BRUSSELS Dec 8 A European Union plan to bolster
its capital markets received a boost from two preliminary deals
to revive the credit sector, EU officials said on Thursday, a
sign that Britain's vote to leave the bloc may not hamper the
Last year the European Commission unveiled a plan for a
"capital market union" (CMU) by 2019 to smooth the movement of
capital across national borders and reduce the EU economy's
pronounced reliance on banks for loans.
Wrangling among EU states and lawmakers over some of the
proposed measures and the June Brexit referendum, which might
deprive the bloc of its main financial hub, London, weakened the
plan and raised fears for its very survival.
But on Thursday, EU lawmakers overcame internal divisions
and gave initial backing to measures to boost the market for
asset- and mortgage-backed securities in a bid to raise banks'
lending capacity and support economic growth.
The move followed a deal reached late on Tuesday on another
plank of the CMU plan, a proposal to exempt more companies from
having to issue a costly formal prospectus for investors - a
step to spur more market-based financing across the region.
The president of the EU Council of finance ministers, Peter
Kazimir, hailed the two accords as "extremely important steps
for the CMU".
The deal on the prospectus regulation was reached after
lengthy talks among EU states and lawmakers. Its final approval
is now considered a formality.
Under the compromise, smaller companies will be able to
raise up to 1 million euros from markets without a prospectus,
10 times more than the current 100,000-euro threshold.
Thursday's vote of the parliament's economic committee on
securitisation, the process through which banks pool and sell
loans, was a first crucial step after months of disputes but
needs the backing of EU governments before it can become a law.
The securitisation plan aims at reviving a 200 billion euro
market that has fallen to about a quarter of its 2008 peak, but
changes made by the Parliament to the original proposal may
hamper the market take-up.
Lawmakers increased controls over banks issuing securities
and raised from 5 to 10 percent the retention rate for the debt
they create. These steps are meant to discourage lenders from
packaging too risky securities, the lawmaker responsible for the
plan, centre-left Paul Tang, said. That sector was at the root
of the 2007-08 global financial crisis.
(Editing by Mark Heinrich)