Incoming EU finance chief says priorities include green bonds and long-term funds

The European Union’s designated top financial services official says his priorities for his term will include green bonds and the “rapid adoption” of the bloc’s long-term investment funds proposal as the EU looks to integrate its capital markets to boost its economy.

Jonathan Hill, the former PR executive and political lobbyist who went on to be leader of the UK’s upper chamber, the House of Lords, is facing a second session ahead of the European Parliament today (October 7) to confirm his nomination as Commissioner for Financial Stability, Financial Services and Capital Markets Union.

If confirmed in post, his says his aim will be to create a single market for European financial instruments to help foster funding for SMEs [small and medium sized enterprises] and long-term projects (such as securitisation, private placement, covered bonds, personal pensions, green bonds or European Long Term Investment Funds) and facilitate SMEs’ direct access to capital markets.

He goes before the Parliament’s Economic and Monetary Affairs Committee in Brussels after his first appearance before the committee underwhelmed some MEPs.

Hill is slated to take over some of the functions of predecessor Michel Barnier’s Internal Markets department, which is being split, with Elżbieta Bieńkowska of Poland designated to cover the Internal Market, Industry, Entrepreneurship and SMEs brief.

Hill has been tasked by new European Commission President Jean-Claude Juncker to maximize the “benefits of capital markets and non-bank financial institutions for the real economy” in an initiative dubbed ‘Capital Markets Union’.In a written response to the MEPs’ questions ahead of the meeting, Hill states that a “rapid adoption” of the European Long-Term Investment Fund proposal could be “a potentially very useful tool” to channel funds to long-term investments like infrastructure and to SMEs, and to provide a common regulatory product for the EU market, “attractive in terms of size, scale and simplicity”.

The ELTIF proposal, put forward by the European Commission in 2013, sets out a pan-European regime designed to offer European institutional and retail investors longer-term investment opportunities in qualifying assets to boost “patient capital”. Hill says: “Long term financing is critical to ensuring long term growth in the Union. It will be one of my priorities to remove any unnecessary barriers to long term financing.”

Hill’s remarks also focus on the role securitisation can play in Juncker’s capital markets plan. He reckons it could provide institutional investors with access to “safe financial products providing them with the stable long term returns they need”, freeing up banks for new lending. Securitisation, he argues, “has the potential to increase both bank and non-bank funding of the economy”.

Integrated capital markets across the 28-member EU could facilitate the flow of “responsible and well- regulated finance” to the economy.

Turning to banks, in what amounts to a 26-page manifesto for his time in office, Hill hopes for a system that is not only “responsibly regulated, managed and supervised” but also “based on strong ethical standards and sound governance”.