After a decade of talking about how to react should a bank operating in several European countries veer toward collapse, EU finance ministers on Friday agreed on some ground rules that could see governments share the cost of rescuing them.
The agreement signed on Friday by 27 EU nations is vague about how governments would work together to prevent widespread financial damage, but it does set out principles addressing when they would act, as well as clarifying priorities.
It would convene groups of national regulators for the more than 40 banks that do business across borders. These groups should plan what to do in the event of a crisis.
But officials said EU nations were still at odds on how far they needed to go to strengthen supervision and financial experts would have to continue talks to fix details.
Some nations — such as Italy — have suggested that one regulator should take the main crisis management decisions for a cross-border bank, something other supervisors strongly oppose.
“This is not a subject of consensus yet,” said Slovenian Finance Minister Andrej Bajuk, who led the talks.
Nor was there any agreement on how EU countries would split the cost of bailing out a bank with public money, he said.
European Central Bank President Jean-Claude Trichet said many national central bank governors had emphasized the danger of giving banks any kind of potential safety net paid for by taxpayers.
“The idea of sharing the burden at the international level is even considered by some as something which is far away from the present possibilities,” he said.
The text of the agreement says regulators do not aim to prevent bank failures.
“The objective of crisis management is to protect the stability of the financial system ... and to minimize potential harmful economic impacts. The management of an ailing institution will be held accountable, shareholders will not be bailed out and creditors and uninsured depositors should expect to face losses,” it said.
The agreement comes less than a year after Northern Rock stumbled toward insolvency and went to the Bank of England for help.
That led to the UK’s first bank run in more than a century.
Last month, the US Federal Reserve brokered a deal to keep the collapse at Bear Stearns from spilling over into the broader economy.
European finance ministers said government assistance would always be a last resort and there was no guarantee of help. Private sector solutions will always come first, the document said — and a government rescue “will only be considered to remedy a serious disturbance in the economy.”
European banks are increasingly making cross-border acquisitions — deals that have been strongly encouraged by EU officials who say it will boost competition and reduce costs.
Italy’s UniCredit leapt into Europe’s top 10 lenders by buying Germany’s HVB three years ago, while Spanish bank Santander, Franco-Belgian counterpart Fortis and Royal Bank of Scotland recently won a joint bid for the Netherlands’ ABN Amro.
This wave of consolidation raises the risk of a failure big enough to ripple across two or more European nations, speeding up 10 years of regulators’ discussions.
“What’s 10 years in Europe-land?” the EU’s top financial services official, Charlie McCreevy, said. “Financial turmoil has sharpened the focus. It’s now time to do something.”
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”