at 33,000 won per share, compared with an indicative range of 31,500 won to 40,000 won per share, ING Life said in a filing.

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Kathleen Hughes, European Head of Institutional Sales at Goldman Sachs Asset Management Kathleen Hughes, European Head of Institutional Sales at Goldman Sachs Asset Management

Has Europe reached a regulatory peak?

Thursday, 20 April 2017
Has Europe reached a regulatory peak? Europe has reached a regulatory peak, says Kathleen Hughes, European Head of Institutional Sales at Goldman Sachs Asset Management http://www.ftseglobalmarkets.com/media/k2/items/cache/a2f21c11a5c425b305bb162a5c4c1fec_XL.jpg

Europe has reached a regulatory peak, says Kathleen Hughes, European Head of Institutional Sales at Goldman Sachs Asset Management

Brexit continues to grab the headlines following last month’s long-awaited triggering of Article 50, but alongside this landmark in the history of the EU, another critical development is gathering momentum: a reappraisal of the huge corpus of financial regulation introduced by EU supervisors since the financial crisis. Both are likely to prompt a reversal in the decades-long trend of harmonisation.  While this won’t result in a loosening of standards, there will be implications for all participants in financial markets.

Three things to watch

Single again?

If the UK is to retain access tariff-free to the single market, roughly equivalent standards in some capacity will be required to enable business to continue with the EU, its biggest trading partner. This principle of mutual recognition is a reality for any trading relationship.

To a degree yet to be determined, it is unlikely that the UK will retreat from much of the EU regulatory settlement in financial services, given that the UK and the EU had common cause over much of it – to the extent that UK regulators frequently “gold-plated” EU rules.

Financial regulation in Europe has passed its peak.  

In the financial sector across Europe, the pendulum is swinging back from the imposition of new regulation, and instead is focusing increasingly both on areas of potential overlap and on addressing any unintended consequences. This review is not necessarily related to US developments so much as to a recognition that rules were getting onerous, particularly within an environment of weak growth and reduced lending.

The reform process since the crisis has been slower in Europe than it has been in the US; it has also been more complex, with 41 major pieces of legislation compared with one. Regulatory tightening probably peaked with the implementation of the Basel III rules, and regulators have since been working with market participants to scale back. Standards will still get tougher, as new measures are implemented over the next few years, but they are less aggressive than originally drafted.

Clarity on regulation is important for banks, in order for them to switch their focus from building up capital to ramping up lending, which in turn is beneficial for consumers and businesses. Lending in the US has been more robust and balanced in terms of supply and demand, and our expectation is that Europe will start to catch up, particularly against a backdrop of improved economic growth.

De-harmonisation.

As European regulators row back, a global fragmentation is also likely to take effect, as authorities worldwide retreat from the attempt to enforce global standards.

Since the early 1990s, regulators have worked toward global harmonisation and standards for capital requirements were introduced to help build trust in foreign banking systems, and promote the globalisation of banking products and services. That trust broke down after the financial crisis, as regulators turned inward, focused increasingly on their own banking systems rather than broader global networks. Re-regulation has been brought into effect as each jurisdiction has revised its own standards in isolation, with more barriers being erected on the basis that it is easier to supervise smaller banks with compartmentalised capital and funding.

As formal divorce proceedings begin for the UK and the EU, and as supervisors around the world assess the implications of their attempts to stave off the next crisis through smarter and more integrated rules, a few likelihoods – if not always certainties – are emerging.

One, the UK certainly is leaving the EU, but that doesn’t mean a wholesale retreat from its current regulatory stance; two, EU supervisors know that they have overreached themselves and will seek to repair the unintentional damage this has caused; three, the emphasis in regulation has turned from global to local, with a proportionate change on the winner/loser ledger board in financial services.

So much else remains unknown, but we are confident that these will remain guiding trends as the regulatory and political cycle enters its next phase. 

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