The Irish Banking Federation's conference on international banking union takes place in Dublin this morning. Among the speakers is Freddy Van Den Spiegel a professor at Belgium's Vlerick Business School and former chief economist at Fortis. The theme of his speech will look at the impact of new regulation on banking strategies.
Professor Van Den Spiegel says that a lot has been done to make banks safer, but he adds that there are still a lot of big banks who could be dangerous for the economy if they get into trouble. The new regulations have created the situation where banks have more equity capital, with less risk and more liquidity, he says. "The banking system in Europe has been stabilised significantly over the last few years," he states.
The Professor says the banks are now looking for new strategies and new opportunities, but profitability remains the key issue for them. The fact that banks have more equity and liquidity and less risk is a burden for their profitability, he adds. He predicts that we will see more and more banks who are active around Europe as they can profit from more efficiency of supervision and the exact same rules and regulations throughout the monetary union where they are active. He also predicts even bigger banks in the future as well as more niche specialised banks and newcomers from big internet firms who want to get into the financial arena. The fact that the whole framework of monetary union is set up with resolution funds and one very strong supervisor is very important and is really the best thing that could happen to European banks, the Professor says.
MORNING BRIEFS - Denis O'Brien and Leslie Buckley's recruitment firm ChinaHR is one of a number of Irish companies announcing investments and joint ventures in China this morning coinciding with an ongoing trade mission to the country. ChinaHR is investing €30m to expand its presence and further develop its technology. Mobile technology company Accuris Networks and building management specialist Cylon have announced joint ventures and Openjaw Technology will open a new office in Hong Kong.
*** French bank BNP Paribas will pay between $8 billion and $9 billion to settle with US regulators over breaches of sanctions primarily involving money transfers into and out of Sudan between 2002 and 2009. The Wall Street Journal reports this morning that the settlement will come in below that mentioned in original negotiations with the US department of justice which at one point was reported to be seeking up to $16 billion in penalties. The sum would still be, by some distance, the largest ever sought by US regulators over sanctions breaches such as these.