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JohannesBorgen Profile picture
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31 Mar, 7 tweets, 2 min read
We have the same kind of institution in France. Its effectiveness is not great. Pretty much every application is approved unless reckless. But there was an extraordinary story once... let me tell it to you
This is the kind of institution that will routinely allow members of the ministry of finance to go work for a bank.

But there was this normal guy who was working as a tax inspector. And he had enough of it, he wanted a life change. So he quit and said he wanted to become...
A travelling salesman selling umbrellas ! And believe it or not, the Commission de deontologie (the french equivalent) refused ! Why, will you ask? Surely there is no lobbying or conflict of interest involved !

Why can a treasury guy who authorised big M&A deals can go to a bank
And our tax inspector can't sell umbrellas?

Because, said the commission, this would hurt the Ministry of finance's prestige and honour!

I kid you not.
But our little umbrella guy was very brave and he fought aaaaaall the way to the supreme court ! (The ministry wouldn't let go ! No former tax inspector shall sell umbrellas!)

The good news is, he won.

The bad news is, revolving doors still work very well, thank you
@DavidKeo @BondHack I'm sure you'll love this
This story is honestly all you need to know to understand France 😂

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More from @jeuasommenulle

JohannesBorgen Profile picture
20 Mar
Je vois qu'il y a quelques questions donc je vous livre ma lecture éclairée du décret Absurdistan

1) on peut se promener avec sa famille mais pas faire du sport avec eux. Le premier que je vois courir avec son enfant c'est 135€. On marche !
2) on peut se promener dans un rayon de 10km ...mais si le chien est avec vous alors c'est max 1km.

3) on peut faire ses courses pro dans un rayon de 30km - mais attention, surtout ne pas prendre son chien.
4) Les vendeurs de graines et les luthiers sont bien en commerces essentiels - je vous sentais inquiet.

5) on peut se déplacer dans le cadre de l'acquisition ou la location d'un bien immobilier- mais seulement si c'est une résidence principale.
Read 5 tweets
JohannesBorgen Profile picture
14 Mar
An optimistic Coronavirus thread, & not only about the corona you know!

There are 4 others widespread human coronaviruses (& 2 rare ones) and most of the time, they only give you a common cold.

Why is it important, if SARS-CoV-2 is different?

Meet OC43.
As I said, OC43 will only give you a cold. Sometimes it gives a bad respiratory infection, but it's rare, and no one really cares about OC43. But it hasn't always been like that!
Recent research (dr.dk/nyheder/viden/…) suggests OC43 was responsible for the "Russian flu" of 1890
In many ways, that pandemic was eerily similar to the Covid one - e.g. see this great story (sorry, in French). It killed more than 1 million people and spread like a wildfire.

vidal.fr/actualites/262…
Read 8 tweets
JohannesBorgen Profile picture
9 Mar
Look like I don't understand why you people don't invest in bank capital legacy bonds. It's very simple.
For example you get this discounted bond. It was Basel 2 tier 1 capital and has been grandfathered as CRR Additional Tier 1 capital. So the bank will keep it until 2021.
But post CRR1 grandfathering period in 2021 it will be eligible as Tier 2 capital so the bank might keep it longer.

However under the new CRR2 it might lack a waiver of set off rights which would eliminate it from Tier 2. But that would only be in 2025
Meanwhile, as a Tier 2 it would lead to infection risk because under article 56 CRR as a Tier 2 it cannot be pari passu to Additional Tier 1 - which it is because it was issued as a Tier 1.

However, since it was issued at an intermediate holdco level of a multiple point of entry
Read 9 tweets
JohannesBorgen Profile picture
19 Feb
Here it is !

A thread on Central Bank Digital Currencies (CBDC) because I think it’s both extremely important and poorly understood.

Simple questions I want to answer are

i)What’s the point?
ii)How do they work?
iii)Is there a risk for banks?

Sorry, it's a bit long.
First, the reasons for CBDC.

You can have a look at the mega thread I started a few weeks ago with @BCoeure stepping in. But it’s hard to digest, so let me summarize the rationale for CBDC (and my views).

I’ll mention official and non-official reasons.
Reason#1: costs.

Real cash (banknotes & coins) is expensive. Estimates vary from 0.2% to 0.7% of GDP, depending on the methodology, country, etc

But electronic payments are also expensive – and cards payments even more. Will CBDC be cheaper? I suspect it depends on country.
Read 60 tweets
JohannesBorgen Profile picture
19 Feb
A funny story & a cautionary tale on the shortcomings of the banking union.

Nordea is the biggest Swedish bank - which is not in the banking union.

At one point, they decided that they were not happy with Swedish supervision (too conservative) and they moved their HQ to Finland
Of course, they didn't say it, but they were hoping for substantial capital relief by using SSM rules instead of Riskbank rules.

But you see, the trick is that under the maze of EU rules, supervisors are in charge of Pillar 1 & Pillar capital requirements...
BUT not of macro-prudential capital requirements!

So the Finnish authority, not the SSM, is in charge of macro-ppu in Finland. Amusingly, they decided to apply to *Swedish mortgages* owned by *Finnish banks* the same risk weight as applied by the Swedish Riskbank!
Read 7 tweets
JohannesBorgen Profile picture
3 Feb
I wanted to wait for a few Spanish banks to report b4 sharing something intriguing. By now, you all know that the name of the game in EU banking is that there are simply no new NPLs because everything is deferred (government schemes, payment holidays). But is that always true?
And we all want to know what’s going to happen when reality kicks in. Interestingly, there’s one Spanish bank which apparently decided to stop pretending. If you take a casual look at it, you won’t see anything, because their NPL ratio hasn’t moved much - it's even going down
But that’ only because they did a big sale. The gross NPL entries are far more interesting - those are the real new default/NPL. And we can the first big jump since Covid.

That's a +125% rise over the past 6 quarters average.
Read 8 tweets

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