Brussels, 22/11/2011 (Agence Europe) - On Tuesday 22 November, EU Internal Market Commissioner Michel Barnier announced the setting up of a 'Group of the Wise' in the near future to look at the dividing up of banks, telling the European Parliament's economic and monetary affairs committee that a very high-ranking group would be examining bank structures and the dividing up of banks, comparing it with the Larosière Group on financial supervision. He said the banking group would issue its findings in the first few months of 2012.
Barnier had already announced plans to examine the impact of dividing up banking in Europe (where universal banking is predominates). The idea is to prevent retail banking and the funding of the real economy from suffering from problems arising in the investment banking arm of the bank (see EUROPE 10481). In the United Kingdom, the independent Vickers Committee recommended in September that retail banking should be hived off from the rest of British banks, without forming a separate body.
Programme for next year. The commissioner outlined the main legislation to be unveiled next year for financial services. The first item to be unveiled is legislation to boost transparency and comparability of retail financial products to ensure better defence of consumer interests in their day-to-day dealings with banks and other financial bodies. He said every investor must receive the right information and have their interests taken into account before any product is promised. Another item of legislation will improve information for investors and introduce a standard document at EU level on information that service providers must provide.
The MEPs quizzed the commissioner about several items of legislation under negotiation. Commenting on credit rating agencies, Jean-Paul Gauzès (EPP, France) said that the EPP would be lodging amendments to ensure a proper system for struggling eurozone countries, liking the idea of suspending the rating of struggling countries as long as this did not generate suspicion. Barnier said that the new legislation would aim to prevent rating agencies from repeating the debacle at a key point of the previous week when Standard and Poor's had provided key clients with false information that France might be on the verge of being downgraded (see EUROPE 10495).
Pascal Canfin (Greens/EFA, France), who was the EP rapporteur on credit default swaps (CDS) (see EUROPE 10495), called for EU rules on CDS issuers, which usually did not have to meet the same capital requirements as their clients. Barnier said he was prepared to work on legislation to this effect.
On the increase in bank capital requirements, the commissioner said infringement proceedings were in the pipeline against member states which have not transposed the previous changes to the rules. In response to Vicky Ford (ECR, UK), who wanted higher capital requirements to be set in the draft CRD IV (Capital Requirements Directive), Barnier said that the draft on the negotiating table allowed a degree of flexibility for member states, so that they can demand higher capital of their banks if required due to the state of the mortgage market, for example. He said that the UK and Sweden would be allowed to introduce higher requirements as long as they act in the interests of the single market. (MB/transl.fl)