The EU's step is crucial because weak banks remain at the core of Europe's financial problems. Above, the EU headquarters in Brussels. Francois Lenoir / Reuters
The EU's step is crucial because weak banks remain at the core of Europe's financial problems. Above, the EU headquarters in Brussels. Francois Lenoir / Reuters

EU banking union a step closer to reality



European Union finance ministers showed yesterday they are not pathologically incapable of consensus, despite years of evidence to the contrary.

But it was no walk in the park. After 14 hours of gruelling negotiations yesterday they agreed to put the European Central Bank (ECB) in charge of euro-zone lenders in a deal that paves the way for the currency bloc's firewall fund to provide direct bailouts to banks.

"It's real progress that opens up interesting possibilities," said Pierre Moscovici, the French finance minister.

The new supervisory mechanism should be fully ready by March 1, 2014, with about 200 banks automatically qualifying for direct ECB oversight, said Michel Barnier, the EU financial services commissioner, after the talks ended at 4:30am local time in Brussels. In the interim, the €500 billion (Dh2.39 trillion) European stability mechanism (ESM) could aid banks directly using its own procedures and asking ECB supervisors to step in, he said.

Mr Barnier called the accord "a fundamental element for financial stability in Europe".

He said the ECB would have total access to banking information and would give equal treatment to non-euro nations that join the oversight system.

The heads of state and government will be looking beyond ECB supervision to other measures needed to break the links between banking woes and sovereign-debt struggles, such as who should pay to stabilise failing banks.

"I think we've agreed on the key points to create a European bank supervision that's supposed to start in 2014," Wolfgang Schäuble, the German finance minister, said after the meeting. The legal framework for the new supervisor could be in place by the end of February, allowing the ECB a full year to prepare before taking on its new duties.

Under the agreement, euro-zone finance ministers could use the ESM to recapitalise banks directly if they made a unanimous request to the ECB to take over direct oversight of a troubled institution. Finance chiefs would need to develop guidelines for when they might offer aid to banks, instead of going through national governments as they did with Spain's financial-sector rescue programme.

Ministers agreed on central oversight for banks with more than €30bn in assets or with balance sheets that represent at least 20 per cent of a nation's economic output. The guidelines include at least the top three biggest banks of every participating nation unless "justified by particular circumstances".

Finance ministers also reached accord on a UK-backed proposal for divvying up European Banking Authority (EBA) voting rights. The United Kingdom, which will not be part of the banking union, sought a requirement that EBA decisions be taken by so-called double majority voting, so nations outside the supervisory mechanism cannot be automatically overruled by those who take part.

The banking deal is a "good outcome," said George Osborne, the UK chancellor of the exchequer, or finance minister.

"It shows that when you go in with a clear and principled argument and you make your case, then you can succeed and that's what Britain has done tonight."

Anders Borg, the Swedish finance minister, endorsed the deal, saying it struck a balance between nations that take part in the common oversight and nations that stay out."These have been very tough negotiations," Mr Borg said. "Sweden will remain outside the banking union but we believe this is a good compromise."

Elsewhere in Europe, Greece's euro partners have agreed to hand over the next disbursement of the country's bailout loans.

The cash-strapped country will get a total of €49.1bn between now and March. Greece needs the money to stay afloat and avoid a potential default. Officials said Athens would get €34.3bn in the coming days.

The decision yesterday by the finance ministers of the 17 EU countries that use the euro came after Greece said it would buy back €31.9bn of its bonds from private investors at a third of their face value, lightening its crushing debt load and meeting a key condition to receive vital rescue loans.

* compiled from Bloomberg News and AP

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Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding

Name: Peter Dicce

Title: Assistant dean of students and director of athletics

Favourite sport: soccer

Favourite team: Bayern Munich

Favourite player: Franz Beckenbauer

Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates 

 

German intelligence warnings
  • 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
  • 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
  • 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250 

Source: Federal Office for the Protection of the Constitution

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What is a Ponzi scheme?

A fraudulent investment operation where the scammer provides fake reports and generates returns for old investors through money paid by new investors, rather than through ligitimate business activities.

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COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
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Nepotism is the name of the game

Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad. 

The%20Genius%20of%20Their%20Age
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How much of your income do you need to save?

The more you save, the sooner you can retire. Tuan Phan, a board member of SimplyFI.com, says if you save just 5 per cent of your salary, you can expect to work for another 66 years before you are able to retire without too large a drop in income.

In other words, you will not save enough to retire comfortably. If you save 15 per cent, you can forward to another 43 working years. Up that to 40 per cent of your income, and your remaining working life drops to just 22 years. (see table)

Obviously, this is only a rough guide. How much you save will depend on variables, not least your salary and how much you already have in your pension pot. But it shows what you need to do to achieve financial independence.

 

Electric scooters: some rules to remember
  • Riders must be 14-years-old or over
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  • Solo riders only, no passengers allowed
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The Rub of Time: Bellow, Nabokov, Hitchens, Travolta, Trump and Other Pieces 1986-2016
Martin Amis,
Jonathan Cape

UPI facts

More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions

Emergency

Director: Kangana Ranaut

Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry 

Rating: 2/5

COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Other workplace saving schemes
  • The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
  • Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
  • National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
  • Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.