RTC Director

EU finance ministers reach draft deal on bank bailouts

European Union (EU) finance ministers have agreed an outline plan on how to rescue troubled banks - without leaving taxpayers to face the bill.

The deal was reached early on Thursday morning after another long session of talks between the 27 EU countries.

It is seen as an important step towards the EU's goal of putting its banks on safe ground after the shocks of the credit and eurozone crises.

The rules set out who should bear the losses when a bank gets into trouble.

In future taxpayers will be among the last to shoulder losses, with banks and their creditors and shareholders to take the first hits.

After that, ordinary savers with large deposits of more than 100,000 euros (£85,000) will be the next to take losses.

If that is not enough, then national governments will be called upon to give support.

Big shift

The Dutch Finance Minister, Jeroen Dijsselbloem, said the outline deal marked a big change from existing procedure: "That's a major shift from the public means, from the taxpayer if you will, back to the financial sector itself which will now become for a very, very large extent responsible for dealing with its own problems."

Later on Thursday the EU's 27 heads of government will hold a summit to look at the region's financial and economic policies.

Its focus will largely be on the problem on youth unemployment, which is at rampant levels of above 50% in the worst-hit EU countries.

Agreement on how to treat damaged banks had been difficult to strike because rich countries feared a guarantee from them would leave little incentive for poorer countries' banks to behave prudently.

Wolfgang Schaeuble, the finance minister from the eurozone's richest country, Germany, said after the meeting: ``The talks were lengthy, quite difficult and intense," but described the conclusion as an "important step".

The next step is for EU governments to negotiate over the legislation with the European Parliament.

by RTC Director

Italy to spend 1.5bn euros to boost youth employment

Italy's government has announced it will spend 1.5bn euros ($2bn; £1.2bn) to try to boost youth employment.

The funds include tax breaks for companies that hire people aged 18-29, and will target the country's deprived southern areas.

Two in five young Italians are out of a job, while the national unemployment rate is about 12%.

The measures were unveiled on the eve of a European Union summit in Brussels on youth joblessness.

Prime Minister Enrico Letta said that the money aimed to get at least 200,000 young Italians into the workforce by aiding those with temporary contracts as well as boosting training and school-leaver schemes.

In addition to the measures to boost youth employment, the Italian government also said it would delay a planned rise in value-added-tax (VAT), which will cost it an additional 1bn euros.

Mr Letta's predecessor, Mario Monti, had announced the VAT increase in 2011 in an attempt to improve investor confidence in the government's capability to repay its debts.

The proposed VAT freeze must be approved by parliament first.

"These are all measures that will help consumer spending in the short term... and a bridge to economic recovery," said Economy Minister Fabrizio Saccomanni, adding that Italy was "fully committed" to keeping the government deficit below 3% of GDP this year, as required under EU rules.

Italy's economy shrank by a worse-than-expected 0.6% in the first quarter of this year.

Across Europe, 5.6 million young people are out of work, with a jobless rate of 23%. In Greece and Spain, the rate of youth unemployment is around 50%.

by RTC Director

UBS France fined 10m euros amid tax evasion probe

The French unit of UBS has been fined 10m euros (£8.5m; $13m) by regulators for failing to tighten proper controls on money-laundering and tax evasion.

UBS and its French branch are being formally investigated for allegedly helping wealthy clients open undeclared bank accounts in Switzerland.

The bank rejected the "contentious nature" of the decision and said it was considering lodging an appeal.

Regulators said the measures taken by UBS had been "lax".

UBS and UBS France earlier this month were placed under formal investigation over suspected "complicity in illegal sales practices". Investigators are examining whether UBS staff broke a French law against "illicit solicitation" by actively approaching potential clients in France.

'Trans-border activity'

Paris prosecutors, who are leading the investigations, are also looking into whether UBS set up a shadow accounting system that masked transfers between French and Swiss bank accounts.

The ACP, the Bank of France's regulatory arm, on Wednesday said that the bank had waited more than 18 months after receiving final warnings in 2007 by authorities to "rectify trans-border activity" amid "serious" suspicions of tax evasion and illegal sales practices.

It also said that the bank had failed to prevent UBS headquarters from authorising staff to transmit lists of prospective clients interested in opening undeclared overseas accounts.

A statement by UBS said: "We disagree with many of the disciplinary commission's conclusions. UBS will further analyze the decision by the commission and will consider whether to appeal at the appropriate time."

"UBS does not tolerate any activities intended to help its clients circumvent their tax obligations."

The allegations against UBS originally came to light after former staff blew the whistle on the practices that involved hundreds of retail and corporate clients.

An anonymous letter was reportedly sent to ACP suggesting that parallel accounts were opened in Switzerland but undeclared in France, which is illegal under French law.

The letter said a special record was kept between 2002-2007 listing undeclared bank accounts that had been opened by corporate clients.

'Disciplinary action'

Former staff also alleged that UBS bankers regularly mingled with affluent people at sporting events and musical concerts - including some sponsored by UBS - in order to seek out possible clients for tax evasion.

The magistrates investigating the affair have sent a list containing the names of 353 people suspected of having held a Swiss account to Swiss authorities and have requested details.

Under French law, being placed under official investigation means there is "serious or consistent" evidence to implicate a suspect in a crime. But it does not necessarily lead to a trial.

UBS said: "This is an issue from the past and we are pleased to note that the disciplinary commission acknowledges in its report that UBS France has taken appropriate steps to strengthen its compliance framework since 2009."

"UBS France has operated under a new leadership since 2012 and has continuously strengthened its rules and processes. UBS France has the fullest support of its parent company."

by RTC Director

EU summit in Brussels wrestles with youth unemployment

The record unemployment blighting much of Europe will be the focus of attention at a two-day EU summit set to open in Brussels.

Across the EU, nearly a quarter of people aged 18 to 25 have no job. In Greece and Spain more than half of people in that age group are jobless.

EU leaders will consider mobilising 6bn euros (£5bn; $8bn) earlier than planned to help youth training schemes.

There are also plans to boost bank lending to small businesses.

A source at the European Commission said an extra 10bn euros in funding for the European Investment Bank (EIB) could be used to encourage private banks to lend more to small and medium-sized businesses (SMEs), especially in the struggling southern "periphery" economies hit hard by the euro crisis.

The idea is to turn that 10bn into EIB guarantees worth 100bn - enough to cover loans issued by private banks. The source stressed that "it is not new money" - it would come from the EU structural funds already earmarked for Europe's poorer regions.

The focus is on SMEs because they account for about 99% of businesses in the EU, employing about 70% of the workforce, the Commission said. Despite the SMEs' importance in EU labour markets, bank lending to them fell by 10% in the first quarter of this year.

But the source told journalists at a pre-summit briefing that co-ordinating action on jobs "is not easy at European level - social policy is mainly a national competence".

The Commission's Youth Guarantee plan would offer young people across Europe a quality apprenticeship or job in the first four months after becoming unemployed or leaving formal education.

The EU Commissioner for Employment, Laszlo Andor, says the scheme could help to reduce the growing north-south competitiveness gap in the EU.

But the heavy lifting of job creation still has to be done by national governments, by making labour markets more flexible, stimulating growth and easing the tax and administrative burdens on SMEs, the Commission admits.

John Springford, an economic analyst at the Centre for European Reform, said the EU was facing "very large political roadblocks" hampering the necessary macro-economic changes.

"They are stumbling towards integration very slowly - when the financial markets relax the pressure, the progress stalls," the think-tank analyst told BBC News.

Germany - one of Europe's few economic bright spots amid the gloom of the euro crisis - is especially loath to pool risk at European level ahead of its general election in September, Mr Springford said.

Germany is making any aid for struggling eurozone economies strictly conditional on them enacting structural reforms, such as making it easier for companies to hire and fire. But such reforms are generally slow to bear fruit.

The draft summit conclusions, seen by the BBC, say the leaders note "the importance of shifting taxation away from labour as a means of increasing employability and boosting job creation and competitiveness".

The leaders will also discuss progress towards a eurozone banking union, as their finance ministers continue tough negotiations on a planned joint bank resolution scheme to deal with troubled banks.

It is proving tricky to agree on how losses would be borne by the stakeholders in struggling banks - that is, the bondholders, investors and holders of deposits above 100,000 euros.

This year's Cyprus banking crisis, with the unprecedented imposition of capital controls, has made EU governments cautious about taking on additional financial risks.

There are still fears that a bank run in one country could spread contagion across a still fragile eurozone.

Source-BBC

by RTC Director

LTE-Advanced 4G network launches in South Korea

South Korea has started offering what are billed as the fastest ever 4G data speeds made available to consumers.

SK Telecom says its LTE-Advanced network allows files to be downloaded at up to 150 megabits per second.

That is twice as fast as before and 10 times the rate of its 3G service.

Although in practice subscribers will get a slower rate, the firm says it will still be fast enough to start offering a full-HD 1080p video streaming service from early July.

It also said it would offer a group video chat service with higher video and audio quality than had been possible before.

Samsung has released a special version of its Galaxy S4 handset with a new communications chip to offer access to the LTE-A system, and SK Telecom says it expects another six compatible devices to launch before the end of the year.

Existing smart devices will not be able to take advantage of the speed boost, but users who do decide to upgrade will not face additional data fees.

The service is initially being offered in 44 cities including the capital Seoul, and SK Telecom said it had plans to double that number in the future.

In the UK most of EE's 4G network currently tops out at 75Mbps.

But the firm recently installed equipment in East London's Tech City business cluster to offer a service it calls "double-speed 4G", which it says can match SK Telecom's LTE-A network kit.

However, limitations with the handsets it offers means the maximum theoretical speed they could access would be 100Mbps.

While speedier downloads may prove enticing to customers, one analyst said that they were only part of the picture.

"I've never found someone who didn't want something faster," said Daryl Schoolar, an analyst at the telecoms consultant Ovum.

"But it's not just about speed - the issue of capacity is perhaps more important. These advances allow operators to use more spectrum which means they can handle more subscribers at once.

"The networks are like a highway - the more people who use them the more clogged they get. By adding the equivalent of more lanes operators ensure that subscriber speeds don't slow down as much at the busiest network times."

by RTC Director