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Exclusive: new euro bailout fund may not have sufficient staff by ferujkll sdff
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Exclusive: new euro bailout fund may not have sufficient staff |
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Business,Business News,Business Opportunities
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Exclusive: New euro bailout fund may not have sufficient staff By Matthias Sobolewski Posted 2012/05/23 at 7:35 am EDT BERLIN, May 23, 2012 (Reuters) — An external consulting firm charged with evaluating the structureof Europe's new permanent rescue facility has raised questionsabout whether it will have enough staff to function effectively,according to documents seen by Reuters. In a May 12 letter addressed to Klaus Regling, the head of thebloc's temporary rescue fund, partners at A.T. Kearney warn thatthe approved staff of 75 for the European Stability Mechanism (ESM)may prove "too small" if the debt crisis rumbles on for severalyears. The opinion comes less than six weeks before the ESM is due to comeinto force and as worries mount that Greece could be forced out ofthe currency bloc, a step that could fuel contagion to other memberstates, forcing the new facility into immediate action.
"With 75 people, the team will manage a balance sheet which ispotentially 50 percent larger than the largest Sovereign WealthFunds (Norway and Abu Dhabi), but with a fraction of the peopleemployed," the letter from A.T. Kearney reads. "Equally, the size is roughly twice the one of the APG Group, thelargest European pension fund, which has roughly 700 people infinancial operations alone." A.T. Kearney notes that unlike such funds, the ESM will have littleor no freedom to choose the majority of its assets, as these willdepend on which euro zone countries require financial assistance.Because of this, it says an argument can be made for having a smallteam that is of very high quality. But the consultants add: "Finally, as a market practitioner, wealso observe that the current team size, as approved may be toosmall in size to operate effectively should the current crisis modecontinue over a number of years." The consulting firm says in its letter to Regling that it has beenhelping his team develop the ESM framework since December 2011.
"UNIQUE RATIOS" European leaders agreed late last year to move forward theintroduction of the ESM by a full year to July 1, 2012. It willraise funding and provide loans to euro zone states threatened bysevere financing problems, and also have the power to buy the bondsof stricken members of the currency bloc. The mechanism is to have an effective lending capacity of 500billion euros that will be built up over a period of several years. In a separate official document on the staff structure of the ESMprepared by Regling's team and dated May 11, it is acknowledgedthat each staff member of the new facility will have "significantresponsibility" for the equivalent of 6.6 billion euros if the fulllending capacity is exhausted.
"These are unique ratios in financial services and a highlyresponsible working environment is needed to ensure errorlessoperations," the document reads. The existing European Financial Stability Facility (EFSF), whichwill run alongside the ESM for a year before being phased out,employs around 25 people, but it also uses to the help of the staffof the European Central Bank for market operations and the GermanDebt Office for some other tasks. The EFSF runs three financing programs -- for Greece, Ireland andPortugal -- and officials say it is understaffed. The ECB has notyet been asked to act as an agent for market operations for theESM, although some officials said it was likely that it would.
According to the ESM framework document, euro zone governmentofficials have given the new permanent fund a mandate to grow to75-100 staff. The budget foresees a staff of 50 when it goes intooperation in July, with staff rising to 75 by the end of the year. One EU official familiar with the planning described the proposedsize of the ESM staff as "fair", and said it was based on theexperience of the EFSF and an opinion of an external consultant. (Writing by Noah Barkin). I am an expert from Wholesale electrical equipment at lowest price, usually analyzes all kind of industries situation, such as ethernet patch cables , shielded ethernet cable.
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