news blog from Shanti

G20 ministers to back big bank capital surcharge

* G20 set to stop short of mandatory commodities position limits* G20 discuss strengthening FSBBy Francesca Landini and Huw JonesPARIS/LONDON, Oct 15 (Reuters) - Finance ministers and central bankers from the world’s top economies are set to back a mandatory capital surcharge on big lenders of up to 2.5 percent to be phased in from 2016.A draft communique from a meeting of G20 finance chiefs endorses a 1-2.5 percent capital surcharge on top banks like Goldman Sachs , HSBC , Deutsche Bank and JPMorgan Chase .The aim is to make sure they have enough capital to withstand market turbulence so that taxpayers won’t have to rescue banks again in the next crisis.A summit of the G20 leaders in Cannes, France in early November is set to give final approval to the surcharge plan and name the banks affected, known as global systemically important financial institution or G-SIFIs, G20 sources said.”Now that the framework applicable to G-SIFIs is agreed, we urge the Financial Stability Board to define the modalities to extend expeditiously the framework to all SIFIs,” the draft communique obtained by Reuters said.Insurers are battling against a surcharge as second tier banks.The charge — which will be in addition to a 7 percent minimum core capital buffer being phased in for all banks from 2013 — is part of a wider package the G20 ministers are set to endorse on Saturday.The other elements include common “tools” for supervisors to wind up ailing banks, compulsory “living wills” or resolution plans for every big bank, and more intensive supervision for large lenders, the communique said.The FSB, which formulates and coordinates financial regulation on behalf of the G20, has already drawn up criteria to determine which banks face a surcharge.It has said 28 banks would be affected if the regime was introduced immediately but G20 sources said the Cannes summit may name up to 50 lenders.POSITION LIMITSThe FSB is also expected to update ministers on its work to define the so-called shadow banking sector before thrashing out recommendations next year to regulate it.Supervisors fear that as banks face tougher rules, risky activities could migrate to other parts of the financial system such as money market funds and special vehicles.G20 presidency France appears to have lost its battle to introduce tough curbs on what it sees as speculation in food and energy commodity markets by imposing limits on the size of positions a trader can hold at any given time.G20 sources said the group was expected to approve a report from the International Organisation of Securities Commissions, which groups national market watchdogs, on the benefit of imposing trading limits but it would remain “optional”.The U.S. Commodity Futures Trading Commission is set to discuss fixed limits on Tuesday but in Europe there is no consensus, with Britain opposed to such permanent curbs.STRONGER FSBBank of Italy Governor Mario Draghi is expected to propose strengthening the FSB, which he chairs, in order to ensure proper implementation of a welter of new rules the G20 has pledged to introduce, including the bank capital surcharge.Draghi, who steps down as chairman this month to become president of the European Central Bank, is expected to propose more members from emerging markets and developing countries on the FSB’s agenda-setting steering committee.Some Asian and Latin American countries feel the regulatory measures now being finalised plug supervisory holes in European and U.S markets and want their circumstances to shape future G20 regulatory work.Draghi also wants representatives of finance ministries on the steering committee to add political clout.”Draghi will also discuss the possibility to give FSB a legal personality and to allow it to receive resources from more diversified sources,” a G20 source said.Saturday’s meeting will also touch on who will replace Draghi. Bank of Canada Governor Mark Carney is seen by some G20 officials as the main contender so far that the Cannes summit will endorse.G20 ministers are also expected to look at proposals to reinforce non-binding draft principles on financial consumer protection authored by the OECD which have been criticised for being too weak.

UPDATE 1-US lawmaker expects trade deals approved Wednesday

WASHINGTON, Oct 12 (Reuters) - The U.S. House of Representatives was set on Wednesday to approve three long-delayed trade agreements with South Korea, Colombia and Panama, a top Republican lawmaker said.”We’re going to win on all three of them today,” House of Representatives Ways and Means Committee Chairman Dave Camp said at a rally with other lawmakers and business groups.Camp also said he expected the Republican-controlled House to approve a worker retraining program known as Trade Adjustment Assistance (TAA), despite the opposition of many rank-and-file Republicans.”In order to have the president’s signature on the trade agreements, we need TAA to pass,” Camp said.The Senate also is expected on Wednesday to approve the three trade deals, which all were negotiated and signed during the administration of Republican President George W. Bush.Together, the three agreements are expected to boost U.S. exports by some $13 billion annually, helping to create or maintain tens of thousands of U.S. jobs.”America’s back and for too long we’ve been sitting on the sidelines” while other countries have pursued trade deals, Camp said.”We’ve been losing market share and others have been advancing very aggressively,” he said.Camp said he expected the House to pass the agreements and TAA with bipartisan support but he also urged supporters not to let up in their efforts until they were approved.”We just have to punch the ball through the goal in the final minutes, the final hours here,” Camp said.Lobbyists also said they were confident the House and Senate would pass the agreements and now were focusing on getting the biggest votes possible.Votes are currently expected in late afternoon in both chambers. The Senate already has approved TAA.