GFMA: News on the global financial markets

Industry News

French banks speed up cuts to their trading books
BNP Paribas and Société Générale are trying not to tap shareholders of taxpayers for capital, by stepping up efforts to reduce their trading books. The French banks have concentrated on reducing their dollar-funded operations. However, they have been reluctant to endanger trading and derivatives business. Bloomberg Businessweek(26 Oct.)

Lehman and Danske Bank agree on bankruptcy claim
Danske Bank filed a claim in 2009 for nearly $700 million against Lehman Brothers Holdings, and another claim for the same amount against Lehman's commercial paper division. The claims focus on a commercial and residential loan repurchase agreement from 2005. Danske has now agreed to significantly reduce the claims, and support Lehman's bankruptcy reorganization plan, according to court records. Bloomberg(27 Oct.)

Regulatory Roundup

FSB calls for tougher mortgage-lending standards
The Financial Stability Board said the global financial crisis called attention to weak home-lending standards, and that banks should make sure borrowers are able to repay their loans. "In all instances, a robust and effective assessment of individual affordability has to underpin any sustainable lending model," an FSB statement says. Reuters(26 Oct.)

EU antitrust officials to question Deutsche Boerse and NYSE
European antitrust authorities today will to question executives of Deutsche Boerse and NYSE Euronext about their proposed merger, which would result in a near-monopoly in European derivatives trading. Financial Times (tiered subscription model)(26 Oct.)

ECB to outline covered-bond buying programme
The European Central Bank next week will disclose details of its plan to purchase as much as €40 billion worth of covered bonds. The ECB helped boost the market in 2009 in its first foray into the covered-bond market. The Wall Street Journal (tiered subscription model)(27 Oct.)

Draghi indicates that ECB will continue buying sovereign bonds
Mario Draghi, the incoming president of the European Central Bank, suggested that he is prepared to keep markets steady by buying the bonds of indebted euro-zone nations. Draghi also hinted that he might support an interest rate cut after he takes over from Jean-Claude Trichet. Reuters(26 Oct.)

BoE committee aims to balance bank capital and lending
The Bank of England's new Financial Policy Committee is working to encourage banks to lend to businesses, while ensuring that they are strongly capitalised, committee member Robert Jenkins said. "That debate within the policy committee was very thoughtful and very difficult," he said. "It was just generally felt it was better in these uncertain times to err on generating confidence in the system as a whole... rather than to push on a string in terms of lower capital requirement that might or might not find itself into lending." Reuters(26 Oct.)