George Osborne, the UK chancellor, surrounded at the marathon Brussels negotiations on bank capital rules. The May 2 talks ended at 2am with Osborne outnumbered 26-1 by other EU finance ministers. A deal was finally done on Tuesday.
Francois Hollande rather enjoys issuing blood-curdling warnings to the City of London. During the campaign he declared his “real enemy” to be ”the world of finance” and post-election he is not toning down the rhetoric.
How ironic then that Hollande’s first major piece of EU financial regulation will see him largely siding with European banks (and yes, that includes the British ones) against calls from the UK and ECB for tougher rules.
Diplomacy in Brussels can be a funny business. Hard as it is to believe, in this negotiation the big beasts of City banking have been privately cheering on the French. Next week, when finance ministers meet to negotiate a deal, we’ll all be able to see if Hollande changes Paris’ tune.
Proud competition commissioners and hard-charging chief executives are a combustible mix. Many a business leader has arrived in Brussels imagining that a bit of face time with the man in charge will clinch approval for their compelling merger proposal. How wrong they can be.
The latest lesson in bad lobbying is provided by Willie Walsh, chief executive of IAG, the parent company of British Airways and Iberia. Admittedly the story ended positively for Walsh, who last month won approval for his takeover of British carrier BMI. But the stakes were high (BMI was on the verge of collapse), the decision was finely balanced (and may still be appealed) and Walsh almost wrecked the chances of getting an early green light.
The details of the drama, which played out in February and March, are slowly emerging. One calamitous meeting between Walsh and Joaquín Almunia, Europe’s competition enforcer, nearly overshadowed the entire process.
European regulators embarked on a financial rulemaking binge after the 2008 crisis. Yet the biggest question of all — how do you let a big bank like Lehman Brothers collapse without endangering the entire financial system — remains unanswered. If you think the system was inadequate 2008, it is basically no better today.
A Brussels proposal on “Crisis Management and Bank Resolution” has been promised “in a few weeks” since the summer of 2011. Month after month, the Commission ducked the issue. Today Michel Barnier, the commissioner overseeing financial services, admitted he needed more time for a informal mini-consultation on “timing and calibration”. The odds are surely lengthening on a proposal emerging before the summer.
Angela Merkel and José Manuel Barroso talk on the sidelines of Monday's EU summit.
The Deutsche Börse and NYSE Euronext exchange mega-merger is dead, the objections of competition officials prevailed, but it followed a tremendous political tussle in Brussels, full of intrigue and skulduggery. Here are some of the snippets from the final days:
The Merkel change of heart: A great mystery in this merger case was the deafening silence from Berlin. Angela Merkel, the German chancellor, was always said to be on the verge of intervening on behalf of the German exchange. But opportunities to say something came and went. Her reluctance was put down to coalition divisions and a complicated political picture in Hessen, the home state of DB.
But in the final days, Merkel did have her say, at least in private.
One week, two policy retreats. Things are not going too well at the moment for Michel Barnier, Europe’s top financial regulator.
First he came unstuck on his credit rating agency reforms, as his fellow European commissioners mounted an revolt over proposed powers to ban sovereign ratings on bailout countries. The result was a last-minute climbdown.
Then, just two days later, some of the same Commission rebels were expressing strong reservations about a separate proposal to break the grip of the Big Four accounting firms. This time around Barnier is offering up his concessions early - at least one of the most controversial measures in the audit proposals will likely be dropped.
EU commissioner Michel Barnier
On what has been a bleak day for credit rating agencies after S&P’s faux French downgrade, here is a tiny bit of good news for the industry.
Michel Barnier, the commissioner overseeing European financial regulation, is on Tuesday unveiling plans to overhaul credit rating agencies, which take an unforgiving approach to many current industry practices.
While the main principles of the draft proposals will remain – powers to suspend ratings on stricken sovereigns, mandatory rotation of rating agencies, an approval process for their analysis methods – there are likely to be some last minute tweaks.
The timing was hardly ideal. Just as funding seized up for some of Europe’s banks, Brussels was gearing up this fortnight to tell senior bondholders to shoulder the burden of rescuing stricken financial institutions.
Whatever the merits of the “bail-in” proposals — and analysts say there are many — it is not exactly a palliative for panicky investors. Little wonder the plan has been shelved, at least for a month or two.
You could see it as a lesson learned. When Michel Barnier, the internal market commissioner, floated the measures in January, bond markets virtually froze for a few days. The stakes are only higher now.
The principle behind the reforms is simple enough: finding a mechanism to save struggling banks by forcing investors to take a hair-cut rather than forcing taxpayers to fund a bail-out.
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Peter Spiegel is the FT's Brussels bureau chief. He returned to the FT in August 2010 after spending five years covering foreign policy and national security issues from Washington for the Wall Street Journal and the Los Angeles Times, focusing on the wars in Iraq and Afghanistan. He first joined the FT in 1999 covering business regulation and corporate crime in its Washington bureau, before spending four years covering military affairs and the defence industry in London and Washington.
Joshua Chaffin is one of the FT's EU correspondents, covering areas including policies on trade, the environment and energy. He has worked in the FT's Brussels bureau since late 2008 and before that was an FT correspondent in New York and Washington DC. 
Alex Barker is EU correspondent, covering the single market, financial regulation and competition. He was formerly an FT political correspondent in the UK and joined the FT in 2005.
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