This is one of those government schemes which is announced but not
operating while Brussels ruminates on whether we may be allowed to do
it or not.
Maybe we should pay Brussels our EU contribution in toxic debt -
discounted of course.
xxxxxxxxxxxxxxxxx cs
========================
GUARDIAN 19.2.09
EU fights plan to ring-fence British banks' toxic assets
Brussels cites competition issues to thwart state-backed insurance
scheme
The government's multi-billion pound insurance scheme to ring-fence
British banks' toxic assets and reboot lending to the recession-hit
economy has run into a wall of opposition in the EU, the Guardian has
learned.
The European commission and several leading EU countries are
understood to have objected that the UK proposals are a serious
threat to competition and to the much-prized single market.
The commission is due to publish final guidance on how to treat their
toxic or impaired assets next Wednesday. It is understood to be
insisting that the UK Treasury impose a hefty premium on the banks
benefiting from the insurance.
Royal Bank of Scotland, soon to be 70% owned by the British taxpayer,
is the guinea pig for the scheme which is regarded as vital in ring-
fencing an estimated £150bn of toxic assets on its balance sheet.
Details of the scheme are yet to be finalised, but there are
expectations of a government announcement when RBS publishes its 2008
figures - expected to show a £28bn loss - next Thursday .
Analysts at Credit Suisse have assumed that RBS and other banks
signing up to the insurance scheme would pay an annual fee of 3% and
might not have to pay in the first year of what might be a three- to
five-year arrangement. The government has made it clear that RBS
would not have to find the cash - which would indicate annual
payments of £4.5bn - but could pay in other ways. The Credit Suisse
analysts suggest that RBS, which has received £20bn of government
funds, could pay using deferred tax assets or issue subordinated debt
or other bonds to prevent the government's stake from rising any
higher. RBS shares closed last night at 18.1p down 12.5%.
Brussels is also determined to force Britain to shrink the business
of its state-owned or semi-nationalised banks through restructuring
schemes as the eventual price for approving the scheme.
Last autumn Neelie Kroes, the EU competition commissioner, and
colleagues imposed at least 10 conditions, including stiff charges
and a ban on dividends, for sanctioning the government's £250bn bank
recapitalisation scheme.
Kroes's department is now taking the same approach in negotiations
with Whitehall. Brussels is also considering forcing France to raise
the 6% premium on its €6bn (£5.3bn) loans to its two biggest
carmakers. Renault and PSA Peugeot Citroën.
Britain has been at the forefront of EU countries pressing for early
approval on how to define, evaluate and treat toxic assets said to
amount trillions of euros in Europe. Other countries urging a rapid
solution in the run-up to an emergency EU summit in Brussels on 1
March are Holland, whose biggest bank ING declared a €3.7bn loss in
the final quarter of 2008 yesterday, and Germany, where the cabinet
approved legislation to take banks under full state control.
Britain pressed to be allowed to go ahead with its scheme at last
week's meeting of EU finance ministers.
Subsequent talks at the EU's economic and financial committee,
chaired by senior commission officials and embracing senior treasury
officials from all 27 countries, have failed to resolve serious
differences, according to insiders. Countries whose banks are less
exposed to toxic assets are mounting the fiercest resistance to the
insurance schemes, they added.
The Treasury has yet to submit its proposed insurance scheme, amid
suggestions that it is waiting for the commission to issue its final
guidance next week. It said yesterday: "The government has worked
very closely with the EU commission on support for financial
institutions in the UK and will continue to do so. There will be
further announcements relating to the detail of the asset protection
scheme by the end of the month."
================
TELEGRAPH 20.2.09
UK clashes with Brussels over toxic insurance
The Government could be heading for a showdown with Brussels over its
insurance scheme for banks' toxic assets.
By Katherine Griffiths Financial Services Editor
Several countries in the European Union have complained that the UK's
proposal to help banks by insuring their worse assets could be anti-
competitive, according to reports.
The European Commission is due to publish guidance on how countries
should deal with banks' toxic assets next week.
The UK is also about to unveil the details of the insurance, called
the asset protection scheme.
Analysts have pencilled in a fee of about 3pc to 4pc on the toxic
assets, which would match America's approach and would provide a
return for taxpayers.
However, as banks want to put up to about £400bn between them into
the scheme, the total fees could be very high.
This has prompted speculation that the Government will have to keep
the fee low in order not to put additional stress on the banks'
balance sheets.
The banks have been working intensively on how they will pay for the
insurance. The fee will be a one-off sum, but it can be paid over
several years.
Given the enormity of banks' difficulties, the time scale for the
insurance scheme is set to stretch to ten or 15 years, up from the
five years the Treasury gave in guidance last month.
Royal Bank of Scotland and Lloyds have said they will pay by issuing
capital instruments. The instruments are likely to be subordinated
debt which will allow the banks to defer payment until the end of the
scheme.
Barclays has said it will pay in cash, in order to avoid triggering
an anti-dilution clause with its Middle Eastern investors which could
see them taking control of the bank if it has to issue new shares.
Barclays may have to stay out of the scheme, or keep its involvement
to a minimum, if it cannot afford to pay in cash
operating while Brussels ruminates on whether we may be allowed to do
it or not.
Maybe we should pay Brussels our EU contribution in toxic debt -
discounted of course.
xxxxxxxxxxxxxxxxx cs
========================
GUARDIAN 19.2.09
EU fights plan to ring-fence British banks' toxic assets
Brussels cites competition issues to thwart state-backed insurance
scheme
The government's multi-billion pound insurance scheme to ring-fence
British banks' toxic assets and reboot lending to the recession-hit
economy has run into a wall of opposition in the EU, the Guardian has
learned.
The European commission and several leading EU countries are
understood to have objected that the UK proposals are a serious
threat to competition and to the much-prized single market.
The commission is due to publish final guidance on how to treat their
toxic or impaired assets next Wednesday. It is understood to be
insisting that the UK Treasury impose a hefty premium on the banks
benefiting from the insurance.
Royal Bank of Scotland, soon to be 70% owned by the British taxpayer,
is the guinea pig for the scheme which is regarded as vital in ring-
fencing an estimated £150bn of toxic assets on its balance sheet.
Details of the scheme are yet to be finalised, but there are
expectations of a government announcement when RBS publishes its 2008
figures - expected to show a £28bn loss - next Thursday .
Analysts at Credit Suisse have assumed that RBS and other banks
signing up to the insurance scheme would pay an annual fee of 3% and
might not have to pay in the first year of what might be a three- to
five-year arrangement. The government has made it clear that RBS
would not have to find the cash - which would indicate annual
payments of £4.5bn - but could pay in other ways. The Credit Suisse
analysts suggest that RBS, which has received £20bn of government
funds, could pay using deferred tax assets or issue subordinated debt
or other bonds to prevent the government's stake from rising any
higher. RBS shares closed last night at 18.1p down 12.5%.
Brussels is also determined to force Britain to shrink the business
of its state-owned or semi-nationalised banks through restructuring
schemes as the eventual price for approving the scheme.
Last autumn Neelie Kroes, the EU competition commissioner, and
colleagues imposed at least 10 conditions, including stiff charges
and a ban on dividends, for sanctioning the government's £250bn bank
recapitalisation scheme.
Kroes's department is now taking the same approach in negotiations
with Whitehall. Brussels is also considering forcing France to raise
the 6% premium on its €6bn (£5.3bn) loans to its two biggest
carmakers. Renault and PSA Peugeot Citroën.
Britain has been at the forefront of EU countries pressing for early
approval on how to define, evaluate and treat toxic assets said to
amount trillions of euros in Europe. Other countries urging a rapid
solution in the run-up to an emergency EU summit in Brussels on 1
March are Holland, whose biggest bank ING declared a €3.7bn loss in
the final quarter of 2008 yesterday, and Germany, where the cabinet
approved legislation to take banks under full state control.
Britain pressed to be allowed to go ahead with its scheme at last
week's meeting of EU finance ministers.
Subsequent talks at the EU's economic and financial committee,
chaired by senior commission officials and embracing senior treasury
officials from all 27 countries, have failed to resolve serious
differences, according to insiders. Countries whose banks are less
exposed to toxic assets are mounting the fiercest resistance to the
insurance schemes, they added.
The Treasury has yet to submit its proposed insurance scheme, amid
suggestions that it is waiting for the commission to issue its final
guidance next week. It said yesterday: "The government has worked
very closely with the EU commission on support for financial
institutions in the UK and will continue to do so. There will be
further announcements relating to the detail of the asset protection
scheme by the end of the month."
================
TELEGRAPH 20.2.09
UK clashes with Brussels over toxic insurance
The Government could be heading for a showdown with Brussels over its
insurance scheme for banks' toxic assets.
By Katherine Griffiths Financial Services Editor
Several countries in the European Union have complained that the UK's
proposal to help banks by insuring their worse assets could be anti-
competitive, according to reports.
The European Commission is due to publish guidance on how countries
should deal with banks' toxic assets next week.
The UK is also about to unveil the details of the insurance, called
the asset protection scheme.
Analysts have pencilled in a fee of about 3pc to 4pc on the toxic
assets, which would match America's approach and would provide a
return for taxpayers.
However, as banks want to put up to about £400bn between them into
the scheme, the total fees could be very high.
This has prompted speculation that the Government will have to keep
the fee low in order not to put additional stress on the banks'
balance sheets.
The banks have been working intensively on how they will pay for the
insurance. The fee will be a one-off sum, but it can be paid over
several years.
Given the enormity of banks' difficulties, the time scale for the
insurance scheme is set to stretch to ten or 15 years, up from the
five years the Treasury gave in guidance last month.
Royal Bank of Scotland and Lloyds have said they will pay by issuing
capital instruments. The instruments are likely to be subordinated
debt which will allow the banks to defer payment until the end of the
scheme.
Barclays has said it will pay in cash, in order to avoid triggering
an anti-dilution clause with its Middle Eastern investors which could
see them taking control of the bank if it has to issue new shares.
Barclays may have to stay out of the scheme, or keep its involvement
to a minimum, if it cannot afford to pay in cash
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