MIFID: Now the Tax Man wants to have his cut

Just when you thought the 1000+ pages MIFID nonsense could not get any worse this news hits the wire. Could it be that it was all along the main purpose of this unnecessary and counterproductive EU edict to create new tax raising opportunities for the voracious appetite that quasi-democratic politicians so desperately are looking for? Just one more reason to make it more attractive for the Financial Service Industry to decamp to friendlier climes, such as New York, Dubai, Singapore. Maybe a successful Brexit will make Britain to abolish this convolut.
Bloomberg

London Job Losses: Trickle rather than Bleeding

One always had to wonder why Deutsche Bank needs 9000 people in London, or HSBC needs 43000 in the UK. Was that not always padded by quite a bit or over staffing? Given the arrival of Fintech and the plummeting cost of communicating with low-cost centres there was always the prospect of job diversion, especially in support roles. Globalisation also means that other centres such as Dubai, Singapore, Shanghai etc would grow in stature and staff would be relocated closer to customers and markets.
In the opposite direction there are forces that might in the long run strengthen the role as hub and nerve centre coordinating and directing the regional centres. Higher Value-added roles might well be concentrated in the UK - if politics and regulation are creating a business-friendly environment.

https://www.cnbc.com/2017/08/29/bank-jobs-are-bleeding-out-of-london--and-brexit-hasnt-even-kicked-in-yet.html

London Job Losses - trickling rather than bleeding

One always had to wonder why Deutsche Bank needs 9000 people in London, or HSBC needs 43000 in the UK. Was that not always padded by quite a bit or over staffing? So large banks move dozens or even hundreds of jobs, dispersed in various regional centres? Given the arrival of Fintech and the plummeting cost of communicating with low-cost centres there was always the prospect of job diversion, especially in support roles. Globalization also means that other centres such as Dubai, Singapore, Shanghai etc would grow in stature and staff would be relocated closer to customers and markets.
In the opposite direction there are forces that might in the long run strengthen the role as hub and nerve centre coordinating and directing the regional centres. Higher Value-added roles might well be concentrated in the UK - if politics and regulation are creating a business-friendly environment.
https://www.cnbc.com/2017/08/29/bank-jobs-are-bleeding-out-of-london--and-brexit-hasnt-even-kicked-in-yet.html

EU Regulators Take Aim At London's Asset-Management Industry

No surprise there, EU is basically a protectionist racket, dominated by socialist parties and lobbies, where even pseudo right wing parties are praying from the same hymn sheet and embrace big government. Also means that the UK has to negotiate harder, I suggested a while ago that if local production would be required for asset management services then the same rule should be applied to manufactured goods. So come on BMW, Daimler, start producing in the UK. And someone has to tell the Eurocracy: keep your MIFID and Financial Transaction Tax nonsense!
EU Regulators Take Aim At London's Asset-Management Industry

EU wants a ban on UK firms setting up Brexit shell companies

So what is supposed to be a 'Shell Company'? Are the Eurocrats going to prescribe the exact number of jobs that have to be hired by a subsidiary? As I repeatedly said - starting in Feb 2016 - one has to look at the different business lines in detail. M+A businesses are quite often already on the ground in the 'Rest EU'. One office should be enough, same can be said for most other finance businesses.
EU wants a ban on UK firms setting up Brexit shell companies

EU: Free Trade only when Eurocrats like it?

Talk about EU being a bastion of Free Markets is Rubbish! Services - the growing part of advanced economies - are carefully excluded where it suits the Eurocracy. So banning Euro Clearing from being handled in the City of London is a blatant slap in the face of Free Trade. Let's call a spade a spade and not pussyfoot around with these hypocritical ideologues - be they called Merkel, Macron or Juncker!
The City of London After Brexit Isn't Just About Jobs - Bloomberg

SURVEY: 82% think more firms will set up in Europe because of Brexit

Nothing to worry about, if anything positive for UK as its firms will have to set their eyes on export markets in a more pro-active manner. Free of the cost of EU membership (mostly socialist redistribution to the unworthy) and regulation Britain should do well. Being ruled by one government rather than a committee of 27 should speed up decision making.
SURVEY: 82% of investors think more firms will set up in Europe because of Brexit

London’s single market access will end with Brexit

No need to run scared, as I have stated earlier, an analysis of all business lines shows that the EU umbrella is not really that important. Major firms are already present in key locations on the Continent. In the long run a dynamic London financial centre serving the world without cumbersome regulations will win over Paris and Frankfort any time! And what about 'giving access' to London to banks/asset managers in the (doomed?) Eurozone?
London’s single market access will end with Brexit

Brexit - Impact on London Financial Centre

Merchants of doom are let loose by the result of the Out side winning the EU Referendum in the UK. All sorts of comments are made by objective and less objective parties. The surprise referendum result shocked quite a few and as the Remain side was expecting a win the resulting reaction was also emotionally charged. And many in the business and financial community favored staying in the EU. That our 'friends' on the other side of the Channel are fighting to get as much of the financial business as they can should surprise no one. One only wonders why they are so keen on activities that the political and cultural 'Elites' on the Continent seem to keen to despise in any case.

But how much business is going to move away from London?

The Brexit impact will be crucially dependent on the skill with with the Exit negotiations are handled by the British Officials.

Leave London? Cut your nose to spite your face!

Talk about major financial institutions leaving the City of London in the wake of the Brexit Vote do not throw a good light on the leadership (if one can call it that) of these firms. Most of them are already well represented in the other major financial centres in Europe. Coverage of local clients is handled by these branches and there is no reason to shift major resources to places like Madrid, Milan or Amsterdam, not even to Frankfurt or Paris (why would it be more efficient to cover France from Frankfurt if the major European hub is installed there?).

Scared about Brexit? - Update

Following up on my post from earlier this year (see below) I want to reply to an important point made by those arguing against Brexit. It is the future of the UK's financial service business, in particular the role of London as the major industry hub in Europe.

Of course no one can predict what the regulatory and tax landscape would be in case of the UK voting to leave the EU.

But a point by point analysis demonstrates that Armageddon is not going to happen.

Why Europe's Banks don't have enough Capital

Interesting contribution from the Head of Research at BIS. But when the incompetents in Politics and Regulation have the UK banks pay £45 Bio in penalties for (mostly ficticious) 'mis-selling' one can only say it is a miracle that the banks are left standing and the sleepy shareholders (basically the fiduciaries managing the investment management industry) are not up in arms. 

If you want to bleed your banking system dry there is no better way, similar to Fx and Libor Fixing. 

The principles of forensic and detailed proof are brushed aside in order to score political points.

Capital Markets Union

The muted plans for CMU will always remain half-baked without a common legal landscape. Only when buying shares in any company sited in the EU is as simple/safe/painless as buying shares in an Oregon company by an investor in Alabama will we reach this Nirvana. Pie in the Sky?

Capital and Chutzpah: Why US has more than Europe

QE - should you laugh or cry?

More and more desperate calls for all-out QE in the Eurozone make me laugh and cry at the same time. Laugh because it is not very likely that the hoped-for revival of the economies in the weak member states of the zone will happen. One has to look at the micro-economic aspect of the problem: why would any business invest/hire just because the rate of borrowing has declined by some small fraction? Given high tax rates - and they are going up all the time, openly or in stealth fashion (think 'fees' and 'charges' by public bodies) it should be expected that the entrepreneurial class will cut back on its work load. Why not take it easy if the larger part (60, 70pct if one adds in tax on taxed income, i.e. VAT, stamp duties etc etc) of additional income is confiscated by a parasitic caste of politicians, bureaucrats and their favoured beneficiaries? And why would I cry? Because the chances that the march into ever-higher control of our lives via the permanent avalanche of ill-thought-out legislation and higher taxation/spending is not going to be reversed anytime soon.

Regulators know no shame when they are after taxpayer's money

European Commission to investigate possibility of levy to fund EIOPA (IPE)The EU is particulary shameless as there is no proper supervision by any real government and the pretend-parliament is just a resting place for party hacks.

European Bond Markets have come full Circle

A few years ago (2005) we warned that anyone continuing to hold Italian government bonds yielding a measly 15 basis points more then German Bunds would be reckless. Now it is time to put out the warning again. While conditions may not yet be as extreme as in those days it is only prudent to consider an exit and take what is effectively a free option. Unless you believe in full political and fiscal union in the Eurozone this prepares you for the next (inevitable?) economic and financial storm.

TLTRO - a can of worms

Last week's announcement by the head of the ECB, Don Draghi, that the Eurocrats will pump up to € 400 billion into a 'targetted' long-term refinancing operation immediately makes me curious about how exactly this new bureaucratic monster is supposed to operate.
Leaving aside the question whether or not this new confetti money will do much good to the real economy in the Eurozone area there is a number of problems even a cursory look at the scheme brings to mind. So when one member of the Commentariat calls the TLTRO the "Star of the Show" (Gilles Moec, Deutsche Bank) we would warn him to be less star-struck and more dispassionate. But maybe his employer really does need this shot in the arm (or gift from heaven, maybe that is the star Moec refers to)?
So I cannot wait for the full details to be published. A few critical points that need answers: Who shall be the beneficiaries of the additional lending? Giant Buy-out funds speculating on ever-rising share prices certainly will not be among them though there is a displacement effect as banks may well use the TLTRO money to fund one group of clients and therefore have more money available to property, buy-out groups and companies seeking to finance M+A deals.
And what exactly counts as a small (and possibly mid-sized) borrower? And who is going to monitor that the TLTRO money really goes into ADDITIONAL lending to this privileged group of clients. And what if most or all of the lending is done in 'stable' economies such as Germany or Austria?
One thing is certain - programs such as these will inevitably lead to additional jobs for the boys and increase the ever-expanding number of bureaucrats working for the ECB, the local Central Banks and favored 'Consultants' charging exorbitant fees that are ultimately paid by savers and taxpayers who as usual have no say in these dirigist extravaganzas.

US blackmails banks - EU useless

The US 'authorities' (if you can name them as such as the country becomes more and more ruled by out-of-control lobbies and zealots) prepare another drive-by shooting aimed at a foreign bank. This time it is the turn of French BNP-Paribas. The 'crime' was that the bank supposedly conducted business with a peaceful country as that is the only way one can describe Iran. Or can anyone point to an occasion where the country has been the aggressor and not the victim (do I need to mention BP, or Mossadegh?). So it is with growing anger that one watches the spectacle of a useless Eurocracy that drowns Europe in more and more intrusive and expensive regulation but is afraid (incapable? lazy?) to put a serious warning shot in the direction of the United States demanding that the extra-territorial reach of its 'laws' be stopped immediately. Europe - or at least its citizens - have no quarrel with Iran and do no longer want to support unaccountable lobbies and the policies they have imposed on the US government.
PS: Cleptocrats in the US have just upped the ante - $10 billion, and rising? Basically it is the behavior of the typical criminal, grab what you can get away with, only this time it is the government (or the shady lobbies that push idiotic and counterproductive foreign policies on a hapless majority).

London - what would be effect of 'Brexit'?

When senior banking figures warn that London's position as preeminent financial centre would be at risk from any British exit from the EU must be taken seriously. But at the same time one should not overlook the other side of the argument. Language and legal traditions aside the first question that comes to mind is the following: where would all the banks that are supposed to leave move to? A battle royal would ensue between the obvious candidates, Frankfurt and Paris. But some banks might also consider Amsterdam or Brussels, and the main European banks might find it unnecessary to maintain a major location outside their home country. If it ever comes to the question of 'Brexit' the main deciding factor might well be what the regulatory and tax regimes look like in the UK and the various possible alternatives inside the EU.

Absurd Asset Quality Review

Every bank is bust if all depositors want their money back at the same time - unless a thorough reform (which we support) has mandated a strict maturity match (Disregarded by the Solons in Brussels, Frankfurt etc). It is also always possible to find a scenario that results in a bank failing a stress test - how about a Mega Earthquake in Yellowstone? an escalation of the Ukraine conflict or a nuclear exchange somewhere else? So to employ 25 Deloitte staffers to check more than half (which half?) of all loans at Austria's Raiffeisen Landesbank Oberoesterreich (12/13 Balance Sheet € 40 Bio) seems to be an expensive waste of money. The depositors/borrowers/equity owners have to pay the hefty fee of € 4.5 Mio for this extravaganza. It remains to be seen how 'expert' the Deloitte people are. Can we assume that they are banking experts? or just box tickers? Will these commissars really be able to properly assess each and every borrower? Are they just recent school leavers and Deloitte charges full whack for their (questionable) services? Was there a proper tender process when the contract was given to Deloitte? As the team will stay at RLB for a full five (!) months each of the 25 will be charged to the bank at a fee of approx. € 40,000 per month (!!). Talking of overpaid bankers! Now multiply all these shenanigans by a massive number - the same game is being played all over Europe, without a single citizen having had a chance to have a say - and you can see what massive amount of wealth destruction is being conducted at the behest of unelected politicians and their minions in the regulatory and central banking institutions. And the taxpayer is still not off the hook when the next disaster hits the financial industry!