Brussels, 26/05/2011 (Agence Europe) - The European Commission is pursuing its aim of introducing as much harmonisation as possible for bank solvency ratios (funding requirements), despite opposition expressed recently by seven member states (see EUROPE 10383). Bank funding requirements are covered by the Basel Committee's Basel III Agreement and a European source says they would be compulsory for a normal economic situation. Mentioning the danger of member states competing over the size of solvency ratios, the source said that maximum harmonisation would be an important part of the EU' s future legislation to transpose the Basel III agreement to improve the quality and quantity of banks' funding by 2019 (see EUROPE 10123). The source wondered why some countries were so concerned about the issue, which is only one of a series of regulations (another of which covers proper supervision).
Changing the EU rules governing financial rating agencies is another key issue in the package of draft legislation to be passed in the next few weeks. Aware of the oligopolistic nature of the Big Three dominating the ratings market, the Commission is looking into how to make the industry more competitive. The European source explained that it was not easy to see exactly how to change matters, but the nationality and legal status (public or private) of rating agencies were not particularity relevant. The source said that when it comes to rating national debt, it would be possible to intervene on the question of timing (the frequency at which ratings are adjusted).
An issue that will soon be on the negotiating table is the future system to cope with the collapse of a bank. The Commission is preparing a system that would enable a bank's creditors to cover losses (“bail-ins”). In Sweden last month, EU Internal Market Commissioner Michel Barnier said that he was certain that bail-ins had to be part of the package of tools available for supervisors under special rules and clearly defined circumstances if it is inevitable that a bank will go under. (M.B./transl.fl)