Brussels, 18/03/2014 (Agence Europe) - Lining up with the European Parliament, the chair of the European Central Bank's supervisory board, Danièle Nouy of France, called during a hearing at the European Parliament on Tuesday 18 March ahead of crucial inter-institutional talks for the bank resolution mechanism (SRM) in the eurozone to be made operational as soon as possible.
After discussing preparations for the single supervision mechanism that comes on stream at the ECB in November, Nouy said: “We do need swift completion of legislation of SRM so that it can be fully operational asap. We need an effective resolution process. Time is always of the essence, we have to shorten it as much as possible. It is crucial to have resolution take place maybe not in 24 hours, but at least over a weekend”.
After the last inter-institutional talks (see EUROPE 11036), the Greek Presidency of the Council of the EU circulated a number of documents on Monday evening to turn the new mandate granted to the Presidency by the Ecofin Council last week into a formal negotiating document (see EUROPE 11037). The three-hour timeline would be maintained for governance of the mechanism for the European Commission, and 24 hours for the Council of Ministers, for any rejection of resolution plans submitted by the future resolution board, according to an EP expert. The MEPs reject this uneven treatment categorically. Addressing MEPs on Tuesday, Competition Commissioner Joaquín Almunia criticised the three-hour deadline: “We need a reasonable deadline and procedure”.
Mutualisation. The member states want the bank resolution fund (SRF) to be set up and managed intergovernmentally during a ten-year transition period. In time, the SRF would be fully mutualised (pooled) and come under the Community method. By then, it would have a budget of €55 billion provided by banks according to their risk profile. In order to move closer to the EP's views, the ministers would be prepared to consider a transition of eight or even five years, indicated an expert. The separation of the timeline for mutualising the national SRF compartments from the timeline for bank contributions to the fund has been discussed but is a non-starter at this stage, due to opposition from Germany.
Nouy said the ten-year period being considered by the member states “is far too long. Preferably, the speed should be doubled, preferably three years”. She added that a common backstop was needed in the transition phases in order to enhance the SRF's borrowing capacity in order to achieve equal treatment of cases, stating: “As long as there are national compartments in the SRM fund, the private/sovereign nexus won't be broken”.
Contributions. Sylvie Goulard (ALDE, France) asked about an agreement in principle on the SRM without deciding on the question of bank contributions to the SRF. Nouy said the latter was “extremely important” and needed to be fleshed out with an impact assessment. She said it could be dealt with in a different legal document so as not to delay the introduction of the SRM. The Financial Times says France fears that its banks would be expected to contribute more than banks in other countries, and wants the level of contributions to be set for each country during the transition period during which the fund is built up. The EP wants this question to be dealt with as a delegated act (over which it has the right of scrutiny), but the ministers want to be the only ones who have a say. (MB and EL)