Brussels, 11/10/2013 (Agence Europe) - Portuguese MEP Elisa Feirrera (S&D) broadly endorses the European Commission's proposal to set up a single bank restructuring mechanism within Banking Union.
In her draft report to be discussed at an European Parliament committee on Monday, Feirrera gives the European Parliament and national parliaments a greater role, scrapping some of the European Commission's powers of initiative and stressing the need for a backstop that the common resolution fund could use in the form of public lending facility, preferably though a European institution.
Feirrera says: “Although the Banking Union will only be complete after the establishment of a common European Deposit Guarantee Scheme, the creation of a single resolution mechanism is already an essential step in that direction.” Describing the Commission's proposal as balanced and ambitious, she backs the idea of setting up a bank resolution fund at EU level. In her draft report, she says that if financing for bank resolution were to remain in the hands of the member states, the connection between the banks and the public purse would not be severed. She feels that full credibility of the SRM will depend on the resolution fund's capacity to deal with the job it's been given, even during the long transition period of ten years before the fund is fully set up.
Backstop. Feirrera adds: “To ensure the immediate availability of adequate financial means for the purposes established in this Regulation, the Fund should only become operational when a loan facility has been established, preferably from a Community public instrument. Full availability of funding is essential for the credibility of the whole system.” The Commission's initial draft did not include this. The rapporteur says: “The Fund shall be used only after a loan facility has been established, preferably from a Community public instrument, to ensure the immediate availability of adequate financial means for the purposes of this Regulation. Any loan from that loan facility shall be reimbursed by the Fund within an agreed timeframe.' The fund should be wholly financed by industry to ensure total budget neutrality for the system.
Ferreira would like to give the Parliament greater powers in the appointment of the chair of the resolution committee, a body comprising national authorities responsible for winding up failed banks. For the appointment of the chair and vice-chair of the resolution committee, the Commission only foresees a hearing of the candidates at the Parliament before they are formally appointed by the Council of Ministers, but the Feirrera report says that instead, the Commission should submit a list of candidates to the Parliament for approval and the same should apply for their removal from office.
For the most urgent cases Feirrera says the Commission should decide whether or not to place an entity under resolution. She removed the phrase stating that the Commission should act “on its own initiative.” Likewise, the Commission should await the review by the resolution committee of its own recommendations when reviewing a decision concerning a financial entity.
In line with the European Parliament's view of the BRRD directive on national bank resolution systems, Feirrera says that the raiding of non-guaranteed deposits (in other words, deposits exceeding €100,000) should be avoided where possible when banks are wound up. (EL/transl.fl)