Archive for the ‘Financial Services’ Category

Mainstream parties block Euroskeptics from top Parliament posts

Mainstream, pro-EU political parties in the European Parliament moved aggressively to block Euroskeptic and extremist groups from claiming several prominent committee leadership posts on Wednesday.

That blocking effort enraged anti-establishment forces and potentially put at risk an overall deal on the EU’s future leadership.

One group leader, Ryszard Legutko of the right-wing European Conservatives and Reformists (ECR), pointedly warned that his MEPs were less likely to support the deal on top jobs agreed by European leaders last week after one of their members — former Polish Prime Minister Beata Szydło — was blocked from becoming chairwoman of the Employment and Social Affairs Committee.

Anti-establishment forces, including far-right and extremist groups, gained strength in the recent European election. The new Identity and Democracy (ID) group, a partnership between Matteo Salvini’s League in Italy and Marine Le Pen’s National Rally in France, is now the fifth-largest group with 73 MEPs — just two fewer than the Greens.

Together, ID and ECR have 135 MEPs, far more than the 108 seats controlled by the liberal-centrist Renew Europe, backed by French President Emmanuel Macron.

But pro-European forces overall control 519 seats and they wielded that muscle Wednesday to deny the insurgent groups several positions, effectively upending the so-called D’Hondt method by which leadership positions are traditionally apportioned among parliamentary groups.

ID had expected to hold the chair of the agriculture committee but its nominee, French MEP Maxette Pirbakas, was blocked by the four pro-EU parties. They instead elected Norbert Lins, a German MEP from the conservative European People’s Party. Pirbakas was then also rejected for two vice chair positions, before voting was suspended for the final spots.

In one of the most bitter stings for the far right, the pro-EU groups also voted down an ID candidate, French MEP Gilles Lebreton of National Rally, who had expected to be chairman of the Committee on Legal Affairs.

Instead, a British liberal, Lucy Nethsingha, was elected to head the panel, which among other responsibilities maintains oversight of the limited parliamentary immunity enjoyed by MEPs. Nethsingha may be out of the Parliament come October 31 after Britain leaves the EU.

József Szájer, an MEP from Hungary’s ruling Fidesz party who chaired the initial vote in the legal affairs committee, had implored colleagues to respect the handshake agreement and the proportional formula.

“I would like to ask you, as the legal affairs committee, to observe the old traditions of the rule of law of our committees and elections, which is based on agreements by political groups,” Szájer said. “We have worked with those rules for 40 years, and if those agreements are not upheld, the consequences are unforeseeable.”

But the pro-EU MEPs were unmoved by the request from Szájer. Sylvie Guillaume, a French socialist, accused ID of having transparent motives in seeking to lead the legal affairs committee, known as JURI. “It fools no one that they chose the JURI committee, where parliamentary immunities are waived,” Guillaume said.

When Le Pen was an MEP in 2017, for example, Parliament voted to lift her immunity over pictures she tweeted of Islamic State violence.

While the blocking maneuvers essentially maintained the cordon sanitaire that pro-EU groups have used to limit the power of extremists and nationalists, the rising strength of the anti-establishment groups raises the possibility of a backlash.

Several MEPs, infuriated by the blocking effort, warned of just such reprisal in the months and years ahead.

The Euroskeptics and nationalists currently do not hold any vice presidency position in the Parliament, a remarkable absence from leadership given their overall numbers in the assembly. That means they still have no MEPs to chair plenary sittings nor any representation in the Parliament’s “bureau,” where the most important decisions on the workings of the Parliament are made.

One Euroskeptic in Parliament accused the pro-EU groups of hypocrisy, by claiming to be defenders of democracy while denying representation to minority parties.

“This is the only parliament in Europe that doesn’t give any minimal guarantee to minorities,” said a senior official from the ID group.

Pro-EU MEPs even moved quickly to disqualify candidates from the EU-critical Fidesz, which is led by Hungarian Prime Minister Viktor Orbán and has been suspended from the EPP’s pan-European party organization, but not the parliamentary group.

The Committee on Civil Liberties failed to elect its full leadership after a center-left coalition blocked a Fidesz candidate for vice chair. Rather than allow the election of Hungarian MEP Balázs Hidvéghi, the pro-EU groups nominated Damien Carême, a French Greens member.

Fidesz was not entirely denied, however: Its MEP Tamás Deutsch won a vice chair position on the budgetary control committee.

The vote against Szydło, Poland’s former prime minister, prompted the fiercest response. After she was voted down, ECR leaders warned their MEPs were far less likely to support the overall cross-party deal on the EU’s future leadership including the nomination of German Defense Minister Ursula von der Leyen for Commission president.

“We are incredibly disappointed with the behavior of some MEPs in the employment committee today,” said Legutko, the Polish leader of ECR. “At the European elections, Beata Szydło received the highest number of preference votes in Polish history and one of the highest of any individual across the whole EU. That MEPs in the Parliament’s employment committee would reject her candidacy as chair is an insult to her voters and hardly encourages us to support a cross-party consensus next week.”

Lili Bayer, Laurens Cerulus, Laura Kayali, John Rega and Eddy Wax contributed reporting. 

The next European Commission: What we know so far

The next European Commission is taking shape.

The current EU executive remains in office until the end of October but some governments have already announced their candidates for the next five-year term.

That doesn’t mean all of those nominees will end up at the Commission’s Berlaymont headquarters in Brussels. Every nominee will need the approval of the Commission’s new president and the European Parliament to take office.

Ursula von der Leyen, the European Council’s nominee for Commission president, herself still needs to be confirmed by the European Parliament.

But the announcements so far give a good indication of who’s staying, who’s joining and who’s leaving.

Here’s what we know so far:


Valdis Dombrovskis, Latvia, European People’s Party (EPP)
Current role: The European Commission’s vice president for the euro and social dialogue
Expected role in the new Commission: Latvia is hoping to get a portfolio connected to finance and the economy, according to one official.

Mariya Gabriel, Bulgaria, EPP
Current role: European commissioner for digital economy and society
Expected role in the new Commission: 
Bulgarian Prime Minister Boyko Borissov has said that he turned down the post of high representative for foreign policy for his country and wants a “a commissioner with a real portfolio.” He also said he would be keen to keep the digital portfolio for Bulgaria.

Phil Hogan, Ireland, EPP
Current role: 
European commissioner for agriculture
Expected role in the new Commission: 
Hogan could stay on as agriculture commissioner, but his name has also been floated as a possible trade commissioner.

Maroš Šefčovič, Slovakia, Party of European Socialists (PES)
Current role: European Commission vice president in charge of the energy union
Expected role in the new Commission: Slovakia is hoping to get a vice president role with a “strong portfolio,” according to one official.

Frans Timmermans, Netherlands, PES
Current role: European Commission first vice president
Expected role in the new Commission: While Timmermans’ party is not in power in his home country, the Netherlands is nevertheless expected to nominate him. He is likely to take the position of first vice president in the new Commission.

Margrethe Vestager, Denmark, Alliance of Liberals and Democrats for Europe (ALDE)
Current role: European commissioner for competition
Expected role in the new Commission: Vestager is also expected to take a senior post in the new Commission, under a deal agreed by the European Council of EU leaders.


Josep Borrell, Spain, PES
Current role: Spain’s minister for foreign affairs
Expected role in the new Commission: The Council has nominated Borrell as the next EU high representative overseeing foreign affairs and security policy.

Nicolas Schmit, Luxembourg, PES
Current role: Member of the European Parliament and former minister for labor, employment, and social economy. Luxembourg’s government is set to nominate Schmit as part of a coalition deal.
Expected role in the new Commission: Schmit has expressed interest in a social policy portfolio.

Kadri Simson, Estonia, ALDE
Current role: Simson served as Estonia’s minister of economic affairs from 2016 until 2019.
Expected role in the new Commission: It’s not certain what role Simson could receive, but in a letter to the Council, Prime Minister Jüri Ratas highlighted her expertise in energy, transport and the internal market.

László Trócsányi, Hungary, EPP
Current role: Trócsányi served as Hungary’s justice minister from 2014 until 2019 and is now a member of the European Parliament.
Expected role in the new Commission: “I certainly have some preferences in this matter but I think it’s too early to talk about them yet,” Trócsányi said in response to a question from POLITICO. According to one senior Fidesz official, Trócsányi is interested in the enlargement portfolio.

Jutta Urpilainen, Finland, PES
Current role: A member of Finland’s parliament, Urpilainen served as the country’s finance minister from 2011 until 2014.
Expected role in the new Commission: While it remains unclear what position Finland would get, Urpilainen’s experience could lead to a finance-oriented portfolio.

Ursula von der Leyen, Germany, EPP
Current role: German defense minister
Expected role in the new Commission: The Council nominated von der Leyen to become the next president of the European Commission.


Johannes Hahn, Austria, EPP
Current role: European commissioner for neighborhood policy and enlargement
It’s possible that Austria will nominate Hahn for another term. As the country is currently being governed by a technocratic interim Cabinet, the major parties in the Austrian parliament will have to agree on a candidate. The far-right Freedom Party’s leader Norbert Hofer, for one, has said he can “imagine” Hahn staying at the Commission.

Věra Jourová, Czech Republic, ALDE
Current role: European commissioner for justice, consumers and gender equality
Jourová is hoping to stay at the Berlaymont, but much depends on a brewing domestic political crisis in Prague.

Pedro Marques, Portugal, PES
Current role
: Member of the European Parliament and former minister
Portugal’s government is hoping to nominate Marques and is eyeing the regional development portfolio.


Andrus Ansip, Estonia, ALDE
Current role: Ansip was the European Commission’s vice president for the digital single market but has resigned to take up a seat in the European Parliament.

Elżbieta Bieńkowska, Poland, EPP
Current role: European commissioner for the internal market, industry, entrepreneurship and SMEs

Miguel Arias Cañete, Spain, EPP
Current role: European commissioner for climate action and energy

Corina Creţu, Romania, PES
Current role: Creţu was the European commissioner for regional policy but has resigned to take up a seat in the European Parliament.

Jean-Claude Juncker, Luxembourg, EPP
Current role: President of the European Commission

Jyrki Katainen, Finland, EPP
Current role: The European Commission’s vice president for jobs, growth, investment and competitiveness

Julian King, United Kingdom, unaffiliated
Current role: European commissioner for the security union

Carlos Moedas, Portugal, EPP
Current role: European commissioner for research, science and innovation

Neven Mimica, Croatia, PES
Current role: European commissioner for international cooperation and development

Federica Mogherini, Italy, PES
Current role: High representative for foreign affairs and security policy

Pierre Moscovici, France, PES
Current role: European commissioner for economic and financial affairs, taxation and customs

Tibor Navracsics, Hungary, EPP
Current role: European commissioner for education, culture, youth and sport

Günther Oettinger, Germany, EPP
Current role: European commissioner for budget and human resources

Marianne Thyssen, Belgium, EPP
Current role: European commissioner for employment, social affairs, skills and labor mobility

Laura Kayali contributed reporting.

No-deal Brexit now a ‘significant risk’: Irish finance minister

Ireland is anticipating the worst come Brexit day, October 31.

“We now believe that the prospect of a disorderly Brexit occurring is a significant risk,” Finance Minister Paschal Donohoe said ahead of a meeting of EU finance ministers Tuesday.

“The Irish government is meeting today now to review our readiness for dealing with this great challenge.”

Donohoe stressed Ireland’s intention to maintain its commitment to the EU, while also seeking the bloc’s continued support to weather the Brexit turbulence.

“We have very strong commitments to the European Union that we will maintain. I’m very confident that our new leaders of our key European institutions will continue to show the understanding and support that current leaders have shown.”

According to the Irish Times, ministers will be briefed on the “dire consequences for Northern Ireland and the all-Ireland economy” in a Cabinet meeting today. Dublin is seeking to avoid a hard border on the island while avoiding a situation in which Northern Ireland becomes a backdoor into the EU.

“If that happens then the Republic of Ireland will essentially get taken out of the single market by default and we can never allow that to happen,” Foreign Affairs Minister Simon Coveney said ahead of the Irish Cabinet meeting.

A revised 100-page contingency plan is expected to be published after the meeting.

How the financial industry and the law firms that support it are preparing for Brexit

rebecca christieThe three years since the referendum have given the financial sector plenty of time to prepare for Brexit, writes Rebecca Christie (Bruegel). Thousands of lawyers have registered to practise in Ireland and firms are using Brexit as a chance to diversify, relocating some services elsewhere in the EU.

The UK is leaving the European Union, in spirit if not in immediate legal jurisdiction. While the next phase of Brexit won’t emerge until October, the financial sector is already on the move. London, long the dominant hub for bankers and investors, will cede ground to a quartet of cities within the EU core. In turn, London’s lawyers are moving to Dublin, raising questions about how they can work cross-border going forward.

samuel beckett bridge dublin

The Samuel Beckett Bridge in Dublin. Photo: William Murphy via a CC-BY-A 2.0 licence

Paris, Frankfurt, Amsterdam and Dublin are the locales with the most to gain overall from the transition, with Luxembourg, Brussels and Warsaw all picking up business as well. Rather than a unified mass transition out of London to another singular hub, the financial industry is using Brexit as an opportunity to diversify. Just as banks have learned to keep their headquarters and back-up facilities in separate physical locations, now they are splitting up their operations in terms of function and human capital.

A lot of the discussion has focused on risk and loss. What is London giving up? What infrastructure shortcomings will emerge? What will it cost and who will shoulder the burden? The modern world has grown accustomed to seamless trading, so any threat to the financial plumbing is a serious concern.

At the same time, Brexit has sparked a transition with some positives. Each of the European cities that gains a share of London’s departing business will see a boost from the jobs and households that will relocate – not just in the short run but in the years to come, as financial firms choose not just where to move but where to set up future operations. For every big insurance company or American bank that moves its EU headquarters to Dublin, for example, a cluster of smaller supporting businesses is likely to emerge. For every executive household a bank needs to move to Paris, a corresponding drop in living expenses is likely to offset the cost of the move.

For the European Union as a whole, this transition can be promoted as offering something for everyone, with benefits spread widely among the 27 countries who remain in the bloc. There are also benefits for London, especially in the eyes of the Brexit-backing public. For those voters, a smaller City is an attraction, not a drawback. If London’s real-estate market cools off, and if global investors lose a little of their thirst for a UK pied-à-terre, it opens up housing for locals. Likewise, if London loses some of its swagger, Britain’s less urban populations may regain some of their voice.

Where the UK specifically is concerned, financial-adjacent business may bear the brunt of issues yet to be resolved. For example, lawyers will not only need to negotiate the Brexit transition, they will need to manage it for their own profession.

Ireland, one of the few EU jurisdictions that is both English-speaking and under a common-law rather than civil-law framework, has been the epicentre of changes to the legal profession. British lawyers have signed up to the Irish bar since the prospect of Brexit emerged, as big law firms register their staff en masse. As of the end of May 2019, a total of 2,970 England and Wales solicitors had been admitted to the Irish Roll of Solicitors since January 1st 2016, with about 600 more applications at various stages of being processed. These lawyers in transition now make up nearly 15% of the total.

Figure 1: English and Welsh solicitors joining the Irish rolls

The red line represents the total number of English and Welsh solicitors joining the Irish rolls. As of the end of May 2019, there were 19,888 solicitors registered on the Irish Roll of Solicitors. As of that date,14.9% of solicitors on the Irish Roll were England and Wales solicitors that had enrolled since June 2016. (Data provided by the Irish Law Society, June 2019)

This has further raised the question of what Ireland will consider valid residency for those who practice law in its system. For now, the answer to this complex question depends on how the EU’s relationship with post-Brexit Britain takes shape. Under some scenarios, this could greatly complicate working relationships, especially for London-based clients. Will they continue to be able to use a London-based lawyer to manage their EU affairs, or will they need to switch to partners in Brussels or Dublin to make sure everything can work smoothly? In the past, Europe has been willing to travel to London, but now Londoners may need to make the journey in reverse.

The EU will face tough choices over when and if to offer mutual recognition to regulators in non-member countries. It will be difficult to create Brexit-proof legal contracts when the shape of the new legal order has yet to emerge. The post-Brexit recognition and enforcement of English judgments across the EU remains unclear. Unless and until these issues are resolved, there is likely to be additional complexity, uncertainty and risk for businesses and individuals as a result of Brexit,” the Irish Law Society wrote.

Britain seems confident it won’t be a huge shift, and so far the financial-sector numbers back that up: banking assets leaving London amount to only about 10% of the total so far, according to think-tank New Financial. It’s possible this amounts to the tip of the iceberg, but it is equally possible that financial business flows gradually away from London in a way that shrinks but doesn’t decimate the metropolis’ role as a financial hub. Inertia is a common European response to managing thorny problems.

In the three years since the UK’s 2016 referendum on EU membership, the markets have had plenty of time to prepare. Banks and other financial firms are establishing or activating licenses within the EU, designing systems that will work under a variety of outcomes and taking a flexible approach to their workforces. Official-sector actors might have a tougher road – EU institutions may be barred from doing business with financial firms that aren’t subject to EU legal proceedings, for example. But while the financial industry would prefer an orderly and well-planned transition, in the event of a hard Brexit most private market participants will still be fine.

For most of the industry, contingency planning and transition periods are already in place: licences have been set up and activated, legal frameworks are already under revision. The European Commission said on June 12 2019 that the financial sector has made “significant progress” in getting ready, pointing out a few areas to work on in the run-up to the next deadline. “Insurance firms, payment services providers and other financial service operators which remain unprepared regarding certain aspects of their business (for example contract management and access to infrastructures) are strongly encouraged to finalise their preparatory measures by 31 October 2019”.

Generally speaking, workarounds are possible and transition periods are part of every scenario. “After a thorough examination of the risks linked to a ‘no-deal’ scenario in the financial sector, the Commission has identified only a limited number of contingency measures to safeguard financial stability in the EU27,” the EU’s executive branch said in December. For critical pieces of financial infrastructure, the EU has already made clear that adjustment periods are part of its contingency planning. For example, the plans published at the end of last year included a 12-month extension for derivatives clearing and contract novation, and a 24-month guaranteed equivalence status for UK central depositaries used by EU firms; the latest guidance suggests those can be adjusted as needed depending on the date of exit.

It’s conceivable that after Brexit, the UK might remain within the single market or a customs union with the EU for an extended transition, or indefinitely. This would be a triumph for negotiators on both sides if it could be agreed, especially given the setbacks faced by the originally negotiated and so-far unadopted Withdrawal Agreement. Generally speaking, whatever new framework emerges is likely to have more roadblocks than the status quo and may wobble whenever Britain’s domestic politics flare up.

Also in question is what happens if Britain never leaves at all. While the UK has shown no sign of wanting to reverse course, it also is currently without a prime minister or a workable strategy. As last month’s European Parliament elections show, anyone planning a post-Brexit Europe also needs to plan around including a UK that hasn’t actually left. At its most extreme, this might even mean that a future British government revokes Article 50, hitting reset on the status quo and raising a slew of questions about what measures would remain available to a member state with one foot, but only one foot, perpetually half out the door. So far, outright discussion of these possibilities remains confined to backchannels and coffee chatter. But as October nears it has begun to leak into the public sphere, as British officials repeatedly rule out ‘no deal’ without any sign of getting closer to an agreement.

Regardless of where Brexit stands, the EU will need to integrate its capital markets more fully in order to support economic growth and guard against the next financial crisis. Anti-money laundering is a thorny EU conundrum, if not especially Brexit-linked. More generally, cross-border banking brings challenges for regulators in the ‘home’ countries of firms’ financial headquarters as well as the ‘host’ countries where they do much of their business. Should regulators require firms to tether some of their assets to specific locations, or is the system safer when capital can flow freely across borders? How can financial firms merge when every country has its own insolvency proceedings and other local infrastructure? And how will the new system decide which judges and lawyers have the authority to settle these disagreements?

Whether or not London stays in the single market, the EU will have to come to grips with whether to concentrate on a centralised, homogenous regulatory framework or allow regional differences to prosper in support of a diverse and competitive financial sector. Big countries and small countries may find they have different interests in the amount of local flexibility that should be allowed, and Europe will have to build a workable system that takes these competing interests into account. Brexit will be a catalyst for all sides to push for change on their priorities.

This post represents the views of the author and not those of the Brexit blog, nor LSE. It first appeared at Bruegel.

Rebecca Christie is a Visiting Fellow at Bruegel. She was previously a political correspondent in Brussels for Bloomberg News.

Powered by WordPress | Designed by: index backlink | Thanks to insanity workout, car insurance and cyber security