07-04-15

EU checks whether Greece, Portugal, Spain and Italy illegaly underwriting banks

cep financial market expert Bert Van Roosebeke says question whether deferred tax assets can be core capital is complex

EU Commission wants to counter national differences

The EU Commission is currently collecting evidence to determine if Greece, Portugal, Spain and Italy should face an investigation into whether they are illegally underwriting banks that have bolstered their core capital with so-called deferred tax assets. The question whether deferred tax assets can be core capital is complex, says cep financial market expert Bert “The European lawmaker in its relevant capital requirements regulation (CRR) has made this more difficult,” the economist explains. It leaves it to national banking supervisors, though, how fast they want to put an end to these exemptions. Naturally, this leads to national differences which the European Banking Authority, the European Central Bank and the EU Commission want to counter now, Van Roosebeke explains. “Especially critical are the cases where banks can demand government bonds in return for tax receivables. This strengthen the unfortunate link between banks and states,” the expert said.