Brussels, 24/06/2014 (Agence Europe) - In early September 2014, the European Central Bank will publish a final list of eurozone banks of systemic importance, two months before becoming the eurozone bank supervisory body.
The chair of the bank supervisory board at the ECB, Daniele Nouy, said at a conference organised by the Irish Bank Federation on Monday 23 June that, under the legislation setting up the bank supervisory mechanism (SSM), “the first list of significant institutions will be published no later than 4 September. Work on this is underway and we will shortly begin the process of notifying each bank of our initial assessment”.
Under banking union, any bank is deemed to be of systemic importance (or “too-big-to-fail”) if it meets one of the following conditions: - total assets of over €30 billion; - total assets as a share of host country's GDP of over 20% (except where the total assets are below €5 billion); - cross-border assets accounting for more than 20% of total assets or liabilities of the bank as long as the total assets are of more than €5 billion; - at least the three biggest banks of each participating country, irrespective of size. In addition, the ECB shall directly supervise any eurozone bank that has received direct recapitalisation from the European stability mechanism.
On 31 October 2013, the ECB unveiled an initial list of 128 banks (124 headquarters and four subsidiaries) whose balance sheets are currently being assessed. The list includes: 24 banks from Germany, 16 from Spain, 15 from Italy, 13 from France, 7 from the Netherlands, 6 each from Austria, Belgium and Luxembourg, 5 from Ireland, 4 each from Greece, Cyprus and Portugal and 3 each from Estonia, Finland, Latvia, Slovenia, Slovakia and Malta (see EUROPE 10949).
Stressing the importance of convergence of bank supervision practices, Nouy said the supervisory manual (an ECB internal document) “provides a common methodology based on the best supervisory practices in Europe and beyond (…) and we intend to publish a 'Guide to supervisory practices and methodologies in the SSM' before we take on supervision so that both banks and the public will understand how supervision will be conducted”. The ECB uses Irish central bank software that has been upgraded to meet the demands of the eurozone bank supervisory mechanism. Nouy says that further field-testing will be required and “we should therefore not expect fully fledged new harmonised approaches to be applied completely consistently already in 2014. For this year, the assessment methodologies in place in national regulatory bodies will still play a major role”. (MB)