Crypto News: Brussels Edition: Banking reality check

Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union.

For proponents of European cross-border banking consolidation, and for those who dream of a genuine banking union, Germany's stubborn resistance to UniCredit's move toward a takeover of Commerzbank presents a reality check. The Italian lender has become the largest shareholder in Germany's second-biggest bank with a stake of around 21%, ahead of the government in Berlin with 12%. Chancellor Olaf Scholz yesterday went so far as to call UniCredit's strategy "hostile" and "unfriendly," an attitude that is irritating officials in Rome. Germany sees Commerzbank as a crucial source of funding for the country's small and mid-sized businesses and is worried about possible job cuts. Yet its opposition comes amid increasing calls to break down national barriers and mobilize enough funding to enable the bloc to better compete with the US and China.

— Jorge Valero

Big Guns | Russia plans to maintain defense spending at a historic high next year, dedicating 13.2 trillion rubles to the sector, or 6.2% of its economy, according to proposals we've seen. The Kremlin continues to ramp up expenditure as its forces slowly advance in eastern Ukraine, while Kyiv's allies try to secure additional aid.

Green Market | The EU will help reduce the costs of issuing green bonds in poorer countries by setting up a Green Coupon Facility to subsidize part of the coupons for issuers that face very high interest rates. "This will allow you to grow your green bond market much faster," Commission President Ursula von der Leyen said at an event in New York.

Risk Perception | The European Central Bank found that loans secured for real estate in "high climate-risk areas" were more expensive than loans with the same characteristics in "safer" regions. But the regulator considered that the climate-related risk is "still under-priced by the average bank," it said.

Booming Banking | The aggregate return on equity for the 110 largest lenders supervised by the ECB hit 10.11% in the second quarter, the highest level since the institution started publishing the data almost a decade ago. The boom demonstrates how much higher interest rates boosted European banking, but the question is how long the tailwind will last since the ECB has started cutting interest rates.

Exchanging Views | ECB President Christine Lagarde said she and her counterpart at the Federal Reserve, Jerome Powell, exchange views, but don't coordinate strategy. "We talk to each other, but we don't coordinate, we don't," she told Jon Stewart in a Daily Show interview broadcast late yesterday.

Numbers Relief | Italy got some fiscal space after a data revision removed almost three percentage points from its debt ratio to 135% of its GDP, days before the government is planning to unveil next year's annual budget. Meanwhile, Romania raised its deficit target for this year to 6.9% of GDP ahead of elections in the country this year.

Market Nerves | Investors are spurning French assets as they lose confidence in the ability of a new government to survive the coming months, when they need to cobble together a budget aimed at tackling France's deficit. The risks have sent the nation's bond yields to the highest relative to lower-rated Spain since the global financial crisis, while stocks in Paris are the only major European market set for losses in 2024.

Housing Crisis | Home prices in the Netherlands jumped by about 11% in August from a year earlier, as the country struggles with a severe housing shortage. The average transaction price for existing houses was €466,207, the national statistics agency said, after registering the biggest rise in two years.

Timely Opportunity | The company that makes what are probably the world's most desirable timepieces is now in the used-watch business. Read how Rolex is making a business in the second-hand market at a time when its luxury sector is coming down from the highs of recent years.

The euro zone's two largest economies saw private-sector business activity slump this month as Germany's manufacturing woes worsened and France's services industry sank. S&P Global's flash Purchasing Managers' Index for Germany fell more than anticipated to 47.2 — the lowest level in seven months and still below the 50 mark that separates growth from contraction. France's plunged to 47.4 from 53.1 - far short of the 51.5 that analysts we surveyed expected. The data suggest that the slowdown in the euro area is becoming more pronounced, potentially giving the ECB a reason to speed up interest-rate cuts.

All times CET

General Affairs Council in Brussels
4 p.m. European Parliament President Roberta Metsola meets Tony Blair, executive chair of the Institute for Global Change, in New York
7:30 p.m. Metsola delivers a speech entitled "Citizen Social Responsibility: Bolstering Democracies through Civic Engagement," organised by the Clinton Global Initiative
European Council President Charles Michel, European Commission President Ursula von der Leyen, antitrust chief Margrethe Vestager, foreign affairs chief Josep Borrell, among commissioners attending United Nation General Assembly in New York
Von der Leyen delivers opening remarks at the Global Renewables Summit in New York
Vestager meets US Assistant Attorney General Jonathan Kanter in Washington

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