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REVEALED: The 29 Global Megabanks That Are Systemically Important And Too Big To Fail

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by Simone Foxman

The G20’s enforcement agency found that 29 banks globally are too big to fail.

It published a long-awaited list of “systemically important” banks Friday. Banks on the list will have to cooperate with regulations imposed by the agency as well as the Basel Committee of Banking Supervision.

Here are some of those new rules (via WSJ):

– By the end of 2012, all banks will have to map out a plan to unwind their businesses in the case of a collapse.

– By 2016 they have to hold more capital than other banks. They’ll be sorted into five different “buckets,” based on which they’ll be required to maintain 1%-3.5% more capital than less significant banks.

– By 2019, that capital requirement will be an added 3.5% on top of other regulations.

The list will be updated every November and the methodology to choose the banks will be reviewed every three years.

Click here to see which banks are too big to fail >

Bill Gates advises Uganda on oil cash

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Microsoft founder Bill Gates

Published On: Thu, Nov 3rd, 2011

The world’s second richest man and one of its most influential philanthropists will today advise the G20 to ask government to make details of Uganda’s oil agreements public.

Microsoft founder Bill Gates is also expected to ask the G20 to ensure that government declares the money it receives from its oil resources. Mr Gates’ comments come a day after a parliamentary ad hoc committee started investigating allegations of corruption and unfair agreements in Uganda’s largely opaque oil sector which is expected to generate $2 billion per year at peak production, compared to a national budget of $3 billion.

“This oil revenue should have a huge impact on the government’s ability to address the needs of millions of poor Ugandans,” Mr Gates will today tell leaders of the G20, which include the world’s richest and most powerful countries. “However, we have no insight into the country’s oil leasing arrangements, and, as a result, Ugandan citizens have no means to protect their interests.”

Mr Gates’ comments on Uganda are part of a report on financing global development he has written for the G20 meeting at the request of French President Nicolas Sarkozy, who currently holds its rotational leadership. The full report will be published today.

Mr Gates has closely been following developments in Uganda where his Bill and Melinda Gates Foundation is a major donor to health projects, and is keen to see Uganda’s oil money spent transparently on social and economic development.

Ms Winnie Ngabiirwe of Publish What You Pay Uganda, a pro-transparency pressure group, said yesterday: “For a long time now, Ugandans have asked our government to do exactly what Mr Gates is asking for. Unfortunately, our government has continued to dismiss our concerns, treating the oil and gas sector with the highest level of secrecy. Making agreements accessible to Ugandans, and publishing what the country is earning is an important step necessary for fighting against corruption and embezzlement.”

Energy Minister Irene Muloni told Daily Monitor yesterday that there was no need to worry since the oil industry in Uganda is young. “All the appropriate laws will be put in place. Uganda’s oil resources will be adequately managed,” she said, advising this newspaper to seek President Museveni’s view over Mr Gate’s presentation.

Tullow Oil is in final stages of farming down two-thirds of its interest in Uganda’s oil fields to France’s Total and China’s CNOOC. In July 2010, the US passed the Dodd-Frank Act, which calls for all oil, gas and mining companies listed in the US to publish their payments to foreign governments.

This would include CNOOC, which is listed in the US, but not UK-listed Tullow.
However, last week the European Commission proposed a new law which would implement the same requirement for all 27 EU member countries.

If adopted, Tullow and Total would have to publish their payments to Uganda unless government passes a secrecy law making it explicitly illegal for any oil, gas or mining company to publish information about their activities in Uganda.

Mr Gates is also expected to encourage Uganda to sign up to the Extractives Industries Transparency Initiative (EITI) and gives an example of Ghana, which used the initiative to raise minimum mining royalties from three to six per cent. “The problem is that EITI is a voluntary initiative, and only five African countries are currently compliant, although more are working towards it,” Mr Gates says. “All G20 countries should require the mining and oil companies listed on their stock exchanges to disclose payments to governments.”

By John Njoroge, Daily Monitor

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U.S. rejects plan to strengthen IMF in euro zone crisis

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By Abhijit Neogy and Glenn Somerville

(Reuters) – Proposals to double the size of the IMF as part of a broader international response to Europe’s debt crisis immediately ran into resistance from the United States and others, burying the idea for now and firmly putting the onus back on Europe.

The outlines of the plan, that had the backing of several developing economies, emerged as G20 finance ministers and central bankers began meeting in Paris to discuss a world economy under threat from European nations mired in debt.

One G20 source said some policymakers backed injecting some $350 billion into the International Monetary Fund. Other options under consideration included loans, special purpose vehicles and note purchase agreements.

Treasury Secretary Timothy Geithner wasted no time in shooting the idea down. The IMF’s dominant shareholders, including the United States, Japan, Germany and China, are content that the fund’s $380 billion worth of resources is enough. Canada and Australia also voiced opposition.

“They (the IMF) have very substantial resources that are uncommitted,” Geithner said.

The United States is among countries keen to keep pressure on the Europeans to act more decisively to end the two-year-old debt crisis that began in Greece but has since spread to Ireland and Portugal and is lapping at Spain and Italy.

“The first priority here is for Europeans to put their own house in order,” Australian Finance Minister Wayne Swan said.

The finance ministers of France and Germany, under pressure from the rest of the world to act in concert, made a fresh commitment to have a plan for the euro zone in place before a summit of G20 leaders in Cannes on Nov 3/4.

Speaking after a lunch meeting with President Nicolas Sarkozy, French Finance Minister Francois Baroin said: “We will continue our discussions in the coming days but we have already come to some agreements that will be very important.”

If minds needed concentrating further, the downgrade of Spain’s credit rating a few hours earlier highlighted the risk of a much larger economy than Greece coming under threat.

Standard and Poor’s cut Spain’s long-term credit rating, citing the country’s high unemployment, tightening credit and high private sector debt.

French and German officials are trying to put flesh on the bones of a crisis resolution plan in time for a European Union summit on October 23. Fears about the damage a default by Greece — and possibly others — could inflict on the financial system have driven a confidence-sapping bout of market volatility since late July, with global stocks falling 17 percent from their 2011 high in May.

Canadian Finance Minister Jim Flaherty also said the G20 should keep up pressure on the euro zone on its “arduous” journey toward a solution and not focus on IMF resources.

DIVISION

Unlike in 2009 when the G20 launched coordinated stimulus to pull the world out of crisis, the rest of the world is chafing at Europe’s slow response while Washington and Beijing are sparring over the yuan currency.

The Franco-German crisis plan is likely to ask banks to accept bigger losses on their Greek debt than the 21 percent spelled out in a July plan for a second bailout of Athens, which now looks insufficient.

“It will be more, that’s more or less certain,” French Finance Minister Francois Baroin said.

It should also lay out a system for recapitalizing banks and plans to leverage the euro zone’s European Financial Stability Facility to give it more punch.

Japanese Finance Minister Jun Azumi said he would share with his G20 counterparts Japan’s “bitter experience” of failing to contain its 1990s banking crisis by doing too little, too late.

Whilst the EFSF has the resources to cope with bailouts for Greece, Portugal and Ireland, it would be overwhelmed by the need to rescue a bigger economy such as Italy or Spain.

“We see heightened risks to Spain’s growth prospects due to high unemployment, tighter financial conditions, the still high level of private sector debt, and the likely economic slowdown in Spain’s main trading partners,” S&P said.

The most effective method would be to turn the EFSF into a bank so it could draw on European Central Bank resources. Both Germany and the ECB are opposed to that.

The G20 may refer to the euro crisis in its communiqué and in closing news conferences on Saturday evening, but little else of substance is likely to be inked in with a EU summit in nine day’s time the make-or-break moment.

ROLE OF IMF

G20 sources said most BRICS economies were in favor of bolstering the IMF’s capital as a crisis-fighting tool.

“We have said this before and have conveyed this again, that if emerging economies and the BRICS are called upon to contribute, we can do it via the International Monetary Fund,” one of the sources said. “India is open to it, China and Brazil are also okay with the idea.”

Another G20 source said the IMF would present a plan which had broad support to its executive board to make short-term credit lines available to fundamentally healthy countries hit by liquidity crises. It could aid euro zone countries hit by the current crisis of confidence in the bloc’s sovereign debt.

The Paris meeting may give the green light to regulators for new rules on banks deemed ‘too big to fail’, including capital surcharges, due to be officially approved in Cannes.

Any real progress on bigger goals such as setting parameters to measure global imbalances and reining in speculative capital flows is unlikely to come before a November 3-4 summit in Cannes, where France passes the G20 baton to Mexico.

A French finance ministry source said that for Cannes, France hoped to have two or three measures agreed for countries showing imbalances: consolidation measures for those with high deficits and stimulus measures for those with surpluses.

“We are going to try to make some progress and obtain, perhaps not tomorrow or Saturday but by Cannes, a list of measures country by country,” he said. “These must be measures which will have an impact on the real economy.”

A separate G20 source said after preparatory talks late on Thursday that China would commit in Paris to boost its consumption through a five-year plan, via households and companies as well as infrastructure.

The G20 countries make up 85 percent of global output.

An April G20 meeting placed seven large economies under review — the debt-burdened United States, export driven China and the economies of France, Britain, Germany, Japan and India. Officials have said privately the aim was to get Beijing to discuss the yuan, and China’s cooperation is essential to the success of the process.

China and the United States sparred this week over a U.S. Senate bill to press Beijing to raise the yuan’s value, and the issue is likely to create a sideshow at the G20 talks, even if the euro zone crisis pushes it off center stage.

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