Oh, the wily and unscrupulous French: They spend years arguing with the ferocity of a cockfighter for tough, nay, draconian financial regulations. And then they elect a Socialist who promises to be even less interested in the concerns of the monied classes. And then, when Europe’s two biggest economies—the ones housing the financial centers the French hope to destroy—announce that they’ll impose the aforementioned tough, if not draconian, regulations, the French say, joke’s on les Huns et les rosbifs.
Both the U.K. and German initiatives are rough equivalents of the U.S.’s Volcker rule, which restricts banks’ ability to put their own capital at risk in proprietary trading….
A bill introduced by French President François Hollande’s administration recently is less far-reaching than the German draft. Some of France’s largest banks say it would affect less than 1% of their total assets. Despite having promised in his election campaign to separate banks’ “speculative” operations from those that are “useful to investment,” Mr. Hollande’s bill still allows deposit-taking entities to lend to hedge funds and conduct other activities such as prime brokerage.
French perfidy isn’t entirely to blame for the British and German plans. In the former, Chancellor George Osbourne is bowing “to pressure from a parliamentary commission.” In the latter, Chancellor Angela Merkel is trying to avoid Nicolas Sarkozy’s fate.
People close to the government said the new draft law might affect up to a dozen of Germany’s largest banks, rather than just two or three, as originally thought. A broader scope for the law will protect the government against claims that it was drafting a bill that would, in essence, only have applied to Deutsche Bank AG. The effects on other big banks were expected to be minimal.
The broader proposal also reduces political vulnerability for the government ahead of general elections in September. Philipp Hassler, an analyst with brokerage Equinet AG, said the draft proposal seems like a tactical move by the ruling coalition to neutralize antibank campaigning by the center-left opposition Social Democratic Party.
It all adds up to this:
It appears more and more likely that French and German skepticism will ensure there is no single European law to mirror the Volcker rule.
And it doesn’t stop there, at least, not in the U.K.
Regulators are considering forcing British banks to raise billions of pounds in fresh capital to address concerns around a key gauge of their financial health….
British banks are locked in tense discussions with the Financial Services Authority to determine how and whether they need to shore up their balance sheets, according to regulators and bank executives. The results of these negotiations, which could see banks sell chunks of their businesses or issue debt, will be presented by the Bank of England in March.
The continentals may not be able to agree on much, banking-related, other than a generalized desire to protect themselves and screw the rest. But they do appear to enjoy a modicum of unity on the matter of money-laundering.
The European Union may target banks with fines as high as 10 percent of their annual revenue if they fail to combat money laundering and terrorist financing.
Bank staff may also face penalties as high as 5 million euros ($6.8 million) under proposals adopted today by the European Commission, the 27-nation EU’s executive arm. The rules would extend requirements for businesses to check the identity of clients and monitor their transactions, according to an e- mailed copy of the measures. They would also apply to lawyers, accountants, dealers in precious stones and gambling firms.