Peter Norman, Sweden's minister for Financial Markets has met his UK counterpart David Gauke, exchequer secretary to the Treasury, for talks aimed at understanding the scope for co-ordinated response to EU issues such as the proposed banking union.
Peter Norman, Sweden’s minister for Financial Markets has met his UK counterpart David Gauke, exchequer secretary to the Treasury, for talks aimed at understanding the scope for co-ordinated response to EU issues such as the proposed banking union.
One of the key issues on the table for discussion between the two was capitalisation requirements in the financial sector, particularly affecting banks.
Norman announced recently that he was putting back the implementation of tougher capitalisation requirements in Swedish law, because of the need to await further clarification of details in relevant EU level legislation.
InvestmentEurope has had exclusive access to Norman during his visit to the UK.
Q1 What is the main purpose of your meeting?
There is intense work ongoing around banking union in the EU. Certain countries want it to start 1 January 2013.
It is very important for countries [outside the eurozone] such as Sweden and the UK that each side informs the other of their conclusions, and explains how they intend to approach the negotiating table – so they roughly know the other’s intentions.
Sweden and the UK have, in my opinion, for a long time had a similar view of regulation of the financial sector. We have had close cooperation for a long time, and that is why it is useful for me to discuss the issues with my counterpart.
Banking union is very complicated. It is primarily a question for the euro countries, but it is possible – we’ll have to see – but it is possible that the [non euro] countries may be in it.
We have said that one of our absolute red lines in negotiations is that we want to retain the ability in any banking union to place a higher capitalisation requirement on our Swedish banks than other banks in Europe.
This is firstly because there is an extremely large banking sector relative to GDP in Sweden, and secondly, problems in the banking sector lead to such fundamental problems in the real economy that it is important to keep pressure on the industry.
Q Are there risks to the banks themselves or their customers of any further delays in implementing tougher capital requirements within Sweden?
My understanding is that banks in Sweden have come round to agreeing with us to raise the capital requirement level. That was not the case some months ago. And that is good.
The other thing is that banks in Sweden have had a high level of profitability in recent years. This has led them to sit at capitalisation levels that are above those that we want to set as limits: 10% in 2013, 12% in 2015. They are well capitalised today, which is why I am not worried.
Assuming the banks do not engage in large dividend or share buyback programmes, then they will sit at very good capitalisation levels. They will not have to do a lot to achieve this.
Q Market abuse is another issue on your agenda – are you concerned about this?
No, there is nothing specific. However, because financial markets develop so quickly then legislation must keep up.
If there is a new type of security or fund, and if there is scope for market abuse, then we have to be prepared to implement new law quickly, so as not to leave any loopholes that those who engage in criminality can exploit.