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.”
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
CUSTOMERS’ BURDEN: TSMC already has operations in the US and is a foundry, so any tariff increase would mostly affect US customers, not the company, the minister said Taiwanese manufacturers are “not afraid” of US tariffs, but are concerned about being affected more heavily than regional economic competitors Japan and South Korea, Minister of Economic Affairs J.W. Kuo (郭智輝) said. “Taiwan has many advantages that other countries do not have, the most notable of which is its semiconductor ecosystem,” Kuo said. The US “must rely on Taiwan” to boost its microchip manufacturing capacities, Kuo said in an interview ahead of his one-year anniversary in office tomorrow. Taiwan has submitted a position paper under Section 232 of the US Trade Expansion Act to explain the “complementary relationship” between Taiwan and the US