Bershidsky on Europe: UK Woos China

Here's today's look at some of the top stories on markets and politics in Europe:

Here's today's look at some of the top stories on markets and politics in Europe:

U.K. Chases Chinese banks and tourists

The U.K. is about to let Chinese banks to operate branches rather than more heavily regulated subsidiaries in London, allowing them to use their full resources for wholesale operations in the City. Normally, international banks can't open branches in the U.K., but Chancellor George Osborne is making a bold political play, hoping to consolidate London's position as the number one venue for yuan trading. China's central bank recently signed a major currency swap agreement with the European Central Bank, and the country's three biggest banks have set up their European headquarters in Luxembourg. To Osborne, these are signs that the competition is winning and the time has come to trump its efforts. At the same time, visa requirements for Chinese visitors to the U.K. are being simplified: They will be allowed to file a single application to visit both the U.K. and continental Europe. It will also be possible to receive a "super priority" visa within 24 hours of application. In a world where Chinese wealth is increasingly important, Britain is keen to catch up with other EU members such as Germany in building a relationship with China.

German lobbying delaysEU CO2 regulations

At a meeting in Luxembourg on Oct. 14, EU environment ministers postponed a key vote on car emissions curbs agreed with the European Parliament in June. The agreement calls for a limit of 95 grams of CO2 emitted per kilometer, down from the 130 grams decreed from 2015. Germany, however, demanded that the new limit be postponed until 2024. A number of other EU nations, including the U.K., Poland, Hungary, Slovakia and the Czech Republic, backed the German proposal. German car makers have large factories in the latter three countries, and the U.K. and Poland are reportedly helping Germany in exchange for future concessions. Persistent lobbying by the auto industry determined the German position: Daimler and BMW will be hard put to meet the new emissions standard. According to visitor lists obtained by the business daily Handelsblatt, car industry leaders have had more access to Chancellor Angela Merkel than any other business representatives.

Burberryannounces new CEO after defection to Apple

London fashion house Burberry said its chief creative officer Christopher Bailey will take over as chief executive in mid-2014, after current company head Angela Ahrendts leaves for Apple. Ahrendts, an American, was the highest-paid CEO in the U.K. last year, making $26.3 million, but she agreed to a second-tier job at Apple, as vice president in charge of retail and online stores reporting to chief executive Tim Cook. At Burberry, Ahrendts and Bailey focused heavily on online sales, using videos of the clothes and model testimonials about how they feel in them. They have been spectacularly successful, bringing the once-fusty British house to the forefront of the fashion world. Apple, unable to produce any ground-breaking technological innovations since founder Steve Jobs died in 2011, is now positioning the iPhone as a fashion accessory with a (moderately successful) line of colorful handsets and a (hugely popular) gold-colored top-of-the line model. So hiring a tech-savvy fashion retailing guru is a logical decision. For Burberry, Ahrendts' departure is a major loss, as a fall in its share price indicates.

Former RBS traderinvestigated for currency manipulation

A U.K. investigation into forex trading manipulation has zeroed in on Richard Usher, a former Royal Bank of Scotland employee now working for JPMorgan Chase. Usher took part in electronic chats with other currency traders within a group known as "The Bandits' Club" or "The Cartel." According to The Wall Street Journal, RBS handed the chat logs to the U.K.'s Financial Conduct Authority to check for signs of collusion in setting the daily "fixes," currency rates established during specific time intervals and used for contract settlements. The Swiss financial authority, Finma, is holding a separate forex manipulation inquiry. Once the details emerge, the scandal is likely to be equal in scale to the one involving Libor, the London interbank interest rate. It is already clear that common market benchmarks in general need stronger safeguards against collusion.

Eurogroupto end Spanish bank bailout

Eurogroup President Jeroen Dijsselbloem said after a meeting with Spanish government officials that the international bailout of Spanish banks will end this year. "The general idea is that the banking program is closed," he said. Spain used $56 billion out of the $135 billion offered to recapitalize its banking system. Now, private investors are showing an interest in Spanish banks and the government does not feel it needs to accept austerity conditions that come with the international aid. Investors are generally interested in post-bailout Europeans banks: U.S. hedge funds have even flocked to Greece to invest in its financial institutions. The logic is obvious: a balance sheet clean-up under strict supervision plus cheap funding is good for any bank. The ultimate success of the bailout is still in question, however, dependant on the ability of Spain's "bad bank," Sareb, to unload the properties it bought up from the banks. The first large asset sale, worth $135 million, was closed in August and another one, worth $477 million, is coming up. Even so, most of the toxic assets remain with Sareb, which is majority-owned by private investors to keep it off the Spanish government's books.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

    To contact the author on this story:
    Leonid Bershidsky at

    Before it's here, it's on the Bloomberg Terminal.