by Pablo Hernández de Cos

In many ways, the recent banking turmoil was the first “real” stress test of the banking system (or at least parts of it) since the Great Financial Crisis; as the banking system benefited from the huge scale of public support measures during the Covid-19 pandemic. We can take some comfort that the significant increase in financial resilience, due in large part to the Basel III reforms, has served to safeguard the stability of the global banking system. But we should also recognise that, once again, significant public sector intervention was needed to avoid potentially adverse spillovers to other banks, non-bank financial intermediation (NBFI) entities, and ultimately the real economy. With that in mind, we need to remain focused on assessing and mitigating the risks and vulnerabilities affecting the global banking system. These include elevated debt levels and stretched asset valuations, geopolitical developments, complex and opaque bank interconnections with NBFI entities, and continued uncertainty with regard to economic growth, inflation and interest rate dynamics. Continue reading…

On 28 December 2022, Luxembourg submitted to the Commission a request for the disbursement of €20.2 million under the Recovery and Resilience Facility (RRF). The request was based on the achievement of the 26 milestones and targets for the first instalment, as outlined in the Council Implementing Decision approving the plan. This includes the entry into force of the “Housing Pact 2.0” reform aimed at increasing the supply of affordable rental housing offered by municipalities, as well as the digitalisation of the public sector with the development of the “MyGuichet.lu” mobile application. It also covers green mobility measures with, for instance, the implementation of a legal framework setting a minimum percentage of clean vehicles in public procurement contracts. The milestones and targets also confirm progress towards the completion of investment projects related to ultra-secure communication with the Luxembourg Quantum Communication Infrastructure Laboratory, the upskilling of the workforce with the launch of the “FutureSkills” programme, and the digitalisation of health.
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The European Commission has adopted a package to further simplify its procedures for reviewing concentrations under the EU Merger Regulation. The package includes: (i) a revised Merger Implementing Regulation (‘Implementing Regulation’), (ii) a Notice on Simplified Procedure (‘Notice’), and (iii) a Communication on the transmission of documents (‘Communication’). The  package is expected to bring significant benefits for businesses and advisers in terms of preparatory work and related costs. It aims to simplify and expand the scope of the Commission’s review process of unproblematic mergers (‘simplified cases’). It also seeks to reduce the amount of information required for notifying transactions in all cases and to optimise the transmission of documents. As such, today’s package contributes to achieving the Commission’s objective to reduce reporting requirements by 25%, as announced in its Communication on Long-term competitiveness of the EU. The new rules will be applicable as of 1 September 2023. Continue reading…

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has fined S&P Global Ratings Europe Limited (S&P) a total of EUR 1,110,000, and issued a public notice, for breaches of the Credit Rating Agencies Regulation (CRA Regulation). ESMA found that S&P published credit ratings before the concerned securities were issued by the rated entities and announced to the market. This was due to internal control failures and led to breaches by S&P of its transparency obligations.

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This proposal aims to harmonise the rules on transfer of criminal proceedings within the EU. Member States currently transfer criminal proceedings between themselves using a patchwork of different legal instruments. For example, the European Convention on the Transfer of Proceedings in Criminal Matters of 15 May 1972 was ratified and applied only by 13 Member States. The majority of the Member States therefore rely on Article 21 of the European Convention on Mutual Assistance in Criminal Matters of 20 April 1959, under which transfer is largely unregulated and relies on national laws. In 1990, Member States signed an Agreement on the transfer of proceedings in criminal matters, but it has not entered into force. A measure on transfer of proceedings has been under discussion since the entry into force of the Lisbon Treaty, which changed the way EU rules in the criminal law field were presented and adopted. This proposal is delivering on the goals set in the EU strategy to tackle organised crime, which emphasises that transfer of criminal proceedings is an important tool, which would reinforce the fight against organised criminal groups that are active in the Member States across the EU. Continue reading…

The seven members of the Eurojust-supported joint investigation team (JIT) on alleged core international crimes committed in Ukraine have agreed to not only investigate alleged war crimes, but also crimes of genocide committed in Ukraine. In a working meeting of the JIT that took place in Vilnius, Lithuania, during 13-14 April, the JIT also welcomed the U.S. Department of Justice’s pledge to second a prosecutor to the International Centre for the Prosecution of the Crime of Aggression against Ukraine (ICPA).

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The European Commission has informed Broadcom of its preliminary view that its proposed acquisition of VMware may restrict competition in the market for certain hardware components which interoperate with VMware’s virtualisation software. Broadcom is a hardware company that offers, among other products, Network Interface Cards (‘NICs’), Fibre Channel Host-Bus Adapters (‘FC HBAs’) and storage adapters. Broadcom is the leading supplier of such products worldwide. It has recently started expanding into software markets, mainly for security and mainframe applications. VMware is the global leading supplier of server virtualisation software in the on-premises and private cloud environments which interoperates with a wide range of hardware, including FC HBAs and storage adapters. The companies’ portfolios are largely complementary. Continue reading…

The International Association of Insurance Supervisors (IAIS) has on 4 April published its report on the targeted jurisdictional assessment (TJA) of the implementation of the Holistic Framework supervisory material. The Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector (Holistic Framework) was adopted by the IAIS in November 2019 and endorsed in December 2022 by the Financial Stability Board. The Holistic Framework recognises that systemic risk may arise not only from the distress or disorderly failure of an individual insurer, but also from insurers’ collective exposures and activities at a sector-wide level. It consists of an integrated set of macroprudential supervisory policy measures, a Global Monitoring Exercise and – as a key element – implementation assessment activities.   Continue reading…

by Donald van Deventer

Are we on the brink of a new banking crisis? In March 2023, California’s Silicon Valley Bank collapsed. Rising interest rates had made refinancing existing loans expensive and difficult. Although the US government intervened to avert a widespread banking crisis,  the financial services industry cannot ignore the alarming signs.  Asset liability management must be central in months ahead.

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The winner of the National Compliance Award as organised annually by the Netherlands Compliance Institute was announced in Rotterdam on 13 April. The winner from the group of four nominees is the VCO, the Association of Compliance Professionals. The president of the VCO, Michelle Fisser was justifiably very proud and she received the trophy from a former winner, Geert Vermeulen, who presided over the ceremony. Continue reading…