The ECB turns to Italy in its extraordinary debt purchase plan | Markets

Italy is not the euro country to which the ECB has acquired more sovereign debt in its extraordinary anti-pandemic program (PEPP), launched in March of last year. It is Germany, for a volume of more than 188,000 million euros. An amount that corresponds to the fact that Germany is by far the country that has the most weight in the capital of the ECB, 21.43% of the total.

But the extraordinary status of the PEPP program does not lie only in its voluminous amount – forecast at a total of 1.85 trillion euros – but in the option that the ECB has given itself of having enough flexibility to deviate in its purchases of the so-called capital key, for which it must acquire sovereign debt in proportion to the weight of the issuing country in its capital. And in that unusual freedom that Christine Lagarde has given herself, Italy – with a debt-to-GDP ratio close to 160% – is the great beneficiary.

The ECB has acquired Italian sovereign bonds in the PEPP program for 136,310 million euros, at the end of January, which is equivalent to 17.75% of the total. The percentage is 3.9 percentage points higher than the 13.81% of the capital that corresponds to Italy in the ECB. This is the biggest deviation from that capital rule among euro zone countries. Above 3.13 percentage points in which German debt purchases exceed the capital key or 2 points in the case of Spanish sovereign debt. The PEPP has allocated 11.7% of its purchases of public debt to Spain. Above 9.69% of Spanish capital in the ECB.

The Draghi government will allow to reduce the pressure in favor of Italian bonds

These percentages of the shareholding distribution in the ECB were reviewed on February 1 on the occasion of the formalization of Brexit. Thus, all EU countries are part of the capital of the ECB and those of the euro zone account for 81.32% of the shareholding. But if the composition of the ECB’s capital were adjusted only to the euro countries, Italy would once again be the great beneficiary of the PEPP, even more clearly.

In that case, and according to calculations by Mitsubishi UFJ Financial Group – Japan’s largest bank – the ECB would continue to deviate by 2.18 points in favor of Italian debt from the new capital key, which would rise to 15.55% for the country. The deviation in favor of Germany would instead be reduced to 0.42 points and 0.77 in the case of Spain.

The ECB has made a clear commitment to making its debt purchases more flexible in the face of the current crisis, which has served to keep state financing costs at bay. The newly launched government of Mario Draghi has triggered investor interest in Italian debt and will undoubtedly be a support so that the ECB does not have to go much further in its purchases in favor of Rome, without forgetting that Italy will be the country of the euro that more debt will issue this year.


And on the sixth day, Brexit ended the City as the financial capital of Europe

The United Kingdom is in the middle of Genesis. After Brexit, we must create that new “Global Britain”, which Eurosceptics always presented as the promised land of the Bible. But there are surprises that were not expected. Or maybe yes, and the problem was that, at the time, there were no explanations or they did not want to listen to each other. Going back to Genesis. On the first day, citizens discovered that certain shipments now cost even more than the purchased product. On the second day, the musicians complained about having to pay different visas if they now want to tour. On the third day, fishermen came out to demonstrate in the streets … And on the sixth day, the City is no longer the financial capital of Europe. Those are big words.

In January, the month in which the United Kingdom left the EU for practical purposes, Amsterdam took from London its historic title as the main stock market of the Old Continent. The Financial Times now reveals that, thanks to the business transfer promoted by the divorce, Euronext Amsterdam and the Dutch branches of the platforms CBOE Europe and Turquoise moved shares for a daily average of 9.2 billion euros, four times more than in December, while that the volumes from the British capital fell to 8.6 billion euros. Amsterdam has also benefited from increased activity in the swap and sovereign debt markets, which would normally have been centralized in offices on the banks of the Thames.

Where is the City now? The service sector in general represents 80% of the British Gross Domestic Product (GDP). And, specifically, financial services represent 7% of GDP, 1.1 million jobs and 11% of the country’s tax collection. Nevertheless, they were left out of the trade negotiations between London and Brussels that ended with the agreement ‘in extremis’ on Christmas Eve.


Downing Street always ruled out any pact it gave to the Community fishermen access to British waters in exchange for better conditions for the City. Despite the fact that fishing represents only 0.12% of British GDP, its political importance was totemic for the Eurosceptic cause. But, after all, it turns out that UK fishermen have not been happy with the new situation. In any case, as emphasized by Jacob Rees-Mogg, head of the hard core of the Brexiteers, “British fish are happier now.” And that’s always a relief.

London and Brussels have agreed to have a Memorandum of Understanding on financial services by March 31. But this will be limited only to designing a framework for “regulatory cooperation”. Ultimately, the equivalence decision is managed completely separately. And this is, after all, the key to everything.

Since 1 January, UK-based financial institutions they have lost automatic access to the single market. Therefore, they will only be able to provide their services in the EU without having to open branches in one of its member states, if the European Commission decides to grant them equivalence rights, that is, to recognize that the British legislation of the area in which they work is “ equivalent ”to the community.

It is the same system with which the EU operates with the United States, Japan or Switzerland. But it is very far from unlimited access that the City had until now to the community market. In practice, moreover, it is an issue that is frequently politicized, a “small” detail to take into account in current relationships between exes. They’ve barely been divorced for a month, and they’ve already thrown their heads with the vaccine war and the Irish Protocol. Otherwise, all good.

Equivalence decisions are made unilaterally by the European Commission and they do not offer great guarantees either, since they have a limited duration, can be withdrawn with a prior notice of only 30 days and do not cover all financial activities, so that key businesses such as retail banking are excluded.

At the end of last year, before Brexit was implemented for practical purposes, Brussels only granted two equivalences, considered essential to guarantee financial stability. One was for securities depositories, specific to Ireland. And another for clearing houses, until mid-2022, since the EU depends up to 95% on the City for the clearing of derivatives. But the European Commission has yet to decide the equivalence with the United Kingdom in 26 of the 40 possible areas. Y, for the moment, he’s in no rush.

“Exclude” the UK

On the other side of the English Channel, a little nervousness is beginning to show. The Governor of the Bank of England, Andrew Bailey, notes that there are “indications” that Brussels is trying to “exclude” the United Kingdom from the EU financial markets and warns that the lawsuits they would lead London to be subjected to their “dictation.”

I think something is missing. ¿Hasn’t it been the UK that has decided (very freely, by the way) to leave the club? Wasn’t it the UK that refused to include the City in the trade negotiations? Isn’t it the UK that now wants access to the common market?

The Minister of Economy, Rishi Sunak, has stated that the City should prepare for a Big Bang 2.0 – in reference to the deregulation implemented by Margaret Tatcher’s government in the 1980s – in order to increase the attractiveness of the United Kingdom. But, to this day, it still does not specify to what extent it wants to move away from the community norms in the coming years or in what areas.

For now, the City continues to dominate the world’s multi-billion dollar currency markets and far exceeds other centers in Europe. Financial services contributed 132 billion pounds (152 billion euros) to the British economy in 2019. With Brexit, around 7,500 jobs have been relocated to rival hubs on the continent, including Amsterdam, Paris and Frankfurt. But this is a figure well below the apocalyptic predictions that were made of up to 50,000 losses.

In any case, the current equivalence debate will offer in the coming months the keys to where the relationship between London and Brussels is going. They may become ex-well-wishers, keeping a close bond out of self-interest. Or perhaps the EU is increasingly determined to reduce your dependency on the City and the UK finds increasing incentives to diverge from EU rules to focus on other markets. Time will tell. We are, after all, in the middle of Genesis.


BBVA will invest up to 124 million in its venture capital fund Propel VC

BBVA plans to invest up to an additional 150 million dollars (about 124 million euros) in the venture capital fund Propel Venture Capital, increasing its commitment to 400 million dollars (about 331 million euros at the current exchange rate), after the previous investment made in 2016.

In the next weeks, Propel will launch a first fund of 50 million dollars (41 million euros) and will be followed by two other funds in 2022 and 2023, which will be open to other investors.

In order to take advantage of opportunities from financial technology sector and channel their investments’ fintech‘, BBVA partnered with Propel, its first independent venture capital fund, five years ago.

Propel invests in start-ups and look for opportunities in others that are in more advanced stages. The fund will continue to focus its activity on the American continent, but with the flexibility to invest globally.

Propel Venture Partners

Since its creation, Propel Venture Partners (PVP) has invested in more than 40 companies in five countries, including the US, Mexico and Brazil. Two of these companies have valued more than $ 1 billion in an IPO and an acquisition, in addition to having stakes in several that already exceed $ 500 million in valuation.

It is BBVA’s new commitment provides Propel with the financial backing to continue advancing its goal of building “a global benchmark investment fund.”

“Propel offers BBVA a privileged window into the ‘fintech’ ecosystem”, has assured the executive president of BBVA, Carlos Torres Vila.

“The excellent fund performance has been combined with lessons and experiences that entrepreneurs have shared with BBVA, helping to accelerate our transformation “, he added.

The venture capital model involves injecting capital into investment opportunities with great potential and is an engine of economic growth. Since 2016, Propel portfolio companies have created more than 10,000 jobs.

Jay Reinemann and David Mort started investing together in 2013, and jointly direct the fund. The team has decades of professional experience working with and for companies in the financial services industry, including bank card networks, retail and commercial banks, insurance companies and software companies.

Beyond investing in recently created startups, BBVA maintains a very close relationship with the global fintech ecosystem, through a wide range of acceleration programs aimed at exploring digital technologies and collaborating in new business segments . The bank has also forged strategic alliances with tech giants like Uber in Mexico or Xiaomi in Spain.


Weather forecast in Capital and Greater Buenos Aires: how will it be on Sunday

The National Meteorological Service announced for this Sunday partly cloudy sky in the City of Buenos Aires and surroundings, with winds from the south, gusts of up to 50 kilometers per hour and temperatures that will oscillate between 17 and 28 degrees.

Meanwhile, the Monday the organism foresees values ​​between 16 and 31 °, with a clear sky and winds from variable directions.

He Tuesday A minimum of 19 ° and a maximum of 32 ° are expected, with slightly cloudy skies and winds from the northwest.

Similar conditions will occur on Wednesday, by the time the SMN announced a clear sky, with a temperature that will oscillate between 21 and 32 °.

Finally, the Thursday the thermometer will be located between 21 and 31 °, with a clear sky and winds from the northeast.


Republic gets fresh capital for the first time in the new year | 01/12/21

Today, Tuesday, for the first time in the new year, the Republic of Austria brought fresh capital to the market. The Oesterreichische Bundesfinanzierungsagentur (OeBFA) announced that a total of 1.38 billion euros could be flushed into the state coffers by increasing a ten- and a 30-year federal bond.

In an interview with the APA, OeBFA boss Markus Stix said that both papers had the lowest yields that have ever been achieved on these bonds with today’s issue. The ten-year bond achieved a negative issuance yield of minus 0.399 percent, while the longer-term 30-year bond was plus 0.159 percent.

The latest statements from the European Central Bank (ECB) support the low interest rate level, said the OeBFA boss. The ECB once again expanded the emergency purchase program at its interest rate meeting in December. This is now 1.85 billion. In addition, the duration of the program was extended by nine months until at least the end of March 2022. All these measures would have a supportive effect in view of the veritable flood of government bond issues, which will continue this year so that states can continue to finance the effects of the pandemic, said Stix.

The interest rate gap between the two papers and the German benchmark bonds has narrowed further. This further improved the financing conditions for Austria. The ten-year bond now has a total volume of over EUR 10 billion. The volume of the 30-year bond is currently around EUR 4.4 billion.

Today’s auction was not only the first of this year, but also the first since Brexit. British banks and also US banks that previously participated in the auction via the financial center in London are now handling the auctions via their EU units, for example in Ireland or Frankfurt. Despite the change, everything worked fine, says Stix. So far, Brexit has not had any impact on the composition of primary dealers in Austria.

Stix does not expect any negative effects of Brexit on the domestic bond market in the long term either. “The banks would be badly advised if they left the business to the other European banks,” said the OeBFA boss on Tuesday. The corona pandemic had triggered a sharp increase in government bond issues, which is also good business for banks.

(Conclusion) bel / cri


The duties of companies to survive and grow in 2021 | Markets

The 2020 Covid apocalypse was sanitary. This year it will be economical. The European Central Bank and its reinforced anti-pandemic arsenal, with a firepower at the beginning of 2021 of more than a trillion euros, together with the shields deployed by the Government and the European Union have anesthetized the beast. But a part of the productive fabric is damaged and needs to be rebuilt. An exercise of refinancing, restructuring and profound changes in business models is coming. The mission is not only to survive but to prepare to grow in a strong and sustainable way, with the vaccine as a great wall of defense against the virus.

The hardest will come at the end of the second quarter, once the painkillers in the form of bankruptcy moratorium, which expires in March, temporary employment regulation files (ERTE) and armored bank loans begin to cease to take effect. SEPI’s rescue fund, with 10 billion euros, will play a crucial role.

Air Europa has already raised 475 million. Globalia and Barceló request 240 million. The steelmaker Celsa, 350; and Duro Felguera, Naviera Armas y Tubos Reunidos more than 100 million each.

“SEPI will be key in some companies. These must demonstrate their viability in the medium and long term, ”says Javier Menchén, partner at Ramón y Cajal. Experts consider that the amount is sufficient, but it can always be raised if it falls short. “Their objective is to support equity and liquidity in the short term, they do not have a permanent vocation and they are being very flexible,” according to José Carlos Cuevas de Miguel, EY partner in the restructuring area.

Instructions not to sink

The desire to achieve liquidity, which has been translated into loans shielded by the ICO for more than 110,000 million, was justified. But not only do you have to ask for money, you also have to spend less. “The companies will continue to carry out viability plans, which while the pandemic lasts will be based on adjusting costs to survive with minimal cash consumption and on controlling expectations of being able to repay sustainable debt in that situation,” warns Julio Manero, managing director from the area of restructuring by Alvarez & Marsal.

Non-essential business sales will be a formula to achieve urgent liquidity

“It remains to be seen if the liquidity buffers will be sufficient,” warns José Christian Bertram, Ashurst’s financial law partner in Madrid. The money with the shield of the public bank, although it can be returned in eight years with two of grace, is not the panacea. It will be necessary to put the spoon in the balance of some companies.

“Every restructuring involves three steps that must be executed with great care. In the first place, analyze the financial situation, the ability to pay of the business and the capital structure; secondly, to negotiate the new structure with shareholders, creditors and suppliers, and, finally, to bring the plan to fruition ”, explains Borja Arteaga, partner at PJT Partners. This bank specialized in restructuring is representing Naviera Armas bondholders and is in contact with other companies that may require its services in the immediate future. “For the sectors affected by the Covid (…) there are years of uncertainty and a lot of work,” adds Juan Sierra, managing director from the company.

Alvarez & Marsal foresees capital needs of up to 136,000 million euros for Spanish companies to regain solvency in the most extreme scenario. “There are companies that will not be able to continue; the aid has served to lift their heads out of the water, but they will end up sinking. Others will survive, but they will have to put their balance sheets in order ”, warns Vicente Estrada, managing director by Duff & Phelps.

There are also more reassuring visions. “The theory says that at some point in 2021, and depending on how the economy evolves and the measures of governments, many companies will suffer liquidity crises and will be forced to put order in their capital structure due to high indebtedness. We will see what happens in practice ”, says Francisco García-Ginovart, director at Houlihan Lokey and who participates, or has done so, in numerous restructurings, such as those of Abengoa, Adveo, Aldesa, Bodybell, Celsa, Codere, Dentix, Dia, Eroski, Eurona and GAM, among many others. “We don’t see the market as active yet. We work with companies that already had problems in their capital structure and the Covid has increased the problems ”, he adds.

Capital increases will reach almost all sectors, but investors will be very selective

Other experts go further. “We are optimistic for 2021. Most of the Spanish companies will meet their financial commitments without difficulties; The problems will be limited to small businesses in specific sectors or companies that were already in bad shape before the pandemic, ”says Guillermo Prada, partner at PradaGayoso, a firm specializing in restructuring.

The core of power

The holders of the new holy grail of liquidity are the hedge funds and venture capital. “They will be able to acquire assets at attractive prices, execute alternative financing operations and carry out acquisitions at a discount of damaged debt to proceed with its restructuring”, anticipates Pedro de Rojas, partner of banking and of restructuring & insolvency de Linklaters.

The funds have already entered the debt of companies such as Telepizza, Haya Real Estate, Cirsa, Codere, Gestamp, Antolin, Tendam and WiZink, among others. Most of these bonds trade below nominal. Be careful, this is a warning to sailors. Classic creditors sell at demolition prices to give ground to these new players, who are not going to sit idly by. They take a high risk buying bonds of distressed companies, but in exchange they hope to take a loot. That is, to force a conversion of these titles into capital and thus stay with the company. Examples of this are Naviera Armas, where the bondholders have taken a part of the capital, although the founding family retains control. This was not the case in Lecta, where the creditors took control of the private equity CVC.

And it not only happens with the listed debt, but also with the bank. Entities are fleeing some companies. In Celsa, for example, almost all of the liabilities, of about 2,800 million euros, are in the hands of funds that they have bought in recent years.

Some asset acquisitions in recent times have been the fuse that has lit the bomb in several companies. For example, two buttons: Caprabo’s by Eroski 13 years ago and Trasmediterránea by Naviera Armas in 2018. Buying voracity has caused devilish situations. “Some firms could find themselves with a large financial debt and insufficient cash flow to cope with this burden derived from an anomalous and unprecedented situation,” says the managing director the PJT Partners.

Shareholders tend to go to the limit and are reluctant to dilute their holdings

Here corporate operations come into play. “The sales of non-essential divisions, caused by the need to obtain money immediately, will lead to M&A operations,” anticipates Álex Soler-Lluró Borrell, partner responsible for restructuring at EY. Eduard Arruga, partner in charge of the department of financial and banking law at Osborne Clarke, and Vicente Conde, managing partner of the same firm, speak along the same lines. They suggest that companies should now focus their efforts on their traditional businesses. “The pandemic has highlighted the need to restructure many businesses: some forced by the financial situation of a company and others to adapt its business model. In this sense, the catalysts for the latter are digitization and decarbonization ”, they argue.

And not only that. Protective mergers are already a reality in Spain. In banking, that of Bankia with CaixaBank and that of Unicaja with Liberbank. More may come …

There is also activity in the tourism sector. “The hotel companies thought in May and June that this was over. Now they have seen that they were wrong and they are moving with sales of assets, real estate operations or search for debt of the funds ”, reveals Eduardo Navarro, executive president of Sherpa Capital.

An almost taboo subject is capital increases. In Spain there have only been two defenses. Amadeus, which at the dawn of the crisis, in April, raised 1,500 million between new stocks and convertible bonds, and IAG, which successfully requested more than 2,700 million from the market in September. Cellnex raised 4,000 million in August but to grow.

The reduction of operating costs is essential to stay afloat

“The shareholder’s tendency is to go to the limit and continue to indebt the company, before opting for dilution or the entry of new players in the capital. Many of the companies that are asking SEPI for help are doing it more through loans than through capital inflows ”, reveals the Alvarez & Marsal director. But this will have to change shortly. There are not many options. “We are going to see capital increases in all sectors and especially in those that have been most affected by the crisis”, predicts Ignacio Marqués del Pecho, partner in charge of restructuring in Arcane. The fear of meager valuations and the dilutions they will cause are holding them back.

“There will be capital increases of a different nature. A large part of the companies have been undercapitalized and need new contributions of their own funds, either by their current shareholders or third-party investors, ”says the Linklaters expert. Investors, true, will look closely where they get. “The capital market will be very selective”, warns Ángel Martín, global head of restructuring of KPMG.


Brexit: Carey Doctrine

For a long time I have argued with a good friend about the ideal of life. And we often agree that an optimal life should include hitting the ball and living off it. We looked for a way to baptize that strategy and on the first day of this 2020 in which Christmas carols sounded, I realized: no one embodied that philosophy more accurately than Mariah Carey. All I Want For Christmas Is You, four minutes and a second for a life.

That “Carey doctrine” was also for decades at the heart of the vaguest and most flat euroscepticism. A message, a clear and understandable idea and with earnings in the form of millions of votes. It worked for decades and many politicians had a good, long life against Europe. A life – politics – at full speed for themselves, their children and political grandchildren without having to worry too much about the ideological background of what they defended.

Today’s Eurosceptics do what happens to journalists who have entered the profession after the “good old days” party. Ignacio Peyró, author of “Ya settle down. When we were journalists (2006-2011) “, said it recently in Javier Aznar’s podcast: “When we get to the party we find that it already smells of bleach in the place.” Eurosceptics and journalists we remember and talk about those unlived times with a mixture of nostalgia and resentment.

Farage collects his belongings in his office in the European Parliament.  (Reuters)
Farage collects his belongings in his office in the European Parliament. (Reuters)

The crisis of the press, when the lights came on and they told us the open bar was already closed, it was Brexit for Eurosceptics. Four years of negotiating agony, chaos in London and a demonstration that leaving the European Union was not as easy as it had been preaching for decades have punctured the globe. A five-year bleeding that has ended with the best example of the “Carey doctrine” in politics.

Some British Eurosceptics, having achieved the Brexit dream and after decades installed in the offices of the European Parliament in Brussels, the euphoria over and the bottles of champagne financed with their high salaries of MEPs emptied, were tormented by the question: and now that? Surrounded by cardboard boxes they wondered what they had done. The answer was too painful: they had sunk their own business.

The coronavirus crisis he has finished breaking what little was left of the Carey dream at the heart of Euroscepticism. The European Union, without too many powers or instruments, has dealt quite well with the coronavirus crisis, and, above all, has given a useful and effective response to the economic consequences of the pandemic. Surveys show that citizens are satisfied with the performance of the institutions, and in some countries the trend has deepened to trust Brussels more than the government of the Member State itself, although that perhaps says more about national policy than about the European Union.

Spent the “Carey Doctrine” Euroscepticism has to work harder on its messages and its strategy. You can no longer continue to live off the hit that your political ancestors gave. That does not mean that the party is over for them, far from it. There are those who think that Euroscepticism is not capable of adapting and changing its message to adapt it to a new reality. But it is something that is already happening and surely this version is more refined and effective than the previous one.

A person burns a European flag during a pro-Brexit demonstration.  (Reuters)A person burns a European flag during a pro-Brexit demonstration.  (Reuters)
A person burns a European flag during a pro-Brexit demonstration. (Reuters)

Part of the Eurosceptic message – not all, because there are convinced Eurocritics who have long articulated a well-structured message as to why the UK should leave the EU – was thought on the basis that it would never come true, like the preacher who shouts about the Apocalypse hoping to attract more faithful but crossing his fingers not to see it with his eyes. Brexit has changed that attitude. The message has not been directed at the idea of ​​destroying the European Union for a long time., but to empty it of power, modify it to adjust it more to his vision of the world.

Exhausted the “Carey doctrine”, the new leaders of this discourse bet on an identity message, deeply nationalistic. It is no longer a question, as with part of British Euroscepticism, of having to deny that a European regulation is going to be made to make bananas straight instead of curved. So fighting politically against this new discourse is much more complex, and certainly less fun, than doing it against the traditional British Europhobia. The new Eurosceptics seek to twist the rules in their favor and use the discursive framework of the most pro-European: when Hungary and Poland violate the Treaties they defend themselves by ensuring that they are actually the ones protecting them.

The end of the “Carey doctrine” has been bad news for Eurosceptics who sought an easy and quiet life without having to prove the validity of their thesis. But perhaps it was even worse news for those who want to curb the new Europhobic discourse.


Apparently fewer job cuts in London than expected

Londoner City

Around 65,000 people still work in the financial center of London today, around 6,000 fewer than before the Brexit decision.

(Photo: AP)

Cologne The Brexit apparently does not lead to the expected large-scale job cuts at the London branches of banks and investors. This is reported by the British Financial Times and is based on its own surveys in the London financial world. Most of the 24 banks surveyed have even increased the number of their employees in the British capital compared to the time before the Brexit vote.

If you add the twelve largest foreign banks together, around 65,000 people still work in the London offices today. Before the 2016 Brexit vote, there were around 71,000, according to the Financial Times. A large part of the decline is due to the reorganization of Deutsche Bank and the restructuring of Credit Suisse. For example, BNP Paribas, Goldman Sachs and UBS have more employees in London today than before the Brexit vote, it said.

These numbers appear to be very different from the estimates the banks had issued a few years ago. The major American bank JPMorgan expected to cut up to 4,000 jobs in London as a result of Brexit. To date, however, the number of employees there has not decreased, and around 2,000 new jobs have even been created at the Glasgow and Edinburgh locations.

The picture is even clearer for the large investment firms. All of the companies surveyed by the FT have therefore significantly expanded their presence in the City of London. For example, Vanguard, T. Rowe Price and PIMCO now employ several hundred people more than in 2016. Figures for the industry giants Blackrock and Fidelity were not available, however.

For the financial sector, however, the amount of capital under management could be more important than the number of jobs. The Bundesbank expects that up to 675 billion euros could be shifted to the Frankfurt financial center. This is mainly due to the fact that after the end of the Brexit transition phase from 2021, many business for EU citizens will no longer be possible from London.

Overall, around 20 percent of the money managed in London could migrate, reports the Neue Zürcher Zeitung, citing experts. That would be a good 1,300 billion euros.

More: This is how companies are preparing for the no-deal Brexit


Johnson wants more weight in the capital of the Galician fisheries of Malvinas

  • A wild ‘Brexit’ will cost almost 28 million a year to Galician fishing only in tariffs

    Brussels reveals the toll of the wild “Brexit” to the fleet … and abolishes the portfolio of Fisheries

Although there are signs of concession on both sides to reach an agreement, the positions are still very far apart. Even more so, if possible, with the latest London proposal: British negotiators have put on the table that companies with British-flagged vessels must have a majority of local capital. If this proposal is carried out, confirmed to FARO by sources close to the negotiation, it would fully affect the 30 Galician shipowners that have fishing vessels flying the islands’ flag.

A group that is part of the 120 ships affected (and 1,700 crew members) by the result of Brexit and that these days are holding their breath.

The measure, presented last weekend, is understood as a measure (more) of pressure on the part of British negotiators. In short, it is similar to the measure applied by the Malvino Government last year when it required a shareholding reform of the joint venture between locals and Galicians so that they had a minimum of 51% Malvino capital.

In this case it is not a mixed company, but a company whose capital is Galician but resides in the United Kingdom, the flag that flies the ship and the country from which it obtains the fishing quotas. It seeks to regulate and limit the participation of foreign ownership in its fishing industry, a Britishization of the fleet that would affect the thirty shipowners identified by the studies that the Consellería do Mar commissioned from the Salvador de Madariaga University Institute of European Studies.

Any Brexit will suffer a 250 million hit for Galician fishing

However, both this proposal and the rest related to the fishing sector they continued yesterday at the last minute without progress at the negotiating table. Frost’s team has taken root in their claims around water access and quota marketing. In the first case, the British side insists on annual negotiations claiming sovereignty as a coastal state, something that the EU continues to strongly oppose. In the second, it maintains the request to retain 80% of the value of the fishing quotas at stake, a crazy proposal for Barnier and his team, who remain in the proposal of between 15% and 18% at most, which It would be equivalent to about 100 million euros in quotas.

Fishermen from a trawler with their face masks. CEPESCA

Another issue is that of Malvinas. In the fishing ground located in the south-west Atlantic, the tariffs of the World Trade Organization (WTO) would be applied in the event of an agreement, which would directly affect the 16 Galician vessels that catch squid (Loligo, with a rate of 6%, in addition of 18% for fish) in its waters. From the government of the archipelago they raised a letter last week so that their problem (fishing accounts for 40% of their GDP) was included among the issues to be discussed at the negotiating table. However, this does not seem to be the case. The Malvinas representative in London, Richard Hyslop, explained to the Fisker Forum that “the UK government has raised the problem during the negotiations and insisted on it”, but the EU refused to negotiate as there was no mandate to deal with it. affecting British overseas territories. “We are preparing for all eventualities, including fees. Although it is preferable to avoid that they are imposed in the first place “Hyslop added to the same medium.

British Prime Minister Boris Johnson


IHK Trier – Brexit countdown is on: We are preparing companies

Great Britain is one of the most important export markets for the Rhineland-Palatinate economy – even if the numbers are already falling because of the impending Brexit. With the UK and EU still not reaching an agreement on the contentious issues surrounding the free trade agreement, there is hardly any time to ratify an agreement by December 31, 2020. “If there is no follow-up agreement, trade between the EU and Great Britain will initially operate under WTO rules. The introduction of customs duties on both sides would be an additional stress test for companies with business relationships with Great Britain, ”explains Jan Heidemanns, foreign trade expert at the IHK Trier.

In order to prepare companies for this, the Chamber is offering a free webinar on Thursday, November 26, 2020, from 1:30 p.m. to 3:30 p.m. in cooperation with Germany Trade and Invest (GTAI), which will inform about all upcoming changes at the end of the Transition phase informed.

Because regardless of an increasingly unlikely agreement, new framework conditions for companies will apply from January 1, 2021. There will inevitably be customs formalities – resulting in increased costs and bureaucratic effort. “This is a challenge, especially for companies that currently only deliver to customers in the EU internal market. Export knowledge is required, ”explains Heidemanns. In addition, there will be a large number of other new regulatory content, for example for product approval, certification and service provision. “The companies should use the remaining time to prepare as best as possible for the new framework conditions.”