These are stories Report on Business is following Monday, Jan. 7, 2013.
Regulators ease rules
A decision by regulators to scale back their plans is driving bank shares higher today, notably in Europe.
In the face of heavy lobbying by the financial services industry, the Basel Committee on Banking Supervision agreed yesterday to ease liquidity requirements and, at the same, push back the date of final implementation to 2019.
“This graduated approach is designed to ensure that the LCR can be introduced without disruption to the orderly strengthening of banking systems or the ongoing financing of economic activity,” the group, made up of central bankers and bank regulators, said of the liquidity coverage ratio, or the amount of liquid assets such as cash that banks must have on hand in the event of another financial meltdown.
The banks had warned about the potential impact on lending, prompting the regulators to ease their requirements by also changing the mix of what can be included.
While global markets are struggling today, investors pushed up bank stocks in the wake of yesterday’s decision.
“Headline news this morning that banks will be afforded greater flexibility and time in complying with the Basel 3 rules regarding liquidity, has indeed helped the sector to buck the wider trend with Barclays (+4 per cent) the top performer, and Lloyds and RBS showing up 1.4 per cent and 0.8 per cent respectively,” said senior analyst Michael Hewson of CMC Markets in London.
“Boosted by the clarity this announcement provides and hopes that the trickle-down effect will ease small business lending in the near term, it remains unclear how much if any material impact will be felt on the high street as a result.”
While the banks applauded the changes, the impact should be muted, said chief global economist Julian Jessop of Capital Economics in London.
"Most of the large (and therefore systemically important) banks already meet the LCR as originally proposed," he said. "There may still be some smaller banks that would have struggled to do so by 2015, but it was always likely that they would have been given more time."
This came as 10 major U.S. banks agreed today to billions of dollars in a deal with regulators to settle allegations of improper foreclosures.
- Follow our Inside the Market blog
- Read the Basel committee statement
- U.S. banks pay $8.5-billion to end foreclosure reviews
- Bank of America strikes $10-billion mortgage settlement
Where the puck stocks
The end of the National Hockey League lockout should put a small spark in Canada’s slowing growth.
“Since a bit less than half the season looks to have been lost, the economic damage will be contained at less than 0.05 per cent of GDP,” said deputy chief economist Douglas Porter of BMO Nesbitt Burns.
“That loss would have been fully absorbed by now, and we should see a slight bump in January growth – in the arts, entertainment and recreation category.”
- Economy Lab: End of NHL lockout to give economy small boost
- The challenge now for the NHL moves to fixing a tarnished brand
- Eric Reguly’s Economy Lab: Italy’s wide-open election will determine intensity of euro crisis this year
- Pakistan voids gold, copper lease held by Barrick consortium
- Grounded Shell oil rig refloated in Arctic