Daniel Gros, directeur du Centre européen d'études politiques. Le Figaro - La nationalisation de Fortis peut-elle être vue comme un plan de sauvetage européen ? Daniel Gros - Absolument pas. Il s'agit d'un sauvetage national : l'État belge a repris Fortis Belgique, l'État néerlandais a fait la même chose aux Pays-Bas, et le Luxembourg a repris Fortis Luxembourg. C'était du chacun pour soi : aucun gouvernement n'était prêt à sauver Fortis Europe aux frais de ses contribuables. Du coup, Fortis qui constituait un groupe récent a volé en éclats. Cette opération a cassé l'intégration du marché bancaire européen.
Le Figaro - La nationalisation de Fortis peut-elle être vue comme un plan de sauvetage européen ? Daniel Gros - Absolument pas. Il s'agit d'un sauvetage national : l'État belge a repris Fortis Belgique, l'État néerlandais a fait la même chose aux Pays-Bas, et le Luxembourg a repris Fortis Luxembourg. C'était du chacun pour soi : aucun gouvernement n'était prêt à sauver Fortis Europe aux frais de ses contribuables. Du coup, Fortis qui constituait un groupe récent a volé en éclats. Cette opération a cassé l'intégration du marché bancaire européen.
Q. Can the nationalization of Fortis be seen as a European bail-out? A. Absolutely not. It is a national bailout: the Belgium state took over Fortis Belgium, the Dutch state did the same thing in the Netherlands, and Luxembourg took over Fortis Luxembourg. It was free for all: no government was willing to save Fortis Europe at the expense of its taxpayers. Thus, Fortis, which was a recent group imploded. This operation broke the integration of the European banking market. Q. What what the ECB President at the meeting over Fortis in Bruxelles. Could he guarantee a rescue as the Fed would have done? A. No! The ECB cannot give its support, unlike the fed, because there exists no European Treasury. The ECB was at the emergency meeting because Fortis is a large player on the interbank market. It financed itself on short-term debt a lot. If Fortis had failed, it would have aggravated already important liquidity issues that the ECB is trying to face by injecting billions on money markets. Furthermore, the ECB had to reveal the extent of the risks Fortis was facing: its assets were too poor to be swapped at the ECB when other banks would not lend to it. Q. Can Europe organize an American-style rescue plan? A. No. Europe cannot create an asset dump to buy back toxic assets. First, because there is no European treasury. Further, because the money required would be too great. But at the end, Europe does not need a "Paulson Plan". Asset held by European Banks are not too bad. The issue for European banks is under capitalization. Giants such as Fortis, BNP Paribas, Deutsche Bank or Barclays multiplied cross border buy-outs without the necessary capital. As a result, the day the market loses confidence, this becomes a major issue. Even BNP Paribas is sitting on a volcano: it has a comparable leverage ratio to Fortis', and 1000 billion of short-term debt. European legislation is not enforced strictly enough. Q. The European Commission will still strengthen its directive on equity... A. Sure, but by the time it will come into force it will be too late ! Q. What else can Europe do? A. It could increase bank's equity through the EIB, the European Investment Bank.
A. Absolutely not. It is a national bailout: the Belgium state took over Fortis Belgium, the Dutch state did the same thing in the Netherlands, and Luxembourg took over Fortis Luxembourg. It was free for all: no government was willing to save Fortis Europe at the expense of its taxpayers. Thus, Fortis, which was a recent group imploded. This operation broke the integration of the European banking market.
Q. What what the ECB President at the meeting over Fortis in Bruxelles. Could he guarantee a rescue as the Fed would have done?
A. No! The ECB cannot give its support, unlike the fed, because there exists no European Treasury. The ECB was at the emergency meeting because Fortis is a large player on the interbank market. It financed itself on short-term debt a lot. If Fortis had failed, it would have aggravated already important liquidity issues that the ECB is trying to face by injecting billions on money markets. Furthermore, the ECB had to reveal the extent of the risks Fortis was facing: its assets were too poor to be swapped at the ECB when other banks would not lend to it.
Q. Can Europe organize an American-style rescue plan?
A. No. Europe cannot create an asset dump to buy back toxic assets. First, because there is no European treasury. Further, because the money required would be too great. But at the end, Europe does not need a "Paulson Plan". Asset held by European Banks are not too bad. The issue for European banks is under capitalization. Giants such as Fortis, BNP Paribas, Deutsche Bank or Barclays multiplied cross border buy-outs without the necessary capital. As a result, the day the market loses confidence, this becomes a major issue. Even BNP Paribas is sitting on a volcano: it has a comparable leverage ratio to Fortis', and 1000 billion of short-term debt. European legislation is not enforced strictly enough.
Q. The European Commission will still strengthen its directive on equity...
A. Sure, but by the time it will come into force it will be too late !
Q. What else can Europe do?
A. It could increase bank's equity through the EIB, the European Investment Bank.
I'm not convinced. The Eurozone cannot buy back assets because it lacks the capital and the institutions to organize the facility, but it can inflate bank's balance sheet through the EIB? what's the difference? Why could not the EIB invest in toxic assets?
Plus, EIB getting equity in European banks would be akin to nationalization -- which surely would require some political decision. Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine
The Eurozone (officially euro area,[1] or informally Euroland) refers to a currency union among the European Union member states that have adopted the euro as their sole official currency. The Eurosystem, headed by the European Central Bank, is responsible for monetary policy within the Eurozone.
From this I get that the ECB heads the association of national central banks, which then work with national banks.
European Investment Bank - Wikipedia, the free encyclopedia
The EIB is an international financial institution, a publicly owned bank. Its owners are the Member States of the European Union
So all members of the Eurozone are owners of the EIB, which also means that some owners are not in the Eurozone.
I meant that getting the EIB to buy toxic assets as in the Paulson plan would be just as complicated then getting it to nationalize bank in the Swedish fashion, which is what I assume he meant in his last sentence. Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine
