Against the backdrop of recent European bank mergers, it is worthwhile examining the effects of acquisitions on regulatory capital. This is interesting because many European banks trade below book value. Normally, firms that acquire other firms pay a premium over book value to purchase the target firm. This premium is called goodwill. However, with the… Read More Badwill accounting
Following up on my post of some days ago on Europe’s efforts to harmonise bank capital, it dawned upon me that this harmonisation plan will probably not go well. Today, Danièle Nouy confirmed there will be a consultation on ECB’s efforts to harmonise Options and National Discretions (ONDs) in the CRR. Consultation, consultation, consultation. Mind… Read More Good luck harmonising European bank capital!
Following on from an earlier post on conglomerate capital rules, the EU now made the conglomerate rules official. This is EU’s answer to criticism on its watered down implementation of Basel III. But it may never become clear why the EU uses conglomerate rules to compensate for weaknesses in bank rules. It looks like a costly… Read More Tight new rules for EU conglomerate solvency calculations are official
This week ING revealed its plans to spin off its Korean insurance unit, see this link from Bloomberg. This made me wonder how this bank-assurer would fare under the current capital rules for conglomerates. The current Fico Directive is clear: ” … the multiple use of elements eligible for the calculation of own funds at… Read More EU conglomerate capital rules expose ING’s weak group capital