Politics

Lax sanctions against sneaking-up

The examples of Schaeffler and Continental, as well as Porsche and Volkswagen, produced calls for tougher laws on the so-called sneak-up in planned takeovers. In mid February, the Bundestag has now adopted the amendment to the Investor Protection Act. This provides that any future incidents will be subject to a fine of one million euros. The opposition condemned it as too lax. Large companies especially would not be deterred by this small penalty. Even the coalition partner FDP admitted that it was not a perfect solution. As late as January, the conservative-liberal government had discussed the withdrawal of voting rights as punishment for such an offence, but rejected it after concerns by the Federal Treasury and the Federal Financial Supervisory Authority (BaFin). Investors still have to disclose if they have purchased five percent of the shares in a company, as well as other increases by five percent. According to the new law options and swaps on shares must then also be reported. For the summer, the word is a second round is on the way: a search for a more effective solution.

New Bank Stress Test

91 European banks were tested in the first stress test in July 2010. Seven, including the German Hypo Real Estate, fell through. Nevertheless, this first test was considered too lax and not credible: after all, the Irish banks that collapsed a short time later were not on the penalty list. Now the European banks are again, in a second, more credible stress test in March and April, to show how stable they are. EU Internal Market Commissioner Michel Barnier even advocated repeating the test on a regular basis and publishing the results. The national watchdogs are consulting with the new European banking authority EBA on the details of the new test until 2 March. The results will then be available in summer. The EBA is also to ensure that the new parameters are applied uniformly in all participating countries and that the countries monitor each other at the same time. Open until now is whether in addition to the credit risks liquidity risks are also to be included in the test. Thus, not just the government bonds held in the trading book could be tested, but also the banking book holding papers with maturity, where potential hidden liabilities lurk. The EBA has proposed as a compromise to analyse the liquidity in parallel with but separately from the stress test and to discuss the results only internally. While the Federal Association of German Banks (BdB) welcomes the liquidity test, Federal Finance Minister Wolfgang Schäuble (CDU) and Bundesbank President Axel Weber fear too high transparency in the publication of the results might cause more damage than any benefit to be achieved.

Weber throws in the towel

Bundesbank President Axel Weber resigned on 30 April 2011, one year before the expiry of his contract. He is to be succeeded by the 42-year-old Jens Weidmann, one of the closest economic advisers to Federal Chancellor Angela Merkel, and as executive secretary the architect of the measures to curb the financial crisis. Weidmann previously worked for the Bundesbank as head of monetary policy and monetary analysis, then worked for the International Monetary Fund and as Secretary-General of the Federal Government’s Council of Experts. His deputy is to be Sabine Lautenschlager, currently at the Federal Financial Supervisory Authority (BaFin) as Executive Director.

Axel Weber was the first contender to succeed Jean-Claude Trichet at the head of the ECB. With Weber’s departure hopes for a German ECB chairmanship seem to have been put off indefinitely.