What has been announced by ECOFIN (European Council of Finance Ministers) today:
- Deposit insurance to be raised from a minimum of EUR20k to EUR50k.
- There will be support/interventions for systemically important institutions; intervention shall be timely, and in principle temporary; shareholder shall bear the consequences of intervention; governments will have the ability to change bank management when intervening.
Bad for shares.
- Recapitalizations may be necessary.
- Interventions to be decided at a national level, but to be coordinated; senior financial officials to be in daily contact.
They are limited by relying on the national government’s ability to fund.
- Commission to provide rapid reviews of interventions; Commission to issue guidance on state-aid compliant deposit insurance and interventions/recapitalizations.
- Systemic liquidity to be ensured.
Maybe in Euro, but maybe not in USD which they all seem to need.
- Executive pay guidelines have been agreed; undue benefits shall not be retained; governments can intervene on manager pay.