| Author (Person) | McLauchlin, Anna |
|---|---|
| Series Title | European Voice |
| Series Details | Vol.11, No.38, 27.10.05 |
| Publication Date | 27/10/2005 |
| Content Type | News |
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Date: 27/10/05 The European Commission is stepping up its fight to make cross-border mergers easier in the financial services sector, by clarifying rules already in place and proposing amendments to existing banking legislation. The details will be laid out in documents, seen by European Voice, to be presented to EU finance ministers at the next Ecofin finance meeting on 8 November. Strengthening the legal protection against opposition to financial tie-ups is top of the list. A survey showed that of the companies with experience in cross-border mergers in the EU, nearly 30% cited political interference as a major obstacle. Nearly 20% said that banking supervisors misusing their power was another. The issue was raised at September's informal Ecofin council, when Dutch bank ABN Amro highlighted its difficulties in targeting some foreign banks. It was followed by a public battle between Italian central bank chief Antonio Fazio and Internal Market Commissioner Charlie McCreevy over ABN Amro's bid for Italy's Banca Antonveneta. McCreevy said at a recent conference in Ireland: "Some supervisors play fair, some not. Whilst I understand legitimate concerns as regards the suitability of potential acquirers, the protection of investors and financial stability, everyone must respect the spirit of the internal market." The Commission will produce a communication informing market players of their rights under EU law on the free movement of capital and the freedom of establishment. The Commission also plans to fine-tune the EU banking directive, which it admits gives supervisors "wide-ranging powers" to block cross-borders take-overs in its current form. Revisions to Article 16 of the directive will include introducing "clear and limited" risk criteria that supervisors may use to judge whether or not to grant a foreign takeover. It will also cut the time period for a review to 45 calendar days from the current three months, under a 'approval by default' system whereby the deal goes through unless the relevant authority opposes it. As agreed under the final draft of an incoming EU law on banking risk capital, if two EU companies are involved in a takeover case, both national supervisors should be involved in judging whether the acquisition is valid. But in the case of a disagreement, the final decision remains with the national supervisor of the acquiring company. The Commission's powers to regulate cross-border activity will also be boosted under the changes, as confidentiality requirements have often made it difficult for the executive to check out any abuse. If the amendments are approved, more transparency will be required if there are competing bids for a particular company, and the Commission will have rights of access to all documents to allow it to oversee the procedure. All EU financial institutions responding to the survey said that they were dissuaded from looking abroad to expand because it was not sufficiently profitable. Among the problems cited was the inability to sell the same products in the target country and discriminatory tax schemes. The Commission is pledging to open infringement cases against those member states which fail to crack down on illegal tax treatment, such as those that discriminate against foreign financ- ial products or favour their own. It also urges member states to look at their own tax systems and address any obstacles to fair tax treatment. Impending proposals on consumer credit and mortgages should also help to restore balance, the Commission says. Further details will be laid out in its white paper on financial services, which is due to be published before the end of November. A spokeswoman for the European Banking Federation (FBE) said, "The FBE believes that Article 16 is currently a key obstacle to cross-border integration in Europe. We encourage the Commission to clarify the definition of suitability in the prudential criteria and to ensure that there is more transparency in the process." Article reports that the European Commission was increasing its efforts to facilitate cross-border mergers in the financial services sector, by clarifying rules already in place and proposing amendments to existing banking legislation. |
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| Source Link | http://www.european-voice.com/ |
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| Subject Categories | Business and Industry |
| Countries / Regions | Europe |
