AFME: More work to be done to make Europe competitive
16 October 2019 London
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There is still much work to be done at European and national levels, particularly in making Europe’s capital markets more competitive, according to Simon Lewis, chief executive of The Association for Financial Markets in Europe (AFME).
Lewis made the comments in the AFME’s second edition of its annual report which tracks the progress of the European Commission’s Capital Markets Union (CMU) project.
The report indicated that Europe’s reliance on bank lending has increased with 88 percent of new funding last year coming from banks and only 12 percent from capital markets—a decline from 14 percent on average between 2013 and 2017.
The association also found the EU 27 “lags behind” on fintech funding with only $7.2 billion in investments made since 2009, compared with $120 billion in the US, $20.3 billion in the UK and $23.8 billion in China.
Though despite these figures, AFME found that Europe had strengthened its global leadership in sustainable finance, with the issuance of green, social and dual-purpose bonds.
Issuance of such bonds increased by 16 percent in the EU during 2018 to €69 billion—an increase of €9 billion compared to 2017.
AFME found that Belgium, the Netherlands and Sweden were the leading EU nations in sustainable finance with over 7 percent of bonds issued in 2018 classified as sustainable.
Comparing the 28 EU Member States, AFME stated the UK is leading the EU with regards to the provision of new bond or equity financing for non-financial corporations (NFCs) with 26 percent of new funding derived from markets.
The Netherlands and France followed closely with market instruments providing 18 percent of total new finance in both jurisdictions.
Together the UK, France and the Netherlands account for 49 percent of total new funding for NFCs raised from markets in 2018.
Lewis said: “As the EU begins a new political cycle, there is an increasing focus on the need for the European Commission to further develop the CMU. While some of our report’s indicators show a positive trajectory since last year’s results, such as Europe’s global leadership in sustainable finance, it is clear that there is still much work to be done.”
Lewis made the comments in the AFME’s second edition of its annual report which tracks the progress of the European Commission’s Capital Markets Union (CMU) project.
The report indicated that Europe’s reliance on bank lending has increased with 88 percent of new funding last year coming from banks and only 12 percent from capital markets—a decline from 14 percent on average between 2013 and 2017.
The association also found the EU 27 “lags behind” on fintech funding with only $7.2 billion in investments made since 2009, compared with $120 billion in the US, $20.3 billion in the UK and $23.8 billion in China.
Though despite these figures, AFME found that Europe had strengthened its global leadership in sustainable finance, with the issuance of green, social and dual-purpose bonds.
Issuance of such bonds increased by 16 percent in the EU during 2018 to €69 billion—an increase of €9 billion compared to 2017.
AFME found that Belgium, the Netherlands and Sweden were the leading EU nations in sustainable finance with over 7 percent of bonds issued in 2018 classified as sustainable.
Comparing the 28 EU Member States, AFME stated the UK is leading the EU with regards to the provision of new bond or equity financing for non-financial corporations (NFCs) with 26 percent of new funding derived from markets.
The Netherlands and France followed closely with market instruments providing 18 percent of total new finance in both jurisdictions.
Together the UK, France and the Netherlands account for 49 percent of total new funding for NFCs raised from markets in 2018.
Lewis said: “As the EU begins a new political cycle, there is an increasing focus on the need for the European Commission to further develop the CMU. While some of our report’s indicators show a positive trajectory since last year’s results, such as Europe’s global leadership in sustainable finance, it is clear that there is still much work to be done.”
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