|Author (Person)||Cordes, Renée|
|Series Title||European Voice|
|Series Details||Vol 7, No.14, 5.4.01, p22|
THE European Commission is set to unveil umbrella EU rules for companies offering insurance, banking and other financial services under one roof.
Until now, financial conglomerates have been covered by sector-specific laws at Union, national and even international level.
But as banks and insurers join forces to meet growing demand for private pension schemes and other combined services, EU policy makers see a need to fine-tune the legal framework. "There is no legislation to cover conglomerates as such," says a Commission official.
The initiative by Internal Market Commissioner Frits Bolkestein, due to be adopted later this month, is part of a broader attempt to create a single financial services market to help investors take advantage of the euro.
The new proposal will seek to provide a clear definition of financial conglomerates, set standards to limit risk exposure and call for stricter supervision of their activities. This may mean increased cooperation among supervisory authorities.
For the most part, the insurance industry welcomes the move.
"We see it very much as the legislation catching up with reality," said Simon Gentry, head of European affairs for the Association of British Insurers. But the group fears some of the new provisions might increase firms' costs - a fear echoed by the Berlin-based Association of German Insurance Companies, which outlined its concerns in a recent letter to the EU executive.
The group said that while it supports the proposal's main aims, some systems should be left intact since credit institutions and insurers have different business structures.
The lobby group also argues that it would be more appropriate to lay down global rules for financial conglomerates - already the case for banks and insurers - instead of just those at an EU level.
The letter adds: "In contrast, the proposal creates new problems as credit institutions, insurance companies and investment firms will have to face a competitive disadvantage to non-EU competitors, for example from the United States."
The Commission's move comes just as grouping gains momentum. Even in countries such as Germany, which has lagged behind others, Allianz, Europe's largest insurer, has announced its purchase of the remaining 80% of Dresdner Bank for more than €23 billion.
In all, bancassurance groups hold about one-fifth of total assets in the EU's financial service sector. They also accounted for 20% of all mergers and acquisitions in the EU between 1985-99.
"It's a trend which you cannot stop," said Karel Lannoo, chief executive at the Centre for European Policy Studies.
The European Commission is set to unveil umbrella EU rules for companies offering insurance, banking and other financial services under one roof.
|Subject Categories||Business and Industry, Internal Markets|