Brussels, 22/07/2014 (Agence Europe) - On Tuesday 22 July, the European Parliament's economic and monetary affairs committee stressed the need to respect EU legislation to the letter when deciding how to calculate the contributions banks must make to member states' bank resolution funds and the common eurozone bank resolution fund, the SRF.
“Are you sure that the work done is consistent with Level 1 rules (Ed: in the BRRD directive and SRM regulation) on proportionality and the risk adjustment of fees?” Gunnar Hökmark (EPP, Sweden) asked the European Commission representatives, warning that the Commission would do well to stick to its mandate.
The Commission will publish two draft items of legislation by the end of September, a delegated act from the BRRD directive laying down the calculation method for banks' contributions to member states' bank resolution funds (which the EP can reject en masse); and a Council of Ministers' implementation act laying down the calculation method for banks involved in banking union (where the EP has no scrutiny rights) (see EUROPE 11106).
Elisa Ferreira (S&D, Portugal) regretted the short time available for examining the draft legislation that has been submitted to the MEPs. Especially when one is a new MEP who hasn't worked before on legislation that had a forceps delivery during the previous parliament, complained Kay Swinburne (ECR, United Kingdom). Sylvie Goulard (ALDE, France) stressed the importance of measures to protect the integrity of the single market. Sven Giegold (Greens/EFA, Germany) urged his colleagues to carry out a “serious” analysis of the draft legislation that will require banks to cough up €70 billion in the EU28, €55 billion of it in the eurozone alone. He called on the Commission to come up with a methodology that goes beyond the lowest common denominator that member states can agree on and instead deals properly with the question of banks that are deemed to be “too big to fail”.
On behalf of the European Commission, Olivier Guersent took stock of the technical preparations. He said the Commission was trying to follow its mandate faithfully but there was more than one way to respect it and it was important to have joined-up proposals to ensure the integrity of the single market.
A bank's contribution to a resolution fund will depend on its size and the type of risks it runs. Small banks are reckoned to pose less of a risk to the financial system and, from 2015 onwards, they will have to pay a set amount depending on their size. The other, usually bigger, banks will pay an amount weighted in terms of the risks that they run.
Work is focusing on the criteria for deciding what constitutes a small bank. Several German MEPs wish to protect “Sparkassen” and have criticised the chosen methodology. Others warn that even small banks can be exposed to a raft of risks. If a national authority feels that a small bank presents a high risk, it can use the risk-weighted calculation methodology for it, pointed out Guersent.
Other key issues are deciding on the type of risks run by the banks and how they should be weighted. Several categories of risk will be used in the prudential bank rules (counterparty risk, financing risk, liquidity risk and the like), each divided into several sub-criteria. (MB)