Basel Committee project on risk calibration for banks exposure to infrastructure projects : the Intergroup writes to VP Dombrovkis

On July 22, 11 MEPs from the long-term investment Intergroup wrote to Vice-President Dombrovskis and called for the Commission’s opposition to recent draft proposals from the Basel Committee on the revision of the standardized approach for credit risk. A major concern is related to the calibration for specialized lending, including for infrastructure financing which could reach 150% in some instances. A figure to be put into perspective as the Basel Committee considers that unrated corporate exposures should be risk weighted at 100 %, even while their loss rate is generally higher than for infrastructure project finance loans.

A solution to protect the financing of infrastructure projects by banks without compromising financial stability could reside in a model in which “the eligible infrastructure assets could be restricted to projects within the EU and, outside the EU, to sectors with high recovery rates, low volatility and complying with the investment guidelines of long-term investors.

The Long-term Investment and reindustrialisation Intergroup will keep mobilizing to defend the imperative financing of infrastructures in the EU.

See the letter

June 29, lunch-debate : Ensuring long-term investments for a sustainable railway sector

On June 29, the Long-Term Investment and Reindustrialisation Intergroup held a lunch-debate in the European Parliament on long term investments in the railway sector.

This lunch-debate, sponsored by the European rail industry (UNIFE) and the Community of European Railway and Infrastructure Companies (CER), was the occasion to discuss the barriers for investment in the railway sector and the merits of the European Fund for Strategic Investment (EFSI) to address them. 

Agenda

List of the participants

Presentation of Arnaud De Monts, Alstom

Speech of Paul Mazataud, Europe Director of SNCF Réseau

Presentation of Pierre Menet, Caisse des Dépôts et Consignations

Conference – The Juncker Plan : and so what?

On June 28, the Long-term investment and reindustrialisation Intergroup of the European Parliament held a conference on the follow-up of the Juncker Plan in the presence of more than 200 participants, including Members of the European Parliament (MEPs), officials from the European Commission, the European Investment Bank (EIB), as well as representatives of the industrial and the financial sector, regional development banks and representatives of the civil society.

Download the minutes of the conference

28 of June b

Juncker

 Agenda

List of the participants

Biographies of the speakers

Keynote speech of Jacques de Larosière

Closing remarks of President Markku Markkula

Presentation of Raphael Lance, Mirova Fund

Presentation of Giulia Gregori, Novamont

AGENDA

As of 16:30         Welcome and registration

17:00                     Welcome Address

Dominique RIQUET, MEP, Chair of the Long Term Investment Intergroup

Keynote Speech

Jacques DE LAROSIERE, Former Governor of the Banque de France, Managing Director of the International Monetary Fund and Honorary President of Eurofi

Keynote Speech

Jyrki KATAINEN, Vice-President of the European Commission for Jobs, Growth, Investment and Competitiveness

18:00                 2 Case studies

Raphael LANCE, Head of Renewable Funds at Mirova, on the Langmarken onshore wind farm located in Värmland County, Sweden

Giulia GREGORI, Strategic Planning Manager at Novamont, on the development of an integrated supply chain in the field of biochemicals and bioplastics, Italy

18:15                  Additionnality – risk is good!

Moderator Simona BONAFE, MEP, Vice-Chair of the Long Term Investment Intergroup

Klaus TRÖMEL, Secretary General, European Investment Bank

Lutz-Christian FUNKE, Senior Vice-President, Managing Affairs and Communication, KfW Bankengruppe

Antonella BALDINO, Head of Development Finance. Cassa Depositi e Prestiti

Benjamin ANGEL, Director for Treasury and financial operations, Dg Ecfin, European Commission & Member of the EFSI Steering board

Laurence MONNIER, Head of infrastructure debt, Aviva

Q&A

19:20                Investment platforms – small is beautiful…

Moderator Adina-Ioana VALEAN, Vice-President of the European Parliament, Vice-Chair of the Long Term Investment intergroup

Laurent ZYLBERBERG, Director of Institutional, International and European Relations, Caisse des Dépôts et Consignations & Chairman of the Management board, Marguerite Fund

Klaus TRÖMEL, Secretary General, European Investment Bank

Wilhelm MOLTERER, Managing Director of the European Fund for Strategic Investments

Joanne SEGARS, Chief Executive of the Pensions and Lifetime Savings Association, former Chair of PensionsEurope

Q&A

20:20               Closing remarks

Introduction by Burkhard BALZ, MEP, ViceChair of the Long Term Investment Intergroup

Markku MARKKULA, President of the European Committee of the Regions

 

As of 20:40   Cocktail

ECON CHAIRMAN ROBERTO GUALTIERI WRITES TO COMMISSIONER HILL ON CONCERNS OVER IFRS 9 IMPACT ON LONG TERM INVESTMENTS

On June 16, Roberto Gualtieri, Chairman of the Economic and Monetary (ECON) Committee of the European Parliament, wrote to Commissioner Hill to express the concerns of the ECON Members of the IFRS Working Group over the International Financial Reporting Standard IFRS 9 potential negative impact on long term investments.

As the ECON Committee is soon to enter the three-month long regulatory scrutiny period for the endorsement of IFRS 9, many questions are left unanswered:

  • Will the extension of the volume of financial assets measured at fair value increase pro-cyclicality?
  • How will the new loan loss provisioning rules impact the bank’s equity levels and financial stability?
  • How will IFRS 9 interfere with prudential requirements for banks?
  • Regarding the misalignments of IFRS 9 with the accounting standard on insurance contacts IFRS 4, will the European Commission follow EFRAG’s advice to allow for all regulated insurance companies in the EU to adopt the deferral approach proposed by the IASB?

As the EU is in a dire need for long-term investments, the European Parliament wants to prevent any risk of having new regulation jeopardize investors’ ability to manage their assets in a positive fashion for the whole economy.

See the letter

 

Conference – The Need for Long-Term Investments in the Water sector

On April 28, Michel Dantin, MEP and Vice-Chair of the European Parliament Intergroup on “Climate Change, Biodiversity, and Sustainable Development” together with Dominique Riquet, MEP and President of the “Long-Term Investment and Reindustrialisation Intergroup” welcomed policy-makers and stakeholders in the European Parliament in Brussels to the conference “The Need for Long-Term Investments in the Water Sector” to discuss the matter alongside the Dutch EU Presidency, the European Commission, the EIB and OECD.

Download the press release

Materials of the speakers :

Pierre Menet, Caisse des Dépôts et Consignations, The need for long term investments in the water sector

Xavier Leflaive, Environment Directorate, OECD

Thomas van Gilst, Head of Water Management Division, Project Directorate, EIB

Jan Busstra, Netherlands Water Director, Three action levels for investing in the Water Sector

IMG_9039

Conference – The digital revolution : How to finance network infrastructures ?

On March 21st, the Long-Term Investment and Reindustrialisation Intergroup of the European Parliament held a conference dedicated to the long term financing of digital network infrastructures in the European Union, in the presence of more than 200 participants, including Members of the European Parliament (MEPs), officials from the European Commission and Permanent Representations of Member States, as well as journalists and representatives of the civil society, in particular from the digital sector. The conference documents, including the minutes, can be downloaded below.

Download the minutes of the conference

Download the agenda

Download the biography of the speakers

Download the list of participants

Materials of the partners :

Caisse des Dépôts et Consignations Presentation

ARCEP strategic review

ECTA Infography

ECTA Press release

ETNO speaking points

Citigroup : Impact of digital revolution on telecom business models

Citigroup : Infrastructure-light & digital service-centered future of emerging markets telecoms

FFTH 2017 event

SAMSUNG CSC

SAMSUNG CSC

SAMSUNG CSCSAMSUNG CSCSAMSUNG CSCSAMSUNG CSCSAMSUNG CSCSAMSUNG CSC

Poster

 

CALLING FOR THE EXTENSION OF THE “SME SUPPORTING FACTOR” REGULATION : MEPS WRITE TO COMMISSIONER HILL

On February 24, MEP Burkhard BALZ, member of the Bureau of the Long-term Investment and Reindustrialisation Intergroup, and ten MEPs from the Committee on Economic and Monetary Affairs (including ECON Chairman Roberto GUALTIERI, the group coordinators and Rapporteurs for CRR) wrote to Commissioner HILL to call for the extension of the lower capital requirements that credit institutions and investment firms benefit from when exposed to credit risk for SMEs.

“The SME supporting factor” is a tool which has proved already very useful to tackle the difficulties SMEs face regarding to financing. At a dire time for the European economy, it is essential to make it easier for 99.8 % of the European companies to finance their development and create jobs.

Click on the link to download the letter

Press release – COP 21: Whats’next?

 

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On February 17, the long-term investment and reindustrialisation intergroup of the European Parliament held a conference with over 200 participants on long-term investment in relation with climate change, taking stock of what has been achieved and what still needs to be done after the COP21.

In his introduction, MEP and intergroup President Dominique Riquet pointed out that “our main issue relates to how we can mobilize the financial sector to operate the low carbon transition. Regulators shall use all their fiscal, budgetary (i.e Juncker Plan or financing the “Plan Energies pour l’Afrique”) and normative tools at their disposal to meet this challenge. Sustainable might mean profitable”. French economist Michel Aglietta stressed that “Climate challenge is not a matter of tonnes of carbon”, but that it “cannot be met independently from other challenges such as anemic growth, unemployment, financial instability and rising inequalities”. He proposed that “Europe shall rebuild a political endeavor by proposing to the world a Marshall plan for Climate, to break away from the threat of secular stagnation”. Former French Minister for Ecology, Energy and Sustainable development Jean-Louis Borloo stated that “we need a Marshall Plan to electrify Africa. We invite Europe to elaborate a Juncker Plan II on extra-EU investments with a focus on Africa.”

As moderator of the roundtable on financing the transition towards a lower carbon economy, MEP Gilles Pargneaux said that “After the success of the Climate summit in Paris, we have a clear path for a low-carbon economy. It’s time to deliver now. Private companies are major actors to this paradigmatic shift as well as public institutions which must, at least, set aside 100 billion dollars a year as of 2020.” Kjetil Tonning, Vice-President of FIEC, the European Construction Industry Federation, pointed out that “the construction industry can provide the solutions for the climate change challenges. The biggest contribution we can make to a lower carbon economy is the reduction of emissions from buildings by reducing their energy consumption.Philippe Méchet, Senior executive Vice-President of EDF, said that “EDF is the electricity provider with the lowest carbon emissions in Europe and aims at being the champion of low-carbon growth. Strongly committed to the Energy transition, we believe the priority now must be to restore very rapidly a significant CO2 price in order to make the transition happen”.

“In the fight against global warming, we all face the same problems, but local contexts largely differ in economic, social and legal terms. Municipalities in Europe require adjusted mechanisms to develop bankable projects in energy efficiency, renewables and clean transport to advance in the implementation of the Paris climate agreement’ declared Kata Tutto, member of the Committee of the Regions. Benjamin Quatre, Director at the French Banking Federation, said that “the best way to fight against climate change would be through tailored market financing”. He recommended in particular the introduction of “a regulatory bonus for green bonds in order to speed up the development of this market. This would be a way for Europe to stay one step ahead in this area”.

In his final remarks, Dominique Ristori, Director General for Energy at the European Commission, declared that “energy will play a crucial role in implementing the COP21 deal, while offering a tremendous opportunity to position European energy companies in the lead of the new global market for clean energy technologies. To make it happen, we need to reinforce the bridge between investors and project promoters all around Europe.” Finally, he concluded by stating that “2016 will be a key year of delivery of the Energy Union in order to achieve a secure, sustainable and competitive energy”.

Sans titre

Background information : The Intergroup is designed to support and promote the issue of long-term investment in perspective of future legislative work. Its creation followed a campaign conducted by organizations from the public and private financial spheres and contributors to the real economy. Three major national promotional banks and institutions, Cassa Depositi e Prestiti, the Group Caisse des Dépôts et Consignations and KfW Bankengruppe, have played a particularly active role. The intergroup is chaired by Dominique Riquet (ALDE-FR), Simona Bonafé (S&D-IT), Adina-Ioana Valean (PPE-RO) and Burkhard Balz (PPE-DE). Currently, the Intergroup has reached 80 members has received the support of some forty professional federations and stakeholders. Today’s conference has been organised with the contribution of the European Construction Industry Federation (FIEC), the French Banking Federation (FBF), Electricité de France (EDF) and the Caisse des Dépôts Group (CDC).

Download the press PDF version of the press release

Discours de Michel Aglietta sur le suivi de la COP 21

Download the list of the participants

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Press release of the intergroup Bureau – Adoption of the EP Report on stocktaking and challenges of the EU Financial Services Regulation

Download the press release

Yesterday, the European Parliament in Plenary Session adopted by overwhelming majority the final version of Economic and Monetary Affairs (ECON) Committee’s Report on stocktaking and challenges of the EU Financial Services Regulation. The Report highlights “the lack of available and attractive risk-appropriate (long-term) investments” and “the possible unintended consequences of multiple capital, liquidity and leverage requirements on maturity transformation”. It welcomes “the diversity of business models” and “calls for the need to reflect this diversity in regulation and supervision”.

ECON Rapporteur and Vice-Chair of Long term investment intergroup Burkhard BALZ said that “The accumulative impact assessment will help to identify potential obstacles to long-term investors who intend to become engaged in the European market. Indeed, the Commission has to deliver a comprehensive report on the financial markets regulation, based on quantitative and qualitative assessments, by the end 2016. This timeline is ambitious but it is a necessary step to further drive sustainable long-term investment in Europe”.

President of the Long term investment intergroup Dominique Riquet added that “This report provides credible solution to better channel European savings towards the productive system and the infrastructures that is to say toward long term investments.”

It is crucial, for the markets to function in the most efficient manner that diversified financial institutions continue to exist. Not only this heterogeneity stimulates the markets, but it also guarantees stability. The greater the similarity between agents, the greater the risks of mimetic behavior; such behavior leads to the creation of bubbles, which then burst, and are prejudicial to the proper functioning of a market economy and to long-term growth. Indeed, when subject to similar rules, those involved tend to adopt similar behavior, and this in itself carries a risk at the level of the economy as a whole.

 

Due to their different economic models, institutional investors contribute to the diversity of the financial ecosystem. In this ecosystem, long-term investors, whether public or private, are particularly well-placed to break the vicious circles created by homogeneity of business models, mimicry and short-termism, by adopting investment strategies based on assessment of long-term yields. As such, it is essential to acknowledge the specific characteristics of long-term investments from an accounting, but also a prudential and a statistical point of view.

Background information: The Intergroup is designed to support and promote the issue of long-term investment in perspective of future legislative work. Moreover, its goal is to maintain a regular dialogue with the key actors to consider tangible avenues to revive investment in the EU. Its creation followed a campaign conducted by organizations from the public and private financial spheres and contributors to the real economy. Three major national promotional banks and institutions, Cassa Depositi e Prestiti, the Group Caisse des Dépôts et Consignations and KfW Bankengruppe, have played a particularly active role. The intergroup is chaired by Dominique Riquet (ALDE-FR), Simona Bonafé (S&D-IT), Adina-Ioana Valean (PPE-RO) and Burkhard Balz (PPE-DE). Currently, the Intergroup has reached 75 members in the European Parliament and has received the support of more than forty professional federations and stakeholders.

More information:          http://longterminvestment.eu/

Contacts:                             Secretariat of the intergroup

info@longterminvestment.eu