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
Two weeks after the Commission unveiled its Action Plan for a Capital Market Union, including a proposal aiming to promote long-term investment in infrastructure for Insurers, the long-term investment and reindustrialisation intergroup of the European Parliament held a conference in order to bring the attention of EU leaders on the crucial role of infrastructure investment.
Dominique Riquet, Chair of the intergroup said: “The challenge for infrastructures: being at the crossroad of interests. With the contribution of the regulator, project promoters as well as investors must find satisfaction.“
The general purpose of the first cross-sectorial roundtable, moderated by Adina-Ioana Valean, Vice-Chair of the Long Term Investment Intergroup, was to present the industry point of view on how to increase private financing for infrastructure. Mrs. Valean said that “We need to use the EFSI as a vehicle for turning infrastructure investment into a fully liquid asset class with bonds that can be pooled and traded on European and global markets“. Monika Heiming, Executive Director of the European Rail Infrastructure Managers (EIM), Erzsébet Fitori, Director of the European Competitive Telecommunications Association (ECTA) and Olivier Grabette, Deputy Director General of RTE delivered a joint message on the importance of infrastructures as the backbone of our European economy as well as some key recommendations on how to best shape those building blocks and unlock cost-efficient synergies for the benefit of European end-users.
MEP Philippe De Backer, as moderator of the second roundtable, highlighted the mismatch between, on the one hand, a great need for infrastructure investments, and, on the other hand, a high demand for investing in long term infrastructure projects. Alain Rauscher, CEO of Antin-Infrastructure Partners and Jacques Röeder, Senior Adviser at Allianz Capital Partners, stressed that more needed to be done to tackle the political risk faced by private investors when investing into long-term infrastructure assets. They explained the positive role the EU could play in promoting investment into infrastructure, including through the revision of Solvency II risk-weights for infrastructure investments, both direct investments and those undertaken via funds. Nicolas Merigo, CEO of the Marguerite Fund for Energy, Climate Change and Infrastructure stressed that “Greenfield projects with demand risk face a real challenge to raise significant amounts of capital”.
“Just a few days before Commissioner Hill releases his Action Plan on the Capital Market Union (CMU), the Intergroup of the European Parliament on long-term investment and reindustrialization has host its third event to which more than 200 people are expected.
In order to move forward on the road to firm and sustainable growth and at a time where digitalization is changing companies’ financing needs, the event’s discussion about the CMU will provide an opportunity to strengthen the contribution of institutional investors, such as insurance companies, pension funds and long-term public investors, to the long-term financing of the economy. In this context, their traditional mission remains to contribute to the emergence of vibrant markets for long term financing, by investing into the real economy.
Due to their different economic models, institutional investors, whether public or private, contribute to the diversity of the financial ecosystem. They are therefore particularly well-placed to break the vicious circles created by mimicry and short-termism, by adopting investment strategies based on assessment of long-term yields. With their specific characteristics, they also play a key role by dealing with European-scale market operators capable of offering attractive and diversified long-term investment products, including SME/Mid-Caps investment banks, private equity and venture capital funds or fund of funds managers, monoline credit insurers, sector-based financing organizations, project bond issuing agencies, etc.).
We are looking forward to engaging with Commissioner Hill and with the members and partners of the intergroup to evoke the capacity of a Capital Markets Union, bringing back confidence and unlocking funding for Europe’s growth, in order to support and extend the Investment Plan for Europe.”
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 some forty professional federations and stakeholders. Today’s conference has been organised with the contribution of the European Private Equity & Venture Capital Association (EVCA – soon to become Invest Europe), the European Sustainable Investment Forum (Eurosif) and Pensions Europe.
More information: http://longterminvestment.eu/
Contacts: Secretariat of the intergroup
On the 9th of June, the Members of the Bureau approved the Charter of the intergroup on long term investment and reindustrialisation. The general purpose of this document is to make the intergroup more transparent and accountable and to continue and enhance the cooperation with partner organisations.
On Wednesday, 6th of May, 2015, Mr. Burkhard Balz, coordinnator of the EPP Group within the Committee on Economic and Monetary Affairs, and Vice-President of the Long Term Investment Intergroup within the European Parliament, hosted a dinner organised at the initiative of KfW Bankengruppe, the Promotional Bank of the Federal Republic of Germany, in the presence of representatives from the EU Commission, the European Parliament, the Council and others. On the invitation of B. Balz, Dr. Ulrich Schröder, CEO of KfW , delivered a speech the politico-economic tasks of National Promotional Banks and Institutions (NPBI), their mode of operation and their contribution to the EU investment plan. Nick Ashmore, CEO of the newly founded Strategic Banking Corporation of Ireland explained which challenges and motivations led to the creation of SBCI. Dominique Riquet, President of the Long Term Investment intergroup, and Vice-chair and Rapporteur of the Committee on Transports for the European Fund for Strategic Investments, presented the progress of negociations within trialogues and welcomed the positive developments of the intergroup’s work.
On the 13th of April, more than 300 people attended the inaugural meeting of the Intergroup of the European Parliament on long-term investment and reindustrialisation dedicated to the Juncker Plan at the European Committee of the Regions.
Jyrki Katainen, Vice-President of the European Commission in charge of Jobs, Growth, Investment and Competitiveness, Markku Markkula, Chairman of the Committee of the Regions, and Franco Bassanini, President of Cassa Depositi e Prestiti, presented their expectations towards this campaign promise of the President of the Commission. The discussions continued with keynote economic players: Viktor Andersson of the European Rail Infrastructure Managers, Christian Thimann of AXA Group and Laurent Zylberberg of Caisse des Dépôts et Consignations.
Vice-President Katainen welcomed this initiative dedicated to the critical topic of long term investment and indicated he would be “pleased to engage constructively with MEPs and civil society through this new structure about the Investment Plan for Europe and how it can help give the EU economy a boost“. Markku Markkula stressed that “The kick-off of this Intergroup is excellent news for European regions and cities. Thanks to its valuable contributions, we are sure that investment for growth will continue to be at the top of the EU political agenda“, adding that “Our local and regional politicians are ready to join forces so we can improve existing EU investment tools, including the European Structural and Investment Funds, through a better understanding of the needs and potential of regional economies.”
The conference was held a few days before the adoption of the Report of the Parliament on the European Fund for Strategic Investments (EFSI) and the beginning of the negotiations with the Council of the EU and the European Commission. Dominique Riquet, Simona Bonafè and Burkhard Balz, President and Vice-Presidents of the Intergroup, emphasised their wish “
to reflect upon the added value of a considerable reallocation of European funds already approved two years ago after a broad consultation, as well as on the EIB’s role in the governance of the future mechanism”.
As a reminder, the idea of the Intergroup comes from an impulse of three major national promotional banks and institutions: Cassa Depositi e Prestiti, the Group Caisse des Dépôts et Consignations and KfW Bankengruppe. Above all, its creation followed a spirited campaign conducted by organizations from the public and private financial spheres and actors of the real economy.
Currently, the Intergroup has reached 70 members in the European Parliament and has received the support of some thirty professional federations and stakeholders. Essentially, it has been designed to encourage and increased consideration on 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.
More information: Agenda
Contacts: Secretariat of the intergroup
Bureau of the intergroup
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