INTERNATIONAL BRIEFING

{ BREXIT } { AROUND THE WORLD IN 30 DAYS } BANKS MAY FACE SIX- CUTS, DODD-FRANK, MONTH LICENCE WAIT

UKRAINE GOVERNOR RESIGNS UK-based banks relocating to Europe An extra €3.4bn of budget following Brexit may need to wait six cuts is on the way in Italy months for a licence, the (ECB) has said. Applications to operate in the must be submitted to the ECB, via the bank’s national supervisors, for assessment by the ECB’s supervisory board and ratification by its governing council. The time taken to process applications will depend on their complexity, completeness and quality, the ECB has said, but all applications must be resolved in 12 months. The criteria for attaining a licence include appropriate governance procedures, fit and proper management bodies, and suitable levels of capital, liquidity and solvency. The ECB has said it remains neutral regarding the location chosen by banks applying to operate in the euro area. “All significant institutions are supervised directly by the ECB, using a single set of supervisory

SHUTTERSTOCK standards, irrespective of the country in which they operate,” it said. Italy approves US Dodd-Frank financial Ukrainian central bank The loss of the UK’s passport to operate budget cuts reform law, the head in April after nearly across the single market is estimated to affect In April, the Italian of the US House of three years at the helm. around 40 UK-based banking groups. government approved Representatives banking Gontareva said that Meanwhile, the Bank of England has asked €3.4bn in extra budget panel has released her resignation did not all banks with cross-border activity to set cuts in an effort to a second draft of a herald changes in central out their contingency plans for the period meet EU demands. The replacement act. bank policy or other following Brexit. centre-left government, Jeb Hensarling, chair changes to the bank’s led by , of the House Financial governing board. approved the extra Services Committee, said She has been credited { FINDINGS FROM THE measures to reduce the the new bill will end the with stabilising the THE DELOITTE STATS Italian government deficit Dodd-Frank “mistake”, economy in Ukraine CFO SURVEY Q1 2017 } in a cabinet meeting while holding Wall in the wake of Russia’s that also approved the Street and Washington annexation of Crimea 30% – proportion country’s annual accountable, and in 2014. expecting Brexit to cause them to economic planning and enabling the US banking reduce their level of hiring, down confirmed an increase and commercial sectors from 66% immediately following in forecast growth from to perform better. the referendum last year 0.9% to 1.1% in 2018. Republicans including Italy’s finance minister, President Trump believe 26% – amount expecting it to hit Pier Carlo Padoan, said Dodd-Frank, which has investment, down from 58% over the the extra cuts would come not been fully enacted, is from more efficient tax unduly burdensome on same period collection and policing banks and businesses, – those expecting M&A activity of tax evasion, along with and restricts lending. 11% spending reductions. to lower as a result of Brexit Ukraine central bank’s Dodd-Frank governor resigns 60% – proportion still expecting a replacement unveiled Valeria Gontareva worsening in economic conditions as a result In an ambitious stepped down as plan to undo the governor of the Valeria Gontareva 42% – amount that rated reducing costs

WIKIMEDIA as a strong priority for their business

08 The Treasurer May 2017 www.treasurers.org/thetreasurer MAKING to demonstrate how they would Commercial banks would between the London Stock THE perform in the face of a severe then be required to recognise Exchange and Deutsche Börse. NEWS economic shock. The additional the assets as security for On the same day that the UK test will be applied at the end of loans. However, bankers are government triggered Article 50, 2017, and annually thereafter. reported to be concerned signalling the start of its Brexit about the rapid depreciation negotiations, EU competition More stringent UK stress tests New Zimbabwe borrowing rules of such assets. regulator Margrethe Vestager The UK’s central bank showed The government in Zimbabwe has Other African countries that said the tie-up would create a its hand on stress tests for the proposed laws that will enable accept such assets as security to “de facto monopoly in the crucial nation’s banking groups in March borrowers to use assets such as back loans include Ghana, Malawi area of fixed income instruments”. when it announced that banks cars and livestock as collateral for and Nigeria. The stock exchanges have would be assessed on their bank loans in a move aimed at attempted mergers on two longer-term risk, including their freeing up credit and promoting Death knell for stock previous occasions, in 2000 potential resilience to the UK’s financial inclusion. Under the exchange merger and 2005, and the latest departure from the EU. proposals, borrowers would be Officials at the European proposals also foundered on The UK’s seven largest banks able to register ‘moveable’ assets Commission have given their final where the merged exchange will go through a test designed as collateral. say in blocking the £21bn merger would be located.

{ ACT NEWS } The ACT’s Peter Matza takes questions ACT EUROPE TALKS from the floor. Inset: Rando Bruns, head of group BREXIT AND TECH treasury at Merck At the start of Aside from political last year’s ACT developments, the Europe Conference in theme at this year’s Düsseldorf, we asked ACT Europe Conference delegates about Brexit, in Düsseldorf quickly writes Peter Matza, became apparent: ACT speakers’ chair. process automation and Overwhelmingly, technology will drive they wanted the UK efficient and effective to stay in the EU and financial and business didn’t want anyone strategy. Delegates heard else to think about from speakers from leaving. A lot of water Merck, Swiss Federal has passed under quite Railways and Airbus on a few bridges since substantial investments stakeholders and their UK’s relations with then. Treasurers, of time and resources boards in clear, concise and the though, have to be in digitising treasury running a $100bn-plus and definitive terms rest of the EU will prepared to help their operations (a project FX risk management that make plain the remain positive and businesses prosper in with a 2025 horizon); programme, respectively. relationship between substantive. Many all circumstances, and liquidity challenges in Common to all their risk assessment and expressed dissatisfaction for that they need cash and pensions in an presentations was value creation. A with politicians on to understand the environment of negative a need to understand fascinating presentation all sides. The ACT, issues that matter. interest rates; and business data at a on cybercrime came meanwhile, is seen fundamental level. to much the same as a positive voice With a deeper conclusion – treasurers in the profession appreciation of the need to be clear about and appreciated by nuts and bolts of a the risks they see, and German corporates. business, a treasurer what they can and Overall, the message should be able to craft cannot address in for treasury was bright, a financial strategy their roles. but the challenges of that supports overall Perhaps automation, robotics, business development. unsurprisingly, Brexit data management, A financial strategy was an undercurrent. regulation and the panel gave clear Much of the comment changing nature of advice that treasurers was of a regretful nature; financial services

ANDI WERNER should engage with it was hoped that the remain formidable.

www.treasurers.org/thetreasurer May 2017 The Treasurer 09