Global Regulatory Impact on the European Treasury Landscape 2015

Ruth Wandhöfer

Global Head of Regulatory & Market Strategy

 

 

Geneva, 29. January 2015

Citi Treasury & Trade Solutions | Global Regulatory & Market Strategy

Current Economic and Geopolitical Conditions

U.S. 2007-2008

Credit & liquidity crisis

• Aggressive risk taking by highly leveraged FIs

• Loose credit policies fueled rise in consumer debt and home prices

• Caused global recession as financial markets seized

• Required massive amounts of fiscal stimulus, bank bailouts and bank b/s recapitalization

• US now experiencing modest recovery

Euro2009-2011

Sovereign debt/bank crisis

• Deficit spending led to rising government debt

• Significant sovereign downgrades with spillover impact on banks who held sovereign debt

• Fiscal austerity and credit crunch led to EU recession

• Required massive amounts of bailouts within the EU for governments and banks, many of which were nationalized

• Challenges linger

Emerging Markets + Euro 2013-2015

Slowdown and volatility

• Recent decline in EM GDP growth and stock indexes

• Triggered by collapse of G10 imports and China slowdown, tighter US fiscal policy and continuing geopolitical uncertainties (e.g. Ukraine/Russia)

• Oil price drop and its knock-on effects

• Localised phenomena, e.g. Swiss Franc revaluation

• Continuing Eurozone concerns with recent Greek election outcome

European Timeline 2015

Quantitative Easing ECB (22 January)

Ukraine Sanctions EC (19 March)

Climate Summit UN

(30 November)

General Election UK

(7 May)

EMU Four Presidents’ Report (February)

CMU Green Paper (February)

General Election Spain (20 December)

Luxembourg Council Presidency

(1 July)

Latvia Council Presidency (1 January)

World Economic Forum Switzerland

(21 January) General Election Greece

(25 January)

G7 Summit Germany

(7 June)

G20 Summit Turkey (15 November)

Digital Single Market Framework EU

(May) Data Protection Regulation EU

(September)

General Election Poland (July)

Q1 Q2 Q3 Q4

Political Events

Legislative Events

CMU Roadmap (Q3)

Non-Bank Recovery & Resolution Directive EU

(Q3)

90

100

110

120

130

140

150

160

Jan-13 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15

STOXX600 MSCI AC World S&P 500

European Market Outlook for 2015

Encouraging Equity Market Outlook for 2015…

Indi

ces

Reb

ased

to

100

Source: Factset, Citi Research

Positive stance on European Equities…Citi Research Regional Recommendations

OVERWEIGHT NEUTRAL UNDERWEIGHT

Europe Ex. UK

Japan

Emerging Markets

UK

US

Australia

31/12/2014 STOXX600 MSCI AC World S&P 500

L3M 10.0% 4.8% 4.2%2014 4.4% 7.2% 11.4%

2013-2014 22.5% 31.7% 44.4%

400 (+12%)525 (+12%)

2200 (+8%)

Citi Research Forecasts End-2015

ECB Policy Action should support economic and earnings growth and therefore positive European equity performance in 2015; Citi’s Strategy team is ‘overweight’ European Equities. Credit spreads are also expected to rally by 20%-25% across the IG and HY space.

Equities remain the cross-asset outperformer to end-2015 on Citi’s house view

• Citi Analyst Tobias Levkovich remains optimistic on European equities as policy action from ECB will be the key driver in the near-term trumping macro/earnings concerns

• ECB liquidity support joins a weaker Euro, modest fiscal easing and improving banking/credit dynamics which should broadly support European equities

Tighter European Credit Outlook…“Where Will Spreads End 2015?” – Citi Credit Survey Nov-14

Citi Credit Forecasts for 2015

90

365

60

331

70

295

50

295

iBoxx € Corp iBoxx € HY iTraxx Main iTraxx Xover

Current 2015F

Oil Prices: potential for further downside

2

ECB Balance Sheet Expansion1

Greek Elections4

Economic Growth: Europe vs US

5

UK General Elections 3 M&A financing to assume a

position of prevalence

7

Weak Euro / Strong USD6

Concerns over low inflation8

Key Market Themes in 2015

Major market elections in 2015

Country Date GDP Governing Party Government Orientation

Nigeria February 14 6.4% People's Democratic Party Center-right

Finland April (TBD) 1.1% Coalition Party (coalition) Center-right

United Kingdom May 7 (TBD) 3.6% Conservative Party (coalition) Center-right

Turkey (legislative) June 13 3.5% AKP Center-right

Mexico (legislative) July 5 4.0% PRI Center-left

Denmark September (TBD) 1.5% Social Democrats (coalition) Center-left

Argentina October (TBD) 0.0% Front for Victory Center-left

Canada October (TBD) 2.7% Conservative Party Center-right

Poland October (TBD) 3.6% Civic Platform (coalition) Center-right

Portugal October (TBD) 2.0% Social Democratic Party Center-right

Spain December (TBD) 1.6% Partido Popular Center-right

There is always something going on in EMEA

• Geopolitical issues in Russia / Ukraine and Iraq / Syria creating

headwinds

• Impact of Ebola locally and globally

• Policy impact will come from national governments who feel

compelled to strike a more populist tone

• UK: Scotland, UKIP and possible Brexit

• Fragmentation risk in Catalonia and Kurdistan

Source: Citi Research

!

Trends in Banking Regulation

• Increased inward focus of governments and regulators: the tax payer needs to be protected

• Balkanization of the banking industry in the name of risk mitigation: • more instances of trapped liquidity / limits to flows between branch and head office• requests for international bank branches in foreign countries to subsidiarize• request of some regulators to have insight in global resolution plan of international banks • development of additional local requirements for example around ring-fencing

• Increasing legislation to tackle tax evasion and to curb speculation: FATCA in the US; BEPS at OECD level; Financial Transaction Tax in Europe (EUFTT);

• National individual interpretations, approaches and timelines of globally agreed regulatory measures:

• Basel III• G-20 recommendations on OTC derivatives• G-20 recommendations on Recovery & Resolution planning

Significant Complexity Need for improved knowledge of local developments and related impacts Continued industry advocacy to strive for harmonisation – for corporates to be

vocal about

This means

Regulatory Landscape: Key Drivers

Recovery and Resolution/Ring-fencing

· EU Recovery and Resolution Directive

· EU Structural Reform Regulation; UK Vickers Ring-fence

· US Foreign Bank Rule

· Dodd-Frank/Volcker Rule

Capital Adequacy/Leverage/Liquidity

· Basel III: Global implementation objective

Payments

· Europe: Payment Services Directive II, Card Regulation

Deposit Guarantees

· EU DepositGuarantees Directive

Infrastructure

· OTC derivatives clearing

Shadow Banking

· G20 agenda

· AlternativeFund legislation

· Money MarketFunds legislation

Taxation

· FTT

· FATCA

· BEPS

Reporting

· GAAP / IFRS need for convergence

Financial Stability

Customer Protection

Enhanced Supervision & Culture Change• EU Banking Union• Enhanced responsibility

regime

Hot Topics on Treasurers’ Agendas for 2015

Central Objective: Managing through economic uncertainty whilst pursuing long-term growth strategy

Liquidity concerns / reassessing balance sheet structures: While high cash levels are a drag on b/s ratios, market events are highlighting need for strategic approach to defining liquidity risks

Adding value across the supply chain and extending treasury role in working capital management: Continuing to work with businesses on procurement and customer terms, ROIC targets for initiatives, sponsoring supply chain financing tools

Responding to regulatory change: Industry regulations are creating substantial new demands on banks’ capital and liquidity requirements and impacting client-bank relationships.

Managing bank relationships: consider efficiency and cost aspects as well as bank counterparty risks

Improving cost and risk management: Driving initiatives on supply chain risks, commercial policy, and the efficiency of cash management structures

Technology investments: Growth and technology change requires continued focus on investments in this space

Managing onboarding and implementation

Regulatory Focus Themes for 2015

On-going regulatory reform across banking sector continues to impact corporate landscape

General Risk of overlaps and inconsistencies in regulatory developments across the globe: triggers concerns around non-level-playing field; fragmented approach challenges global operating model of banks as well as global corporations

Prudential Reform/Basel III: the combination of capital, leverage ratio and short/long-term liquidity requirements for banks translates into more granular and focused balance sheet management, where corporate deposits and loans continue to be impacted. Long-term (+365 days) corporate deposits and shorter term corporate loans as well as dealing with highly credit rated counterparties will be more attractive for banks.

Structural Reform, Ring-fencing and Recovery & Resolution Planning (RRP): Ring-fences, local capital/liquidity dispositioning and challenges on implementation of internationally agreed RRP models creates questions around availability and cost of global network based services, such as liquidity/cash management/trade finance. Key message to regulators focusses on importance of global transaction banking services to the real economy.

Payment Specific measures: Ongoing evolution of European payments legislation with Payment Service Directive 2 – consumer protection enhancements with focus on ensuring corporate flexibility. SEPA implementation phase one completed in summer 2014 – efforts continue to enhance harmonisation across borders.

Derivatives Clearing/Trading: (too) Slow alignment work between US/European regimes.

Progress on Key Issues

ConsultationCommission Proposal

releasedESMA/EBA Technical

Standards Implementation

FTT

Parliament/Council finalise legislation

MMF

SFT

SRM

ELTIFS

PSD 2

CMU

Recovery & Resolution

FEMR (UK)

SSM

MiFID & MAD

Enhanced cooperation

Ordinary Legislative Procedure

CRD IV

Financial stability : Additional Capital and Recovery & ResolutionFinancial Stability Board Consultation: In November 2014, the FSB issued a consultative document for total loss absorbing capacity (TLAC) intended to facilitate bail-in and resolution of G-SIBs.  The proposal has two components :

– (i) “External TLAC” (required at the parent holding company level or the “resolution entity”) and – (ii) “Internal TLAC” (or pre-positioning required for “material” subsidiaries). 

Under the FSB proposal, External TLAC must equal 16 – 20% of RWAs and at least twice the Basel 3 Tier 1 leverage ratio requirement. The 16-20% of RWAs is exclusive of regulatory capital buffers (conservation, countercyclical and G-SIFI surcharges) which sit “on top” of the minimum TLAC requirement. 

US G-SIFI Surcharge Proposal: Proposed requirements for capital surcharges that would be imposed on the eight largest U.S. G-SIFIs, were announced in December 2014. Comments are due by February 28, 2015.

– The proposed rules would assign G-SIFIs to buckets with capital surcharges ranging from 1.0% to 4.5%, based on risk level derived from two methodologies and the second of which would account for a G-SIFI’s reliance on short-term wholesale funding 

– The Fed indicated that “almost all” of the G-SIFIs could currently meet the requirement or would be able to by the January, 2019 effective date. 

EU Bank Recovery and Resolution Directive (BRRD) was proposed for credit institutions and investments firms, creating an EU framework for cross-border crisis management and resolution in the banking sector. The proposal allows for bail-ins, creation of bridge banks and temporary control of banks.

– Formally adopted in 2014 and Member States had until 31 December 2014 to transpose the BRRD into their national law. EBA will develop secondary rules in a number of areas.

– Consultations on bail-in powers, valuation in recovery & resolution and draft guidelines in relation to bail-in (specifically the rate of conversion of debt to equity and treatment of shareholders) launched in November, concluding in early February 2015.

EU Banking Union: In 2012, European Heads of State and Governments agreed to create a Banking Union(BU), completing the already existing economic and monetary union and allowing for centralized application of EU rules for banks in the euro area (and those non-euro MS who may want to join). The BU consists of the Single Supervisory Mechanism (SSM), the Single Resolution Mechanism (SRM) overseen by Single Resolution Board (“SRB”) and the Structural Reform Fund (“SRF”), which will run from 2016 over eight years.

Structural ReformUS Volcker Rule

– Ban on proprietary trading (other than in FX spot, loans and US govern securities), other than market making, underwriting and hedging was published as a final rule in December 2013 and requires compliance by July 2015.

EU Regulation on Bank Structure Reform (BSR), proposed by the Commission in January 2014; Key elements include:

– Ban on proprietary trading– Potential separation of certain trading activities; possibility for national supervisors to require legal separation of

trading activities within a group

In view of the European Parliament the biggest challenge facing the EU financial sector is ensuring banks are able to finance commercial investments in order to promote economic growth and that making it possible for banks to provide liquidity and creating conditions for a well-functioning Capital Markets Union should be the primary task for any further legislation for the single financial market.  The report highlights that underinvestment in the EU may threaten financial stability. Final decisions on this measure not expected before Q3/Q4 of 2015.

UK Ring-fence (the Banking Reform Act)– UK regulatory approach defining that retail banking should be ring-fenced from the rest of the bank, be supported by

higher levels of capital.– Ring-fenced activities include deposit taking, provision of overdrafts to individuals and SMEs– Secondary legislation is expected to be in place by May 2015 and bank compliance required by 2019 at the latest.

Basel III: Multi-Year Timing

Capital Framework 2011 2012 2013 2014 2015 2016 2017 2018 2019

Minimum Common Equity (CET1) 2.0% 2.0% 3.5% 4.0% 4.5% 4.5% 4.5% 4.5% 4.5%

Deductions from CET11 NA NA NA 20% 40% 60% 80% 100% 100%

Minimum Tier 1 Capital 4.5% 5.5% 6.0% 6.0% 6.0% 6.0% 6.0%

Minimum Total Capital 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

Capital Conservation Buffer (CCB) NA NA NA NA NA 0.625% 1.25% 1.875% 2.5%

Total Capital including CCB 8.0% 8.0% 8.0% 8.0% 8.0% 8.625% 9.25% 9.875% 10.5%

Counter Cyclical Buffer (if triggered) Up to

0.625%

Up to 1.25% Up to

1.875%

Up to 2.5%

Additional Loss Absorbency for G- SIBs2 1% to

2.5%

Potential Max Total Capital with G-SIB and

Countercyclical Buffer 215.5%

Leverage Ratio 3 3%(2) 3%(2)

Liquidity Ratios

Liquidity Coverage Ratio (LCR) 4 ≥ 60% ≥ 70% ≥ 80% ≥ 90% ≥ 100%

Net Stable Funding Ratio (NSFR) 4 > 100%

1. Deferred Tax Assets (DTA), Mortgage Servicing Rights (MSRs) and equity ownership of other financial institutions is capped each at 10% of CET1 and combined at 15% of CET1; phased out completely by 2018

2. Additional requirement for Global – Systemically Important Banks (G-SIBs) ranges from 1-2.5% (with an additional 1% for banks in the top category who increase their systemic importance).

3. Test run at 3% during observation period before figure set for 2018+.4. Final as of January 6th, 2013

Observation Period

Observation Period

Parallel Run with Disclosures 2015+

Phase In

TLAC will apply asadditional G-SIB

requirement from 2019

Basel III: Today …and next steps for the BCBS· Capital requirements: The original version of Basel III has been largely maintained but national

implementations reflect varying approaches.

· Liquidity: The initial Liquidity Coverage Ratio (LCR) of 2010 was modified in 2013; Further revisions of the Net Stable Funding Ratio (NSFR) have been finalized with the NSFR publication end October 2014. – The liquidity regime changes the ‘quality’ of corporate deposits and creates bank preference for long-term

fixed deposit solutions (LCR: +31 days; NSFT: + 365 days); impacts on banks’ funding cost and ability to lend.

· Leverage Ratio: The rules around applying the leverage ratio were revised in 2013 in order to take into account less risky off-balance-sheet items (such as trade finance contingent assets). In terms of the value, the original proposal of 3% will be revised by 2017 with the expectation of a formal global increase. Countries such as the US have already decided to implement a higher leverage ratio of 5%/6%.

· More work is now underway to review Pillar III of Basel. The objective is to require increased transparency, harmonization and simplification with regard to the calculation of risk-weighted assets (consultation 07/14).

· BCBS focus in 2014, 2015 and beyond: strengthening supervision, improving disclosure, new calibration for operational risk capital, revision of the standardised approach for credit risk, introduction of a capital floor for banks using the Advanced Internal Ratings Based Approach…

· Risk of Basel III process:– Diverging national implementation of Basel III– Trigger points for capital buffers and reporting requirements vary– Inconsistent implementation timelines

Shadow BankingFSB Shadow Banking Reform: In October 2014, the FSB published its progress report based on previously issued policy recommendations for reforming shadow banking. The report found a general increase in the size of the shadow banking sector based on the methodology for estimating the sector’s size. The FSB remains broadly focused on both monitoring developments outside of the traditional banking sector and policies to strengthen oversight and regulation of the shadow banking system.

European Regulation on reporting and transparency of securities financing transactions (SFTs), proposed by the Commission in January 2014 as a part of the Bank Structure Reform agenda.

EU Money Market /fund Legislation: In September 2013, the European Commission proposed a European framework designed for Money Market Funds (MMFs). The proposed EU Regulation requires:

– certain levels of daily / weekly liquidity for the MMF to be able to satisfy investor redemptions (MMFs are obliged to hold at least 10% of their assets in instruments that mature on a daily basis and an additional 20% of assets that mature within a week);

– clear labelling on whether the fund is short-term MMF or a standard one (short term MMFs hold assets with a residual maturity not exceeding 397 days while the corresponding maturity limit for standard MMFs is 2 years);

– a capital cushion (the 3% buffer) for constant NAV (net value of assets) funds that can be activated to support stable redemptions in times of decreasing value of the MMFs' investment assets;

– customer profiling policies to help anticipate large redemptions;– some internal credit risk assessment by the MMF manager to avoid overreliance on external ratings.

· The US Approach to Money Market Funds: The US has been further advanced in this regulatory area and already in July 2014 the US Securities Exchange Commission (“SEC”) passed new regulations for US-domiciled money market funds (“MMFs”). These reforms will be implemented over a two year period through to 2016.The rules comprise primarily of two components:– Floating NAV for “institutional” Prime/Commercial Paper (“CP”) MMFs– Liquidity Fees & Redemption Gates for all institutional MMFs (if liquid assets drop below certain thresholds and subject to

board's discretion).

· As a result, a number of investor concerns focus on: Liquidity access, principal preservation, tax (capital gain/loss) and accounting (where potentially no longer considered a cash equivalent).

European Payments LegislationPSD2 (Payments Directive II): Trilogue negotiations are still underway, with final text due in 2015 and implementation expected in 2016/17. The Directive seeks to: :

– Modify concepts from PSD1– Address technology developments in the payments space– Enhance consumer protection and encourage innovation and competition.

· PSD2 covers the following main areas:– Introduction of third party payment providers (TPP) – Access to customers’ bank accounts and security verification– International ‘one leg-out’ transactions and payments in non-EU currencies; more reporting for intra-EU leg– Rules around surcharging, e.g. for cards, are likely to ban surcharging for cards regulated under the IFR caps

- Amendments by Council clarify that corporate in-house banks are not subject to PSD2; refund right likely to return to PSD1 wording with bilateral ability to agree enhanced rights for direct debits

Card Interchange Fee Regulation (IFR): In July 2013 the European Commission published a proposal for Regulation on interchange fees for card based payment transactions carried out in the EU. A final agreement was reached in December and official publication of the Regulation is expected during Q1 2015.

· The final Regulation covers the following areas:– a cap on the level of interchange fees charged in four party payment schemes; IFs are limited to 0.2% for consumer

debit card transactions and 0.3% for consumer credit card transactions with the ability of Member States to opt for lower IFs in relation to domestic transactions.

– changes to the Honour All Cards Rules (“HACR”): it applies only to cards under the IF cap– prohibition on preventing steering; surcharging/rebate rules are in PSD2 (see above)

Trading and Markets ReformOTC Derivatives clearing and reporting requirements

G-20 recommendation to trade and clear the majority of OTC derivatives is being implemented but new concerns are arising about the risk of CCPs being too big to fail unless an appropriate recovery & resolution framework is being designed for them.

Europe: EMIR - Regulation of OTC Derivatives, CCPs, and Trade Repositories. In force since 08/2012.

· Key aspects include:– mandatory clearing obligation for certain classes of OTC derivatives contracts entered into between certain

counterparties;– risk-mitigation techniques for non-cleared OTC derivative transactions (e.g. provision on margin, timely

conformations, portfolio reconciliation and compression, and dispute resolution);– reporting obligations for all OTC derivative trades, whether cleared or not; and– framework for regulation of central counterparties (CCPs) and trade repositories (TRs).

· Non-financial entities are in scope if their trading activity is not for the pure purpose of risk hedging and if it exceeds the threshold of 1 billion EUR gross notional value of OTC credit or equity derivative contracts and 3 billion EUR gross notional value of OTC interest rate, foreign exchange, commodity and undefined derivative contracts.

· Technical standards on trade reporting obligation and risk mitigation techniques have been published by ESMA. Clearing and margining technical standards are currently being finalised.

· First clearing obligations planned to apply 10/2015 subject to phase-in. Margining for uncleared trades and initial margining requirements to start from 1/12/2015.

· Potential for increase in demand for collateral.

Trading and Markets ReformUS Derivative rules under Dodd-Frank

· The CTFC has recently issued Cross Border Guidance for the application of swap regulatory regime to border swap transactions:– It is expected that the CFTC will continue to discuss swaps cross border issues with foreign regulators and

potentially lead to discrete changes to the CFTC’s cross border swaps guidance to reflect increased co-ordination with Europe and other major jurisdictions.

· Margin rules (initial and variation margin) for uncleared swaps entered into by swap dealers and major swap participants have been proposed and are planned to be phased-in from December 2015.

US Push-Out rules: According to this rule banks must push-out certain types of derivatives into separate units that cannot receive government assistance.

– This derivatives push-out requirement targeted to be effective in July 2015 was scaled back significantly by a legislative amendment in December 2013.  National banks, will continue to be able to engage in commodities swaps, equity swaps and credit default swaps, although derivatives on asset backed securities or on an index of asset backed securities will still have to be pushed out of banks.

Asia: Derivatives Reform and Trade Reporting

· Asian jurisdictions are in various stages of implementing trade reporting for derivatives as well as mandatory clearing requirements. For US entities to be able to clear for clients on Asian CCPs the CCPs need to be registered with the CFTC as a Derivatives Clearing Organisation (DCO) or otherwise be exempt from the registration. US clients also need to clear via registered Futures Commission Merchant (FCM).

· Latin America: Brazil Mandatory Clearing & Other Derivatives Reform The registration of derivatives contracts with a registration entity authorized by the Central Bank is a legal requirement. It is a condition for validity of the contract and applies to all derivative transactions (including OTC swaps).

Trading and Markets ReformEurope Markets in Financial Instruments Directive (MiFID2 / MiFIR): EU Directive and Regulation amending the original Markets in Financial Instruments Directive to address market regulation and investor protection.

– Expands the existing reporting regime in an effort to increase transparency; impose additional systems and control requirements on firms using algorithmic and high frequency trading;

– requires organized trading to be conducted on regulated venues; and increases protection for retail and professional investors based on simplification of products, better information, and increased regulatory supervision.

· Published in June 2014 and effective from January 2017. EU Member States are required to implement MiFID2 in their national legislations by June 2016. While primary legislation has been agreed, there is still much to be determined by ESMA and the Commission in terms of technical standards.

· It will be important for corporates to ensure that access to trading platforms does not translate into being subject to all MiFID rules.

Asia Investor Protection measures: focus in Hong Kong, Singapore and Austria.

US Dodd-Frank Title X on investor protection

Taxation

· EU Financial Transaction Tax (EU FTT): EU Commission proposed to introduce a tax within 11 Member States (the EU11). The FTT would impact financial transactions by FIs (broadly defined) charging 0.1% against the exchange of shares and bonds and 0.01% across derivative contracts (both rates minimum), if just one of the parties to the transaction resides in the EU11 or if the financial instrument is issued in the EU11.– In May 2014, 10 of the 11 participating MS committed to finalising “viable solutions” by 31 December 2014 to

implement a first step of the FTT, no later than 1 January 2016.  Considerable effort was taken to meet the deadline, but it was not met.

– Following this, Austria and France proposed that the FTT: should have the widest base (not the narrow base of equities and limited derivatives, as previously supported by France); should be introduced by January 2016 and changes be made to the working group, in order to accelerate progress.

– Many differences remain between the MS, but appetite for the proposal remains keen. A meeting of the EU11 is taking place at the end of January 2015 and Citi will continue to monitor developments.

– Concern for corporates.

· Base Erosion Profit Shifting (“BEPS”) refers to tax planning, which seeks to exploit cross border gaps and mismatches in tax laws to reduce the overall tax liability - “to make profits ‘disappear’ for tax purposes or to shift profits to locations where there is little or no real activity” (OECD Website)– Well publicised cases of dramatically low effective corporate tax rates have put corporate tax systems high on the

political agenda. The work being undertaken by the OECD is mandated by the G20 and all G20 nations are participating in the work.

– The OECD launched an Action Plan on BEPS and has identified 15 Actions to be developed in 2014 and 2015 to more closely align taxation with economic activities and results and thus prevent “double non taxation”.

– Considerable debate continues around implementation, consistency, approach to development countries and tax competition between jurisdictions.

– High on corporate watch list.

Useful ReferencesIf you ever wanted to have a comprehensive view on the SEPA and European payments legislation what this means for Euro payments integration, efficiency, transparency, cost/benefit etc., then this a book for you:

“EU Payments Integration: The Tale of SEPA, PSD and Other Milestones Along the Road” (2010)Ruth WandhöferPalgrave MacMillanISBN 9780230243477

And for the latest on Transaction Banking and Global Regulation, please see:

“Transaction Banking and the impact of regulatory change” (2014)Ruth Wandhöfer Palgrave MacMillanISBN 9781137351760

A comprehensive overview of global regulatory change including Basel I – III and how this impacts banking and in particular transaction banking is provided in my second book. Includes implications for corporates and provides a recipe on how to solve the ‘Too big to fail’ dilemma.

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