The Finance Lobby and the European Union

1. The Finance Lobby and the European Union

2. The Lobby Groups

3. The Finance Lobby in the EU • 700 lobbyists in Bruxelles • Most lobbying via associations • Commands huge sums of money • Deemed to be ‘experts’ by the Commission

4. 1. The big plans (strategy) Legislative process in five stages 2. Proposals are made 3. Politicial decision process (Council and Parliament) 4. Precisioning and transposure 5. Enforcement

5. How the EU designed the rules that flunked

6. The crisis • Big banks had made huge risky investments • Credit rating agencies had deemed them right all along • Accountancy standards/rules had made it next to impossible for the authorities to see through them • Hedge funds were one type of vehicle that enables banks to hide bad investments

7. The financialsector and the crisis Four examples: 1. (Self) regulation of banks 2. Credit rating agencies 3. Accountancy standards 4. Hedge funds

8. Why the expertgroups matter • They provide lobbyists with a chance to influence new legislation before it’s released by the Commission • They’re an important part of the surface of contact between the lobbyists and the civil servants.

9. Expert group on banking • Mr Javier Arias Banco Bilbao Vizcaya • Mr Michel Van Lierde LeaseEurope/Euro-Finas • Dr Lothar Blatt- von Raczeck Deutscher Sparkassen- und Giroverband • Mr Rainer W. Boden Deutsche Bank AG • Mr Steve Johnson European Banking Federation • Mr Bill Eldridge Barclays Bank PLC • Mr Mick McAteer Which? (UK Consumer Association) • Mr Gérard Gardella Société Générale • Mr Alain Gourio BNPPARIBAS • Mr Volker Heegemann EACB • Ms Judith Hardt European Mortgage Federation • Mr Riccardo Iozzo San Paolo IMI Bank • Ms Michaela Koller ESBG - European Saving Banks Association • Mr Wim Mijs ABN AMRO • Mr Joan Rosas Xicota La Caixa • Ms Katharine Seal LIBA • Ms Emmanuelle Sebton ISDA • Prof. Blanche Sousi Université Lyon 3, Chaire Jean Monnet • Mr Tomasz J. Stachurski ING Poland • Mr Freddy Van Den Spiegel Fortis Bank • Mr Miles Webber Merrill Lynch • Mr Pehr Wissén Svenska Handelsbanken • Mr Andreas Zehnder European Federation of Building Societies

10. Expert Group: Liquidity Group on liquidity of banks

11. Credit rating agencies • Pr Luis Miguel Beleza, Banco Comercial Português; • Dott Salvatore Bragantini, Centrobanca S.p.A.; • Dr Rolf E Breuer, Deutsche Bank AG; • Mr Donald Brydon, AXA Investment Managers; • Mr Ignace Combes, Euroclear Bank; • Mr P.P.F. de Vries, Euroshareholders; • Mr Lars-Erik Forsgardh, Swedish Shareholders Association; • Mr Dominique Hoenn, Euronext; • Ms Sonja Lohse, Nordea AB; • Mr Theodoros Philippou, The Institute of Certified Public Accounts of • Cyprus, • Mr Mariano Rabadan, (INVERCO); • Mr Wieslaw Rozlucki, Warsaw Stock Exchange; • Pr Rüdiger von Rosen, Deutsches Aktieninstitut; • Pr Dr Emmanuel D. Xanthakis, Marfin Bank • Mr Zoltan Zpeder, OTP Bank RT

12. Investment Funds • Mr Segun Aganga UK Goldman Sachs • Mr Antonio Ary dos Santos Freire P Santander • Ms Odette Cesari FR Axa-IM • Mr Neil Donnelly IRL Pioneer • Mr Alain Dubois FR Lyxor • Mr Horst Eich DE Allianz • Mr Paul Feeney UK Gartmore • Mr Holger Hartenfels DE Deutsche Bank • Ms Gay Huey Evans US Citigroup-Tribeca • Mr Alain Reinhold FR ADI • Mr Rupert Rossander CH MAN • Mr Lindsay Tomlinson UK BGI • Mr Jack Tracy UK Morgan Stanley • Mr Luc de Vet LUX Citco • Mr Neil Warrender UK RAB Capital • Mr Damian Neylin IRL PricewaterhouseCoopers

13. Expert group on investments

14. Expert groups on taxremovingtaxobstacles to investment funds

15. Accountancy standards • Johan van Helleman, KPMG • Yves Bernheim, Mazars & Guerard • Andreas Bezold, IAS 39 Implementation Guidance Committee • Allan Cook, UK Accounting Standards Board • Stig Enevoldsen, Deloitte & Touche • Begoña Giner, Professor in Accounting and Finance, Valencia. • Hans Leeuwerik, Shell International • Freddy Méan, PetroFina, ERT (European Round Table) • Eberhard Scheffler, German standard setter GASB • Friedrich Spandl, Bank für Arbeit und Wirtschaft AG (BAWAG) • Giuseppe Verna, Italian Accounting Standards Setting Body

16. Somestatistics (2010) Expert groups (non-governmental): 14 80 % of members from the financial sector 12 groups heavily dominated by rep. from the financial sector 7 exclusively with representatives from the financial sector

17. The crisis and the big promise

18. The crisis and the promise “I think the current crisis has shown that we need a comprehensive rethinking of our regulatory and supervision rules for financial markets” José Manuel Barroso, October 2008

19. A protagonist Charlie McCreevy Single Market Commissioner (2004-2009) Former Irish minister of finance

20. McCreevy’sconfession • ” I've learned that all consultation bodies should be able to stand back also, and say 'it's wonderful what the industry has said' but we need to be a bit more objective ourselves". • “The fact that consensus [among stakeholders] has been reached does not mean it should all be implemented.“ January 2009

21. McCreevyagain “What we do not need is to become captive of those with the biggest lobby budgets or the most persuasive lobbyists: We need to remember that it was many of those same lobbyists who in the past managed to convince legislators to insert clauses and provisions that contributed so much to the lax standards and mass excesses that have created the systemic risks. The taxpayer is now forced to pick up the bill.” Commissioner Charlie McCreevy, February 09

22. McCreevy againagain ” In the case of legislators, I am convinced that over the years there has been too much "regulatory capture" by the sell side of the financial services market: Their lobbies have been strong and powerful. By contrast there has been too little engagement on the buy side. That is an imbalance that legislators must be much more conscious of.. ” February 2009

23. How the financial lobby won the post-crisis battle

24. The first step: the de Larosièregroup Jacques de Larosière (BNP Paribas) Otmar Issing (Goldman Sachs) OnnoRuding (Citicorp) Rainer Masera (Lehman Brothers) José Pérez Fernandez (ex-BBVA) Leszek Balcerowicz Lars Nyberg

25. Letter from Barnier ”I am awarethat the financial and economiccrisis has significantlyshaken the confidence of consumers, retail investors and SMEs in the regulationthataremeant to protectthem from failings in the financial system.” Michel Barnier to ALTER-EU, Nov. 10

26. Letter from Barnier ” Therefore it is more essentialthaneverthat the concerns of end-users and other non-industrystakeholdersaretakenintoaccountwhen the Commission designs initiativesthataim to restorecitizens’ confidence in the soundness of the financialsector. ” Michel Barnier to ALTER-EU, Nov. 10

27. Banking regulation “..a very real risk” that “regulatory reforms come into force that could undermine global recovery and job creation” Institute of Internationale Finance, Summer 2010

28. The Group of Experts on Banking Issues • 1. Mr Martin Abbott, Bank of America Merrill Lynch • 2. Mr Davide Alfonsi, Intesa Sanpaolo • 3. Mr Lars Andreasen, Danske Bank • 4. Mr David Benson, Nomura • 5. Mr Michel Bilger, Credit Agricole Group • 6. Mr Ales Blazek, GE Capital global banking group • 7. Mr Pierre-Henri Cassou, Deloitte • 8. Mr Robert Charnley, Goldman Sachs • 9. Mr Maurizio Cravero, Unicredit Group • 10. Mr José Luis de Mora, Grupo Santander • 11. Mr Achim Duebel, Finpolconsult.de • 12. Mr José-Luis Escrivá, BBVA Group • 13. Mr Ernesto Fiorillo, Consumatori Associati • 14. Mr Daniel Gros, Centre for European Policy Studies • 15. Mr Jordi Gual, "la Caixa" • 16. Mr Bill Hayward, Barclays Bank Plc • 17. Ms Patricia Jackson, Ernst and Young • 18. Ms Anna-Maria Jurkowska-Zeidler, University of Gdansk • 19. Ms Leena Kallasvuo, OP-Pohjola Group • 20. Mr Rüdiger Krautheuser, NRW.BANK • 21. Ms Dorte Kurek, Nykredit • 22. Mr Christian Lajoie, BNP Paribas • 23. Mr Luc Léonard, Dexia SA • 24. Ms Leena Mörttinen, Nordea Group • 25. Mr Olof Myhrman, SEB Merchant Banking • 26. Ms Kerstin Neumann, Commerzbank AG • 27. Mr Jesper Nielsen, Danish financial services union • 28. Mr Frank-Christian Pauli, Federation of German Consumer Organisations • 29. Mr Mark Penney, HSBC • 30. Mr Thomas Poppensieker, McKinsey & Company • 31. Mr Andrew Procter, Deutsche Bank AG London • 32. Dr Paul Quigley, AIB Group • 33. Mr Jörg Reinbrecht, UNI Europa • 34. Mr Ralph Ricks, The Royal Bank of Scotland • 35. Ms Magdolna Szőke, Takarékbank Zrt. • 36. Ms Hiltrud Thelen Pischke, PricewaterhouseCoopers AG • 37. Mr Andrzej Topinski, Credit Information Bureau • 38. Mr Andreas Treichl, Erste Group Bank AG • 39. Mr Harm Van de Meerendonk, ING • 40. Ms Myriam Vander Stichele, SOMO Centre for Research on Multinational Corporations • 41. Ms Pamela Walkden, Standard Chartered Bank • 42. Mr Giuseppe Zadra, Prima Holding

29. Banking regulation Commission and Council: Lowerthan Basel: • Capital requirements Basel: 8 per cent minimum C&C: 8 percent max. and minimum with someexceptions 2. Liquidity Basel: Test period with clear numbers on requirements C&C: Test period with nofixednumbers

30. Banking regulation New rule on leverage: Max. ratio: 33 times the banks’ assets 31

31. Corporatecapture Accounting standards Derivatives Investment and investor regulation (MiFID)

32. Investment funds • Scaremongering • Lobbying at national level (UK not least) • Contacts to the US government • Massive lobbying in the European Parliament • Astroturfing

33. Investment funds ” Nearly 700 companies signed a letter to MEPs warning of the dangers of the directive..” The Independent, May 2010 The Directive…”would distort the market, harm finance for innovation and company growth and ultimately inhibit Europe’s economic recovery.” Letter signed by 700 ‘SMEs’

34. Investment funds

35. Part of a conclusion • Overhaul of expert groups • A mandatory register for lobbyists (incl. financial transparency) • Development of an ‘arms length principle’ • Improvement of rules on access-to-documents

36. www.corporateeurope.org