Brussels, 27/05/2015 (Agence Europe) - On Tuesday 26 May, the European Parliament's economic and monetary affairs committee (ECON) failed to adopt a negotiating position on bank reform plans (see EUROPE 11320).
As amended by MEPs in a pretty stormy debate, the report by Gunnar Hökmark (EPP, Sweden) left it for supervisory bodies to decide on the best measures to be taken vis-à-vis big European banks that run excessive levels of risk in their portfolios, measures that may include greater capital requirements or hiving off investment banking from high street banking. Garnering 29 votes in favour to 30 against, with 1 abstention, the report was rejected, but all EPP, ALDE and ECR MEPs supported the rapporteur. The rejection of the report was due to a marriage of convenience among the European Left, Europhobes and the far Right.
Reacting to the vote on Twitter, Hökmark talked about the “paradox in Econ vote, votes against mandatory separation, support for rapporteur, but the report voted down by alliance of the left and the extremes”. Germany's Jakob von Weizsäcker, who is responsible for piloting the talks for the S&D group, wants automatic separation of bank activities and is pleased that the big step by the bank lobby had been stopped. Elisa Ferreira (S&D, Portugal) said: “The attempt from the EPP to impose a narrow majority ended up in defeat”, and the S&D Group wanted to continue working to find the broadest possible compromise among the major political groups in Parliament. On behalf of the Greens/EFA Group, Belgium's Philippe Lamberts welcomed the vote: “The final draft legislative report would have failed to provide meaningful separation of retail and investment banking activities. This would have robbed the reform of the core element it was intended to achieve and, as such, the fact it was rejected is a good thing. However, it reflects badly on the rapporteur and the parliament's credibility. We now need to go back to the drawing board and ensure a proper reform”.
The coordinators of the political groups on the ECON committee will meet soon to decide on the next steps to take. Ferreira spoke of a new rapporteur, but Hökmark does not seem to be open to this. A Parliament source said that such a move would enable the S&D to appoint a different MEP to pilot the talks. Von Weizsäcker is considered too hard-line by some of his Social Democrat colleagues.
The Liberals want to avoid the danger of the legislation being stalled if the Parliament cannot decide on a clear negotiating position. At the Council of Ministers, work is continuing at a steady pace, but agreement in principle is not yet in reach. The approach that seems to dominate is for legislation that does not introduce at EU level automatic separation of retail and investment banking when excessive levels of risk are taken. At the Council, the Socialist governments of France and Italy and the Social Democrat members of the German coalition government “are on the same page as us”, Sylvie Goulard told a handful of reporters ahead of the vote on Tuesday 26 May. She called for coherent legislation at European level in order to avoid a segmentation of the market since some countries have already introduced legislation of their own. If the draft legislation remains in the doldrums for too long, this could encourage the European Commission to withdraw it, warned Lamberts on Tuesday.
Banking lobby concern. The European Banking Federation (EBF) urges policy makers to rethink their priorities, stating in a press release: “The outcome of the ECON vote shows that there is no clear consensus on what is right for big universal banks in Europe. The confusing vote is indicative of the uncertainty that the European banking sector faces at a moment when Europe needs to revitalise economic growth”, as ... “the BSR proposal could lead to a loss in European investment capacity equal to five percent”. AFME, which represents big European investment banks, made similar comments: “We are concerned that bank structural measures are being considered at the European level without taking stock of the significant structural changes the banking sector is already engaged in driven by the G20 agenda and the Basel committee. The failure to agree in the European Parliament on the BSR regulation highlights this is a divisive issue”, adding: “We urge policymakers to consider the range of existing reforms and the need to develop Europe's capital markets in adopting any new measures”.
The Finance Watch public interest advocacy group on financial issues says the rejection of the amended Hökmark report provides a “new chance to get bank structure reform right”. Christophe Nijdam, Secretary General of Finance Watch, said: “Structural reform of the EU's too-big-to-fail banks is essential if we are to restore trust in the banking sector and a level playing field among banks. Last night, ECON rejected the Hökmark report, which would have added layers of administrative burden without benefiting the public interest”. (Mathieu Bion)