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Dr Rolf Breuer urges for change for European Capital Market

Added: (Mon May 27 2002)


Dr Rolf Breuer, outgoing CEO of Deutsche Bank and Chairman of the Finance Foundation Board, openly aired his views on urgent changes needed for the European Capital Market yesterday evening (21/06/02). The 2nd half of the below outlined interview will be aired this evening (22/06/02). Dr Breuer is actively working in preparation for the Finance Foundation Conference, to be held in Venice 16-18/06/02, and is identifying what he considers to be some of the most immediate measures necessary to build financial Europe.

Some 30 other top financial leaders across Europe, including Jean-Claude Trichet, Professor Giulio Tremonti, Dr Werner Seifert and Chris Tupker are also working in preparation for the Conference. Their suggestions will be collated in ‘Catalogues de Grievances’ (a term taken from the French Revolution) which will be presented, debated and modified in workshops during the Conference. The findings will then be presented to the European Commission, the European Parliament and national Governments across Europe. The Finance Foundation will ask to see the clear and constructive measures that they have identified implemented within the next 12 months, leading to the accelerated development of a unified capital market.

When questioned about the expansion of a single currency in Europe Dr Rolf Breuer said:

“We’re partly a single market for everything connected with interest rates and the corresponding derivative products. So far there is some progress being made. But the answer to one unique European Capital market is equity markets and derivatives connected to products. Progress is lacking and the nationalism of politics, watchdogs, and even market participants is still prevailing.

People aren’t aware of the fact that progress in Europe means foregoing some of your own sovereignty. That is a very difficult move intellectually to perform and not many people are willing, specifically not when it comes to politics ... If it comes to the officials in regulatory authorities it is very difficult to convince them that they should forego some of their sovereignty in favor of a common regulatory authority. It is very difficult to convince stock exchange officials to forego some of their sovereignty and work with other stock exchanges from other countries”.

Dr Breuer had the following to say in response to the Finance Foundation findings showing that in the past 10 years less than one quarter of mergers and acquisitions in the financial sector across Europe were cross border, and that more than 75% were national or between non-European equities, in particular America:

“It is dangerous and it is a result of a lack of openness and a lack of willingness to let foreigners into your own back yard. The reason why so much cross border M & A activity is across the Atlantic has a very simple answer. The US is an open market. You can do acquisitions; you can do mergers if you are ready to pay. It’s not so in European countries. Local and national authorities tell cross border businesses that they aren’t wanted… This is all about foregoing your own sovereignty, coordinating efforts and being ready to do something in common even if it is to the detriment of the bottom line”.

There was discussion too about the Finance Foundation findings on cost involved for each individual in Europe to transfer money, and the fact that even when drawing money with a credit card in another European country the charge will be far higher than in one’s own country:

“We should take into account the lack of infrastructure when it comes to European money transfers. It’s an essential piece to be solved. We do have efficient payment transfer systems in many national marketplaces but when it comes to cross- border the same very efficient systems break down because they are not constructed as being cross border. The customer expects cross border money transfers to be installed in a very short period of time, because that is what Europe is all about. He has a right to expect this. We cannot sit back and let the technicians do the job”. Dr Rolf Breuer

Dr Breuer agreed that there should be more of a cross European perspective when it comes to personal investments, rather than a country-by- country view, where the average investor is invested in local equities and bonds by his bank or broker: “Deutsch Bank customers discussing investment opportunities will be given an international view rather than a domestic one”.

He finished by saying:

“Clearing and settlement is still too national and the cross border costs for European or International transactions are much too high. We should really work on a co-ordination, a consolidation of clearing and settlement European wide. I think that the customer is not somebody who will continue to tolerate those clearing systems making money on his back. That is over. The customer will start pushing, arguing and demanding progress”.

For further information and a full conference program contact:
Kate, Max PR, +00 44 (0)208 939 9000
Interviews available with Finance Foundation members
Limited media places available at the conference

* The Finance Foundation was formed in 1997 to accelerate the creation of a European capital market and a community of European market users who are, still today, more or less isolated in 18 countries and some 25 financial centres.

The organisation is made up of practitioners who wish to discuss and affect change in the finance community. It sponsors and organises a number of different activities which promote discussion and propositions on key European financial issues.

Finance Foundation Board
Chairman: Dr. Rolf Breuer. Vice Chairmen: Dr. Werner Seifert, Jean-François Theodore, Sir David Walker

CEO: Michel Gabrysiak. Executive Committee: Marisa Barbour, Managing Director, Jean-Marie Cardinet, CFO, Dana Settelen, Secretary General.

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