“A two-day summit in Brussels…”

EU leaders meet in Brussels to discuss Ukraine and the economy

The 27 heads of state and government will give the very final push to a €2-billion package of military aid for Kyiv, which for the first time includes €1 billion for joint procurement of 155 mm artillery shells.

Leaders will discuss the possibility of topping up the assistance with a further €3.5 billion in the coming months, although this will require further negotiations between ambassadors before turning into concrete action.

Ukrainian President Volodymyr Zelenskyy will address the room via video on Thursday to share the latest updates from the war and explain what his country needs to withstand Russia’s invasion.

Also on the table will be a new industrial strategy that aims for the bloc to have 40% of the key technology it needs to combat climate change, such as solar panels and wind turbines, built within its own borders by 2030.

The meeting in Brussels comes mere days after Chinese President Xi Jinping and Russian President Vladimir Putin held one-on-one talks in Moscow and committed to prioritise ties.

Speaking to Euronews before the summit, European Council President Charles Michel said the bloc was not “naïve” about the ever-closer links between China and Russia.

But, he noted, the rapprochement should not deter Brussels from engaging with Beijing.

“We need to engage with China, not because we agree on everything with China, on the contrary, but because we need to defend our interests and to defend our principles,” Michel told Euronews.

China is not an official item on Thursday’s agenda, but the Xi-Putin reunion is expected to come up during discussions, particularly amid growing fears that Beijing might supply lethal aid to Moscow.

Although Chinese officials have insisted the fears are unfounded, European leaders have nevertheless warned Beijing against taking such a step, calling it a red line and a cause for sanctions.

“It’s important that China supports the international law, the stability through the UN Charter,” Michel told Euronews.

ECB ready to preserve ‘as necessary’ the eurozone’s stability, Lagarde pledges amid market turmoil

The European Central Bank is ready to “respond as necessary” to maintain stability in the eurozone, President Christine Lagarde has pledged amid persistent market turmoil across Europe’s banking sector.

Lagarde, however, admitted the real extent of the ongoing tensions remained “to be seen” but would probably lead to “tighter” conditions for lending.

“We are monitoring market development closely and stand ready to respond as necessary to preserve price stability and financial stability in the euro area,” Lagarde said on Monday afternoon.

“The euro area banking sector is resilient, with strong capital and liquidity positions.”

Financial markets have been in disarray since the collapse of two mid-size American banks, Silicon Valley Bank and Signature Bank, earlier this month.

Europe was further roiled after a dramatic plunge in the stock of Credit Suisse, Switzerland’s second-largest bank, following a refusal from its main shareholder, Saudi National Bank, to provide fresh aid.

The drop in value raised the alarm of a possible domino effect and forced the Swiss authorities to intervene in an unprecedented manner, pushing UBS to acquire its long-time rival, Credit Suisse, for $3.25 billion or around €3.05 billion.

“I welcome the swift action and the decisions taken by the Swiss authorities,” Lagarde told Members of the European Parliament.

“These actions were instrumental for restoring orderly market conditions and ensuring financial stability.”

Meanwhile, the European Central Bank, together with five other central banks, announced coordinated action to facilitate access to dollars and ensure liquidity across the banking system.

European bank shares fall as crisis leaves mark

Banking shares slipped in Europe on Thursday as the instability that surged through the global banking system this month is prompting investors to adjust to more challenging economic and lending conditions ahead.

The Federal Reserve on Wednesday indicated it was on the verge of pausing further increases in borrowing costs after the collapse of two U.S. lenders earlier this month triggered worries of contagion throughout the banking system.

Fed Chair Jerome Powell said the banking industry stress could trigger a credit crunch with “significant” implications for a slowing U.S. economy.

The turmoil that began in the United States spread quickly around the globe, ensnaring one of Europe’s biggest banking names in 167-year-old Credit Suisse AG CSGN.S, which was forced into a shotgun marriage with Swiss peer UBS Group UBSG.S to avert a wider crisis.

Citigroup downgraded Europe’s banking sector on Thursday, warning the rapid pace of interest rate hikes will further weigh on economic activity and lenders’ profits.

“The European banking sector’s fundamentals look healthy. But the ongoing confidence crisis could limit banks’ risk appetite and reduce the flow of credit,” Citigroup equity strategists led by Beata M Manthey said.

Switzerland’s financial market regulator FINMA on Thursday defended its decision to impose steep losses on some of Credit Suisse bondholders as part of its rescue, saying the decision was legally watertight

UBS buys back bonds days after issue to buoy investor confidence

UBS Group UBSG.S said on Wednesday it would buy back 2.75 billion euros ($2.96 billion) worth of debt it sold just days ago in a bid to boost confidence among bondholders rattled by its $3 billion rescue of rival Credit Suisse.

UBS’ takeover saw holders of Credit Suisse’s Additional Tier 1 bonds getting written down to zero while shareholders will receive some UBS stock, an unusual move that sees stock owners benefiting from better terms.

UBS is buying back its own bonds at the price at which they were sold on March 9 prior to the Credit Suisse deal rather than at market prices, compensating investors after a sell-off this week.

“They’re trying to be friendly to investors who purchased just before the mess,” said Jerome Legras, head of research at Axiom Alternative Investments, a fund which owned Credit Suisse AT1 bonds.

UBS in a statement said it was buying back a 1.5 billion-euro 4.625% fixed-rate note due March 2028 and a 1.25 billion-euro 4.750% fixed rate note due March 2032.

Macron determined to push ahead with pension reforms despite anger

French President Emmanuel Macron said on Wednesday that the pension bill he pushed through without a vote in parliament needs to be implemented by the “end of the year”. 

He is sticking to his decision to raise the retirement age from 62 to 64 – despite mass protests.

Macron, who made the comments in an interview broadcast on national television, said the bill will “continue its democratic path.”

The Constitutional Council needs to review the bill in the coming weeks, and it can only be turned into law after the body gives its approval.

It was the first time Macron spoke publicly since his government forced the pension bill through parliament last week, using special powers. 

This extraordinary measure triggered protests across the country, some of which were violent. 

Protesters claim pushing the deeply unpopular bill through parliament was anti-democratic and that there is enough money to fund pensions, despite Macron’s claims to the contrary. 

Polls show 70% of the French oppose the reforms. 

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