Bank Leverage Gaps Drive Scandinavia To Set Agenda Europe Won’t

A leverage ratio — a measure of capital to assets before theyve been weighted for risk — will help national regulators catch banks understating loss probabilities, said Jesper Rangvid , the head of Denmarks government-appointed crisis commission. His report, released last week, showed excessive leverage at Danske Bank A/S almost destabilized the entire Danish economy in 2008. At the moment, it is difficult for the Financial Supervisory Authority, Rangvid said in an interview. Thats why we need some minimum level so that a bank holds a certain level of equity in the end. Stefan Ingves, governor of the Riksbank and chairman of the Basel committee, said this month regulators in his native Sweden should target a leverage ratio before European standards are set. Ingves said in June the risk weights banks apply to their assets vary across markets, putting additional pressure on regulators to ensure capital buffers arent diluted. Europe Hesitant Europe has hesitated to follow Basels recommendation that banks hold at least 3 percent equity relative to total assets on concern more rules risk curbing lending and hampering economic growth. The EU will instead require banks to publish their individual leverage ratios from 2015 and decide by 2018 whether region-wide standards need to be set. Ingves has warned that without leverage requirements, banks are left with too much freedom to lower their capital base by adjusting risk weights. Though Swedens four biggest banks, led by Nordea Bank AB and Svenska Handelsbanken AB (SHBA) , are among Europes best capitalized, the lenders are highly leveraged, Ingves said Sept. 12. Norway , which unlike Sweden and Denmark isnt an EU member, is working to raise banks equity relative to total assets by tripling risk-weight requirements. National Standards Dutch Finance Minister Jeroen Dijsselbloem, who leads the group of 17 euro finance ministers, said last month systemically important banks should meet a leverage ratio of at least 4 percent.

Somali jihadists recruit in U.S., Canada, Europe

Nokia, however, won’t fade into obscurity. John Stoll reports. 10:43 a.m. Sept. 20, 2013 European stocks retreat after rally; Adidas drops LONDON (MarketWatch) — European stock markets dropped on Friday, retreating from multiyear highs reached the prior day when investors celebrated the U.S. Federal Reserve’s decision to keep its bond purchases intact. The Stoxx Europe 600 index fell 0.2% to 314.39 after closing at the highest level since June 2008 on Thursday. Germany’s DAX 30 index slipped 0.2% to 8,677.41, pulling back from a record close reached on Thursday. The U.K.’s FTSE 100 index lost 0.3% to 6,605.84, while France’s CAC 40 index gave up 0.2% to 4,198.55. Among notable movers in Europe, shares of Adidas AG dropped 4.2% after the sportswear maker lowered its full-year guidance. 3:24 a.m. Sept. 20, 2013 Stocks rally to an almost seven-week high in London on Thursday as the impact of the U.S. Federal Reserves surprise decision not to pare its bond purchases offset disappointing U.K. retail sales.

Europe and Middle East

Kenyan security forces crouch behind a wall outside the mall on September 23. Soldiers take cover after gunfire near the mall on September 23. Kenyan paramilitary police officers patrol the area near the mall on Sunday, September 22. Soldiers from the Kenya Defense Forces arrive outside the Westgate Mall on September 22. A woman shields a baby as a soldier stands guard inside the Westgate Mall on Saturday, September 21. A rescue worker helps a child outside the mall on September 21. People who had been hiding inside the mall during the gunfire flee the scene. An armed official takes a shooting position inside the mall. An armed official crouches on September 21. Bodies lie on the ground inside the mall. Men help a wounded woman outside the mall on September 21. Officials carry an injured man in the mall. Soldiers move up stairs inside the Westgate Mall. A soldier directs people up a stairway inside the Westgate on September 21. An injured man is wheeled into the Aga Khan Hospital in Nairobi.

China, Europe orders signal economic healing but U.S. disappoints

Manufacturing Purchasing Managers Index (PMI) retreated to 52.8 this month from 53.1 in August, confounding analysts’ forecasts of an improvement. A reading above 50 indicates expansion. Output growth accelerated but new order inflows slowed, suggesting “production growth is likely to weaken in the fourth quarter unless demand picks up again in October,” said Chris Williamson, Markit’s chief economist. The Fed surprised markets last week by postponing a reduction of its massive, $85-billion-a-month bond-buying program, while downgrading its growth forecasts. Conflicting views from policymakers of when the wind-down will come has left markets uneasy, while the threat of another fight on Capitol Hill over how much the United States can borrow loomed large. The uncertainty emanating from Washington took the shine off a German election triumph for Angela Merkel which confirmed she would remain Europe’s dominant leader as the continent tries to put its debt crisis to bed. Still, the bloc should be able to take on its continuing challenges from a position of improving economic growth, after the region pulled out of recession in the second quarter. Markit’s Eurozone Flash Composite PMI jumped to 52.1 in September from last month’s 51.5, its highest since June 2011 and beating expectations for a reading of 51.9. The pace of expansion in the bloc’s dominant services sector also beat all forecasts in a Reuters poll and the surveys suggested the recovery was becoming more broad-based. Business at firms in Germany, Europe’s largest economy, expanded at a faster pace than last month and in France, the second biggest, activity increased – albeit marginally – for the first time in 19 months. FORWARD MARCH Markit said the composite euro zone PMI, which surveys both manufacturing and service sector companies across the region and is seen as a good guide to economic growth, pointed to a 0.2 percent expansion this quarter, matching a Reuters poll taken earlier this month. “Today’s PMI figures support the view that the euro zone recovery is gradually becoming more entrenched and, as such, further reduce the odds that the ECB will follow up its forward guidance rhetoric with action,” said Martin van Vliet at ING. European Central Bank President Mario Draghi said earlier this month monetary policy would remain accommodative for as long as necessary, and that interest rates would remain at present or lower levels for an extended period of time.