EU regulators plan stress tests for non-banks

Good morning and welcome to FirstFT. Right here’s what’s on immediately’s agenda:

• Greenland says it’ll flip to China if the US and EU shun its mining sector

• European corporations hail Japan’s embrace of non-US defence offers

• Toyota mounts software program problem to Tesla and Chinese language rivals

• The rise of robotic canine

We start with an unique story on EU regulators planning their first stress take a look at to search for vulnerabilities within the monetary system exterior banks. The transfer displays fears concerning the fast development of much less regulated teams corresponding to hedge funds and personal fairness.

What are regulators proposing? European authorities plan to look at the influence on the broader monetary system of a possible market disaster, together with pension funds and insurers. Officers on the EU’s foremost monetary watchdogs are nonetheless discussing the main points of such a system-wide stress take a look at of non-bank establishments, however they’re optimistic that it may very well be launched subsequent 12 months, in response to two individuals concerned within the talks. The plans observe the same train by the Financial institution of England final 12 months.

Why does it matter? For the reason that 2008 monetary disaster, the availability of loans has shifted from banks’ stability sheets in direction of different corporations that behave like conventional lenders however are extra flippantly regulated. Supervisors are rising more and more involved concerning the opacity and potential dangers these corporations might current.

The plans for a stress take a look at would most likely elevate critical issues amongst hedge funds, non-public credit score teams and cash market funds that they may very well be subjected to higher scrutiny and restrictions by European regulators sooner or later. Read the full story.

Right here’s what else we’re preserving tabs on immediately:

• EU: The Common Affairs Council meets in Brussels. The agenda consists of Spain’s request to recognise Catalan, Basque and Galician as official languages of the bloc.

• Canada: King Charles addresses the state opening of parliament in Ottawa, the primary time a reigning monarch has carried out this responsibility in individual in 50 years.

• Financial knowledge: The Convention Board releases its US shopper confidence index.

• Outcomes: US automotive elements retailer AutoZone stories outcomes.

Be part of Monetary Occasions consultants tomorrow to get clear-sighted evaluation of probably the most consequential geopolitical rivalry of our time: the US-China showdown. Register for the webinar now and put questions to our panel.

5 extra high tales

1. US and European mining corporations have to hurry up and put money into Greenland, in any other case it should look elsewhere for assist exploiting its minerals, together with from China, the Arctic territory’s enterprise minister has warned. Nuuk would favor to work with “allies and like-minded companions”, however Greenland was “having a troublesome time discovering our footing” within the changing nature of the western alliance, the minister added.

2. European defence corporations say Japan has accelerated its opening to non-American suppliers of army gear for the reason that election of US President Donald Trump. Tokyo’s rising willingness to look past its conventional defence accomplice for procurement comes after Trump rattled US allies by elevating questions on Washington’s commitment to joint defence.

3. Toyota has promised to put in a homegrown working system inside its best-selling RAV4 sport utility car by subsequent March, in a bid by the world’s largest carmaker to catch up with Tesla and Chinese rivals’ software lead.

4. A number of EU governments have signalled they need a fast take care of the US to move off Donald Trump’s risk of fifty per cent tariffs on the bloc, urging the European Fee to maintain speaking to Washington somewhat than taking the trail of confrontation.

5. Police mentioned a 53-year-old man has been arrested after a automotive collided with crowds at Liverpool Soccer Membership’s Premier League victory parade. British Prime Minister Sir Keir Starmer described the scenes rising from the incident as “appalling”. Here are more details.

Information in-depth

Germany’s efforts to swell the ranks of its armed forces have hit a snag because the nation has misplaced contact with virtually 1mn potential reservists resulting from strict knowledge safety legal guidelines, its reservists’ affiliation has mentioned. The setback comes as Berlin seeks a stronger role in European defence and security.

We’re additionally studying . . . 

• ‘Process discretion’ decline: Digital productiveness instruments might sap staff’ sense of management of their work and scale back scope for trying new ways of doing things, writes Sarah O’Connor.

• US-South Korea: Commerce tensions are constructing, the army alliance is underneath strain and Korean home politics are fraught. Can Seoul negotiate a way out?

• Eurozone bonds? The EU now has a novel likelihood to capitalise on investor doubts concerning the US and promote the euro as a reserve currency, writes Marieke Blom, chief economist at ING.

• Nick Sweet, the treasurer of Nigel Farage’s Reform UK, has racked up greater than £100mn of economic losses after the property developer’s Luxembourg-based funding portfolio backed a number of failed ventures, together with an augmented actuality start-up and a excessive vogue home, an FT evaluation discovered.

Chart of the day

4 of Europe’s oldest industrial teams, Schneider Electrical, Siemens AG, ABB and Legrand, have added more than €150bn to their market caps on the again of hovering demand for knowledge centres pushed by the increase in synthetic intelligence for the reason that launch of ChatGPT in November 2022.

Take a break from the information

Robotic canine are multiplying quick all over the world, metamorphosing from amusing playthings to trusted companions deployed in a variety of terrains from manufacturing crops to battlefields. Michael Peel takes a take a look at the growing use of caninoids as a part of the FT’s particular report on robotics.

Further contributions from Irwin Cruz and Benjamin Wilhelm