Brussels, 10/02/2014 (Agence Europe) - The chair of the Supervisory Board of the single supervisory mechanism, Danièle Nouy, has pledged to demonstrate that the European Central Bank (ECB) will fully assume its role as single supervisor within the single supervisory mechanism (SSM) for banks in the eurozone, from November 2014.
“We have to accept that some banks have no future (…). We have to let some banks disappear in an orderly fashion, and not necessarily try to merge them with other institutions”, said Nouy, in an interview published by the Financial Times on Monday 10 February.
In cooperation with the European Banking Authority (EBA), the ECB has undertaken a health check exercise in the banking sector, including an assessment of assets and a wave of stress tests (see EUROPE 11010). The aim is properly to ensure transparency regarding the solidity of the sector before the ECB starts directly supervising nearly 130 systemic banks in the framework of the banking union currently being set in place. The results of the health check will, however, be published before the single banking resolution mechanism, the second plank of banking union, is in place by 2015 (see other article). Nouy referred to the “firm commitments” of the states to have safety nets at national level.
Ring fencing. The former head of banking supervision for the Banque de France went on to say that banking union should be sufficiently integrated to avoid the ring fencing of assets whereby, in the event of financial turbulence, a national supervisor prevents the assets of single entities of the group on its territory from being transferred to another entity in the same group. “Surplus deposits in one country will be available in another country within the SSM mechanism”, ECB Vice President Vítor Costancio told the Tatra Summit at the end of January (see EUROPE 11005).
Lastly, Nouy said that, in the medium term, banks should be obliged to hold own resources for their investments in sovereign debt. (MB/transl.fl)