BRUSSELS (AP) -- European Union finance ministers are to meet in in Brussels Tuesday to hammer out an agreement over how high banks should build their defenses against future financial shocks, with the U.K. running the risk of being isolated over who should set the height.
The EU's 27 members agree on the need to increase capital reserves of banks, following an international agreement called Basel III, which was negotiated by the world's largest economies to avoid another financial meltdown such as the one brought on by the collapse of U.S. investment bank Lehman Brothers in 2008.
But the U.K. wants national regulators to be able to set requirements significantly higher than those of the EU — a position opposed by almost all other EU members, who fear investors might then prefer UK banks and flee from those in other countries.
On his way into the meeting Tuesday morning, George Osborne, the British chancellor of the exchequer, was non-committal about the possibility of reaching an agreement.
"This is a time of considerable uncertainty in the eurozone economies," he said, referring to the 17 countries — the U.K. not among them — that use the euro currency. "And that uncertainty is undermining the entire European recovery. And I think we're reaching a point where we've got to make a decision to see the eurozone stand behind their currency. A very important part of that, of course, is strengthening the entire European banking system. And that is what we intend to do today."
Once enacted, Basel III would require lenders to increase their highest-quality capital — such as equity and cash reserves — gradually from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times. All members of the G-20 have agreed to implement Basel III; if the European Union succeeds, it would become the first entity to institute the new requirements.
The U.K. is arguing that, because national taxpayers have to bail out banks when they fail, national authorities should be able to set more stringent requirements to guard against such failures. A compromise proposal offered by the Danes, who hold the rotating presidency of the European Union, would allow national authorities some leeway to increase requirements beyond those called for in the Basel III agreement. That proposal has broad support — except, so far, from the U.K.
The finance ministers can approve the compromise proposal without British support, through what is known as qualified majority voting, in which member countries have different numbers of votes according to their populations. However, there is a tradition in the EU that changes that would affect an industry in a particular country — such as the banking sector in the U.K. — are not forced into effect over the objections of that country, and consensus is sought.
"I think there should be a unanimous decision on such an important issue," Swedish Finance Minister Anders Borg said on his way into the meeting.
A German lament for the Deutschmark - Financial Times
Europe doesn’t need the euro, by Thilo Sarrazin, Duetsche Verlags-Anstalt, RRP £17.30
Two years ago Thilo Sarrazin, a former senior civil servant in Berlin’s finance ministry and a director of the mighty Bundesbank, published an alarming book called Germany is abolishing itself. His thesis was that the immigration of Muslims and the falling birth rate of indigenous Germans meant that the German nation was effectively committing suicide.
Based on simplistic extrapolation of demographic trends, and sweeping generalisations about genetic inheritance, he caused a national sensation, and sold 1.5m hardback copies of his book. It was a marketing triumph for a tedious and tendentious book.
He was forced to resign from the respected German central bank for publishing such views. But his book stirred up a furious debate about the limits of political correctness and the use of arguments based on ethnicity and genetics.
Now Sarrazin is trying to repeat the same marketing miracle with another deliberately provocative contribution to the controversy over Europe’s common currency.
In the midst of the eurozone crisis, the book is intended as a counterblast to the mantra repeated by Angela Merkel, the German chancellor: “If the euro fails, then Europe will fail.” Some suspect that the former civil servant is trying to be a German version of Geert Wilders, leader of the anti-immigration and anti-European Freedom party in the Netherlands. If so, it will be an uphill struggle.
The problem with his latest book is that Sarrazin knows too much, not too little. He is much less provocative than he was when writing about identity and genetics. This time, it seems, he does not want to look like a fool among his peers.
That’s not to say he doesn’t try. He argues that Germans who are prepared to countenance bailing out their eurozone partners with jointly guaranteed eurozone bonds are “driven by that very German reflex according to which penance for the Holocaust and world war can only finally be done if we put all our affairs, including our money, into European hands”. That is a silly simplification.
He hints at “cultural” reasons for the feckless budgetary policies of the “Club Med” of southern eurozone states, including France.
But the truth is that Sarrazin’s book is really just another rehearsal of some very familiar German arguments about the foolishness of ever getting rid of the Deutschmark. It could have been published 15 years ago and probably should have been.
Today, in the throes of the eurozone crisis, when people are crying out for intelligent solutions – to make monetary union work, or to disentangle it without precipitating a financial catastrophe – Sarrazin has no helpful suggestions. He just thinks eurozone members should declare bankruptcy and quit.
His analysis is certainly not all wrong. He is right that from the start it was a rash move to set up a European monetary union that was not underpinned by much closer political union. That was the conclusion of the Werner report in the 1970s and then again, though less clearly stated, in the Delors report of the 1980s. But when push came to shove, France was unwilling to go as far as Germany. So Europe got a monetary union with fiscal discipline, not a fully-fledged fiscal union.
On the other hand, he argues that Germany has gained nothing economically from the creation of the common currency, which is much less clear cut. He argues that German exports outside the eurozone have grown faster than those within it – ignoring the faster growth rates of markets in China and eastern Europe.
He is obsessed by the breaking of the German-inspired rules of the Maastricht treaty, including the so-called no bailout clause in Article 125, and the prohibition on the European Central Bank using its money to buy sovereign bonds and thus finance government spending by eurozone members. His very German priority is that the currency union should never be a “transfer union”.
He pays much less attention to the management of macroeconomic imbalances between the member states, producing a constant German trade surplus with its partners.
The book should really have been called Why Germans should not love the euro. His golden era was when the Deutschmark was the dominant currency and everyone had to follow the lead of the Bundesbank – in the 1980s and 1990s.
Sarrazin could have written a much better book, but he has been seduced by the desire to provoke his audience.
Yet he will never be another Geert Wilders. Their populist views may be similar, but Sarrazin is no politician: he is cold and aloof, a rather arrogant intellectual who does not suffer fools gladly. Perhaps that is a good thing.
Money from PGA Programs going to kids golf program - Fox 28
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Money advice upon landing your first job - Examiner
Dear Class of 2012,
Congratulations! You have just found out that you have landed your first job. After years of living dirt poor, you now are beginning to dream of vacations and designer clothes. But hold off on living big. Hopefully, you know better than to go on a crazy shopping spree at the mall. You need to begin practicing smart financial skills.
Here are a few ideas and tips:
Make a list of your debts– Debts are not all alike. You want to prioritize your debts based on what will cost you the most over the long-term. To do this, rank your debts by their interest rates, with the highest-rate loans at the top. Then add up your minimum payments, and figure out how much more than that total you can pay on your debts each month.
Apply that extra amount to the highest-rate debt until it is paid off. Cross it off your list. Attack the loan with the next-highest rate in the same way. Keep going until you have no debt.
Plan accordingly – The concept of “take home pay” is misleading – especially if you have student loans. Six months after graduation, you'll need to start paying them off. But if you are like most new graduates, you bill. By then, some have locked themselves into other monthly expenses – a car, for example – that makes paying off debts difficult.
Don’t fall into this trap. Before you make any new financial commitments, find out how much you already owe, the interest rates, your minimum monthly payments and the terms of the loans. You'll then be able to figure out how much of your disposable income will have to go to paying your loans and how much you'll have left for other spending -- including paying more than the minimum amounts due.
Save –You need a safety net in case of job loss, medical expenses or emergency. It is recommended that you save at least three months of living expenses. Make sure to calculate all the expenses you need for day-to-day life, including rent, bills, groceries – anything to maintain your current standard of living. Pay your “savings account” a set amount every month – just like you would with any other bill.
Your image is your brand – Begin investing in a few key wardrobe pieces, appropriate to your industry. If you aren’t dressed professionally, you are inviting your colleagues to not take you seriously. You need to dissect the dress code by taking a look at those around you. You can still have some personal style, but you need to do it within the confines of the industry standards. For example, if you are in a conservative field like banking or business, then invest in a simple black suit (blazer, slacks and skirt), two to three button down blouses, a cardigan set, a more colorful blouse, a work dress (find out the rule on sleeves), a tote and pumps (be sure to know rules on open-toes, hose, etc.). You will be able to interchange these items and slowly add more wardrobe pieces. It’s important to note that you don’t have to spend a lot of money to start your professional wardrobe. Try outlet malls, sales and discount stores like Old Navy or H&M. Simple jewelry, hair and makeup will complete your look.
Splurge – That’s right. You can splurge every now and again. You work hard and deserve to treat yourself with a mani-pedi, drinks out with friends, a nice dinner or new outfit. Go ahead -- do so in moderation. You've earned it.
Do you have some great financial advice, or a story to share? Feel free to let us know at patricia.kagerer@gmail.com. Thanks, and good luck.
Brazil Finance Minister Demands Lower Bank Interest Rates -Report - NASDAQ
SAO PAULO -(Dow Jones)- Brazilian banks must lower their lending rates by between 30% and 40%, and increase lending, without raising fees, to help spur economic growth, Finance Minister Guido Mantega said in an interview with the Folha de Sao Paulo newspaper and UOL website.
"In one more month, all of this has to be in due course," Mantega said in an interview with Folha. "Our intention is to monitor this on a weekly basis. I will demand," Mantega said.
Brazil's government and banks have been involved in a tug-of-war for several months over the reasons behind sky-high bank lending rates in Brazil. While the government argues that banks inflate their costs, as measured by the spread between their borrowing and lending rates, banks argue that high non-payment levels, labor costs and taxes all drive up interest rates.
"If private-sector banks reduce [rates] 30%, 40% and increase the volume [of lending] 30%, 40%, they will be providing a service to the economy," Mantega said. The Folha report cited central bank data which shows that Brazil's five largest banks on average charge 54.11% per year for personal and corporate loans. A 40% reduction would see that fall to 32.46%, according to the report.
Brazil's central bank has slashed rates by three-and-a-half percentage points since late August 2011, to 9%, and is expected to lower rates again after its next monetary policy meeting on May 29-30. But the government has become increasingly concerned that the Brazilian economy isn't picking up as fast as it would like, following a meager 2.7% rise in gross domestic product in 2011, and has taken a series of other measures to try to promote growth, most recently unveiling tax breaks and other incentives for car makers.
The minister said he no longer expects the economy to grow 4.5% this year, and that somewhere between 3.5% and 4% growth is more feasible. Inflation in 2012 will be lower than last year's 6.5%, the minister said. Consumer price inflation is currently running at around 5.1%; "If it stays were it is, that's good for us," the minister said.
Mantega said he doesn't see any need for the government to reduce its savings target, although he acknowledged that if there were to be a global catastrophe--such as a chaotic Greek exit from the euro zone--"then clearly we would use all the instruments to prevent the economy from skidding."
With regards to bad loans, the government is preparing measures to encourage customers that are late on their payments to catch up, the minister said. Rules currently don't favor repayment of overdue loans, he acknowledged. Current rules are more flexible for loans of up to 30,000 Brazilian reais and the government plans to extend this to BRL80,000 or BRL100,000, the minister said.
Mantega rejected worries that Brazilian families are increasingly indebted, and cannot thus consume as much as they have done in recent years, contributing to the economic woes. He said overall debt levels are among the lowest in the world, with families setting aside around 20% to 22% of monthly income to pay debts, compared to around 80% in the U.S. Moreover, credit will continue to grow as Brazil continues to generate more jobs, Mantega said.
On the web:
http://www.folha.com.br (http://www.folha.com.br)
-By Matthew Cowley, Dow Jones Newswires; +55 11 3544 7082; matthew.cowley@dowjones.com
(END) Dow Jones Newswires 05-27-121018ET Copyright (c) 2012 Dow Jones & Company, Inc.
£10m boost for Money Advice Group - menmedia.co.uk
Money Advice Group, which has its headquarters at Carrington Business Park, Greater Manchester, has secured additional working capital and a war chest for acquisitions of smaller rivals.
The cash injection has been provided by asset-based lending specialist PNC Business Credit.
Money Advice said it aims to use the funding to grow its 28,000-strong client base by a third.
It currently handles £250m of consumer debt and turns over £15m. It is the parent company of Kensington Financial Management Consultants, Oak Loans & Mortgages, Knightsgate Insurance and Knightsbridge Insolvency Services.
The group's range of services include debt management plans and individual voluntary arrangements, which are an alternative to bankruptcy for indebted consumers.
Money Advice will take 3,500 sq ft of additional office space at Carrington and plans to bolster its management and client services teams as its case-load increases. Its currently employs 285 staff.
The group said its expansion plans have been stimulated following an Office of Fair Trading clampdown on debt management companies last year, which forced some to quit the market or be made to close due to a lack of compliance.
Tougher regulations since March this year and the associated costs of compliance have sparked a period of consolidation in the industry, which Money Advice said creates 'significant opportunities' for larger companies to gain market share by snapping up smaller operations or their books of customers.
It said it has anticipated this shift and previously bought a small player, which proved such a success that it is now seeking to replicate the strategy on a larger scale.
Advisers at Warrington outfit Dow Schofield Watts acted for the group on today's PNC deal.
Simon Brown, managing director at Money Advice, said: “With the introduction of more stringent compliance guidelines than our industry has ever witnessed, we spotted an opportunity in the market.
“We are extremely proud of our compliant culture but the costs associated with becoming compliant are too excessive for some of the smaller players, so what we find is they want to exit altogether or just sell on some of their books or assets.
“We trialled this approach last year with the successful acquisition of a smaller company, and it was from this we saw a clear direction for Money Advice Group.
“We have ambitious plans for expansion and growth, and the partnership with PNC has assisted us in realising these plans.”
Mark Shackleton, of PNC, said: “Money Advice Group has the infrastructure, industry knowledge and experience to facilitate steady growth through acquisition.”
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