Brussels, 08/02/2013 (Agence Europe) - The withdrawal of five banks from the panel of experts that draws up the Euribor benchmark is a matter of concern to the ECB and the European Commission, so much so that the latter is considering making it compulsory in legislation to be unveiled in the second half of the year for banks to send representatives to the Euribor panel.
On Friday 8 February 2013, EU Internal Market Commissioner Michel Barnier said: “The Commission is therefore following developments on Euribor, in particular the recent departure of a number of panel banks.... The Commission will propose further legislation on benchmarks in the second quarter of 2013 in order to further clarify the framework under which benchmarks should operate”.
The idea of making involvement on the panel compulsory was mooted during a public consultation organised by the European Commission in the autumn on interbank and commercial benchmarks, explained Barnier, adding that the UK has made submission to LIBOR compulsory. “Any banks considering withdrawing from the contributing panels should therefore take into account that they may be required to rejoin the panels”, commented Barnier.
Since the scandal of manipulation of interbank benchmarks broke out, the panel of banks involved in setting Euribor has shrunk from 44 to 39 after the following banks left: Citigroup and DekaBank November 2012, Bayern LB on 1 January 2013, Rabobank on 3 January and Raiffeisen Bank International on 15 January.
On Friday, the Commission published a summary of the consultation exercise results, indicating that the participants recognised the need to take action to restore confidence in the falsified benchmarks that are subject to conflicts of interest, although there is disagreement about how this should be done. The participants were wary about the risks of regulatory intervention for fear that the rules may be insufficiently flexible or suited to the market.
In the spring of this year, the European Banking Authority (EBA) and the European Financial Markets Authority (EFMA) will publish recommendations on setting and drafting benchmarks. Last month, the two bodies issued recommendations on Euribor governance and supervision of banks involved in setting Euribor (see EUROPE 10762). (MB/transl.fl)