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EU signals greater scrutiny for banks and financial groups PDF Print E-mail
News - Politics
Tuesday, 17 August 2010 08:14

The European Commission is proposing to give national supervisors greater oversight of conglomerates and holding companies in a move that could bring banks and financial groups under greater scrutiny.
 
‘The Commission proposes to equip national financial supervisors with new powers to better oversee the conglomerates’ parent entities, such as holding companies,’ the EU executive said in a statement, saying the move was being made as a result of the financial crisis.
 
‘This would allow supervisors to apply banking supervision, insurance supervision and supplementary supervision at the same time, thereby remedying unintended loopholes identified in the context of the financial crisis,’ it added.
 
The Commission said it hoped the amendment to EU rules would allow supervisors to get better information at an earlier stage should a financial conglomerate run into trouble, allowing them to be better equipped to intervene in the event of a crisis.
 
Financial conglomerates are holding companies or large firms that usually have activities in more than one country and operate in both the insurance and banking businesses.
 
The Commission’s proposal must now go to EU member states and to the European Parliament for consideration.
 
Meanwhile Irish central bank governor Patrick Honohan said he sees very little risk of a double dip recession and that the European Central Bank holds a similar view. ‘The US economy has some concerns, the European economy a gradual recovery. China and the East is the bright point,’ he told reporters while on a visit to Hong Kong.
 
Honohan, who is a member of the ECB’s  governing council and one of those with interest rate setting powers, also said that Ireland’s bailout of Anglo Irish Bank which is partly behind the country's soaring budget deficits, is ‘costly but manageable’.
   
He reiterated that the country’s budget deficit would be around 20% of its annual GDP this year despite continuing troubles at the bank, which is receiving extra state aid.
 
The European Union last week approved plans for up to €10 billion euros of state aid for Anglo Irish, and Honohan said that plans to recapitalise the bank were well on track and had little impact on the government’s overall deficit plans.
 
Honohan added that Ireland remained committed to its target of reducing its budget deficit to 3% of gross domestic product by 2014.
 

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