Brussels, 08/01/2013 (Agence Europe) - European cooperative banks back the idea of Banking Union, whose first arm, the creation of a eurozone bank supervision mechanism under the aegis of the European Central Bank (ECB), will be the subject of tough talks between the European Parliament and the EU Council of Ministers in the first quarter of 2013 (see EUROPE 10751). Aware that most of them will continue to be supervised at national level, cooperative banks will be keeping a close eye on the supervision process and the writing of a eurozone bank supervision manual.
High quality supervision requires high quality information, stated Hervé Guider, Executive Rirector of the European Association of Cooperative Banks (EACB) that represents some 4,000 local banks representing a fifth of the market, in an interview with this newsletter at the end of December. He argued for proportionality in the financial reporting requirements for banks because as, he said, it was not yet clear whether it would be the ECB or the European Banking Authority (EBA) which would be responsible for writing the eurozone bank supervision manual. Guider wanted to know how the new system would work in terms of reporting and information quality, how banks would be involved in the process of writing the manual and whether supervisory bodies outside the eurozone would also use the manual. He would like a common set of rules to avoid banks shopping around for the best rules and regulations, explaining that the reliability of the supervisory system would depend, apart from the manual, on reporting frequency, pertinent analysis of the information collected and high-quality stress tests carried out by the ECB, EBA and IMF.
European cooperative banks say they are happy that EU Internal Market Commissioner Michel Barnier is aware of the specific nature and importance of coops. A full three-quarters of the balance sheet of regional banks comprises lending to the real economy, compared with less than a third for the too-big-to-fails. Guider said the challenge was to translate this difference into the legislation under negotiation. For example, in the CRD IV rules on bank funding requirements, capital to be held to balance out the weighted risk of loans to small businesses should be reduced to around 60% (see EUROPE 10744) to give some leeway to banks that lend to the real economy, but the capital requirement increases operated across the board, thus unfairly affecting all equally, he explained. Another example is the draft bank resolution rules and their bail-in measures (see EUROPE 10724), where cooperative banks want the special nature of their business to be taken into account. Guider wonders how the transposition of debt into shares of the business would work for banks owned by their members. (MB/transl.fl)