The UK will stop classifying debt issued by EU countries as “zero risk” if it leaves the bloc without a deal, raising the prospect that banks could have to raise additional capital.
The change would automatically require UK banks, and subsidiaries holding parts of their liquidity in European government bonds, to commit additional capital against the securities, said the UK Treasury, which outlined how it plans to address the future of financial services supervision after Brexit.
Supervisors would look at the creditworthiness of the various governments when deciding on weightings, potentially hurting lenders who have significant bond holdings from weaker nations.
CAPITAL INCREASE
A bank found holding too many of the penalized securities could be forced to either raise capital or sell its holdings in a market roiled by Brexit.
British banks would find themselves similarly penalized by EU supervisors, because mutual recognition rules would no longer apply. The changes would also make it more difficult for EU lenders to maintain trading desks in the UK, because it would require them to commit additional capital.
“It’s a bizarre decision,” said Owen Callan, a Dublin-based analyst at Investec PLC, adding that some market-making would become “prohibitively expensive to do out of London.”
Leaving the EU means that banks from the union with UK operations would “be subject to an additional layer of UK-led supervision” because Bank of England supervisors from the UK Prudential Regulation Authority (PRA) would view them as a standalone unit, the statutory instrument dated Aug. 21 said.
The change was reported earlier by Global Capital.
SHOCK TRANSITION
“It remains to be seen what liquidity requirements the PRA will impose on EU banks operating in London. In a worst-case scenario this could be very penal,” said Etay Katz, a partner at Allen & Overy LLP in London.
It is a major surprise that no transitional period is foreseen, he said, adding that a transition would have allowed the banks to model the impact of the changes and “come to terms with any adverse capital and liquidity consequences” by restructuring their holdings.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained