Week in Review (17 May)

Finance Ministers adopt packages aimed at shoring up European banking sector and improving the functioning of the over-the-counter derivative market

On 14 May EU finance ministers adopted two legislative packages. The first is aimed at reinforcing banks’ capital and liquidity positions, strengthening the framework for recovery and resolution of banks in difficulty and reinforcing banks’ ability to withstand shocks. The legislative package will be signed next week and most of the new rules will start applying in mid-2021.

The second amends the European Market Infrastructure Regulation (EMIR) to improve the functioning of the over-the-counter (OTC) derivative market by addressing disproportionate compliance costs, transparency issues and insufficient access to clearing for certain counterparties. This regulation will also be signed next week and will enter into force 20 days after its publication in the Official Journal.

Greek NPL sales begin in earnest

With an eye on the 2020 stress tests, Greek banks are ramping up their preparations for NPL sales with Eurobank out in front. It received binding bids for its €2 billion ‘Pillar’ portfolio on Wednesday and non-binding bids for the €7.2 billion Cairo portfolio its’ €24 billion NPL management company FPS were also received.

Bain, Pimco, Lone Star, Fortress, Elliot, B2Capital are understood to be in the running for all three portfolios and should the transactions proceed Eurobank will meet its NPL reduction targets for 2019 and puts the bank in a strong position for the stress tests of July 2020.

National Bank of Greece is preparing the sale of a €1.2 billion portfolio called Project Mirror and in H2 2019 is expected to prepare a €700 million business NPL portfolio. Alpha Bank also has a total of €3.9 billion worth of NPL transactions lined up for this year split into two sales. Piraeus seems to be the least advanced despite having the highest NPL ratio.

Italy opens fresh Google competition probe

The Italian competition authority announced on 17 May that it is opening an investigation into a potential abuse of dominant market position by Google.

The probe centres on Google’s treatment of apps on its Android system, and specifically its failure to integrate an ENEL Energy app into the operating system. The competition authority believes that Google, in its dual role as an operating system service provider and competitor, may have abused its position in order to defend the position of Google Maps.

Any fines arising from the Italian investigation are unlikely to overly trouble Google. The real significance of the probe lies in the possibility that it could feed into a fuller investigation at European level.