Draghi: Europe needs more bank safeguards
Draghi: Europe needs more bank safeguards
Draghi said yesterday that's the next important step after European Union leaders agreed last week to put the ECB in charge of overseeing banks as the bloc's single supervisor.
The top central banker for the 17 EU countries that use the euro sought to discourage the idea that a bank cleanup fund would itself require a lot of money from taxpayers.
"It's not a bailout fund," Draghi said in an appearance before the European Parliament's economic and monetary affairs committee.
Any funding given to the cleanup authority would be to cover "limited, well-defined expenses" that are required to finance a dead bank's breakup or restructuring.
European leaders are trying to create EU-wide banking supervision and backstops to keep bank failures from wiping out government finances, as happened in bailed-out Ireland and threatened to happen in Spain.
The link between troubled banks and governments has been a hallmark of Europe's debt crisis. Governments are tempted to bail out banks, because of their key role in keeping the economy going. But the bailout costs in turn can burden government finances. The mere threat that they might has made it difficult for Spain to borrow money affordably, for example.
As supervisor, the ECB could remove a bank's license and sanction it for breaking rules. The resolution authority could go further and force losses on bank shareholders and creditors before tapping taxpayers' money.
"A single resolution mechanism is very important because it allows us to cope with bank failures, which may well happen, in a way that does not force us to use taxpayer money, and at the same time it does not destroy major parts of the payments system," Draghi said.
The ECB's role as supervisor must first be approved in the EU parliament; leaders have not agreed on a proposal for a cleanup authority, but are due to take up the issue next year.
Saudi Arabia flat, Drake and Scull International lifts Dubai
- The Saudi index was little changed, while the Dubai index closed up 0.2 percent
- Shares in Saudi oil and gas and petrochemical companies were mostly down
DUBAI: Gulf stock markets were mostly flat on Sunday amid low trading volumes and a lack of significant events.
The Saudi index was little changed, while the Dubai index closed up 0.2 percent. The rest of the region closed down, but with losses limited.
Global stocks dipped last Friday because of persistent concerns over trade tensions. Oil prices also slipped on Friday, with Brent crude futures falling 79 cents, or 1 percent, to settle at $78.51 a barrel. But the dip came after a sixth week of gains, with prices breaking through $80 a barrel last week for the first time since November 2014.
Shares in Saudi oil and gas and petrochemical companies were mostly down on Sunday, despite some gains earlier in the day. Blue-chip Saudi Basic Industries (SABIC) shed 0.2 percent, while Saudi Kayan Petrochemical edged down 0.1 percent.
Most of the trading was concentrated on real estate developer Dar Al Arkan Real Estate Development Co., which was up 0.4 percent, and Alinma Bank, down 0.1 percent.
Real estate developer Jabal Omar Development was among the best performers, up 3.9 percent at the close – and it had been up more than 6 percent in earlier trading – after announcing an agreement with Albilad Capital to sell 90 housing units for 1.1 billion riyals ($293 million).
In Dubai, the index was lifted by gains of 2 percent and 1.7 percent by Dubai Financial Market and building contractor Drake and Scull International, respectively.
Drake and Scull International, by far the most traded stock in the market, reported last week a net profit attributable to shareholders of 16.2 million dirhams ($4.4 million) for the first quarter, swinging from a net loss of 722.5 million dirhams in the corresponding period last year.
Heavyweight Emaar Properties climbed 0.2 percent after a weak start earlier on Sunday.
The Abu Dhabi index edged down 0.1 percent, pressured by Sharjah Cement and Industrial Development Company, which lost 4.8 percent and was the most traded stock.
The Egyptian index lost 0.6 percent, but the most traded stock was Orascom Telecom Media & Technology Holding , which gained 2.4 percent.