Brussels, 09/11/2015 (Agence Europe) - France is up in arms against the informal agreement reached by the two MEPs of the EPP and S&D groups on structural reform in the banking sector.
The dossier is not officially on the agenda of the Ecofin Council on Tuesday 10 November, but it could be referred to in the framework of an information point on legislative work underway in the financial sector. Paris is working behind the scenes to ensure that the Hökmark/von Weizsäcker agreement is watered down when it is approved by the committee on economic and monetary affairs of the European Parliament, on a date which has yet to be announced (see Twitter @Agenceurope). We have been informed that the coordinators of the political groups and the (shadow) rapporteurs will meet behind closed doors on Wednesday 11 November to discuss the dossier.
At the end of last month, Gunnar Hökmark (EPP, Sweden), rapporteur of the European Parliament on this dossier, and Jakob von Weizsäcker (S&D, Germany) reached a compromise on the main elements of the proposal, which aims to prevent the excessive risks run by a bank on its market activities from jeopardising its retail banking activities (see EUROPE 11422). According to the compromise hammered out between the two MEPs, only a handful of very large European banks would be obliged to prove to their supervisors that their market activities do not represent excessive risks. In the event of failure, this supervisor would be able to choose between ordering a separation between market and retail banking activities and imposing a significant increase in own funds. It would be the responsibility of the European Commission, with the opinion of the European Banking Authority (EBA), to set the level of this significant capital increase. A broader range of credit establishments, including the British banks and the London-based subsidiaries of American banks, would be affected by the EU-wide ban on proprietary trading.
Last week, the French Prime Minister, Manuel Valls, stuck his head above the parapet in person to emphasise the extremely negative opinion held by France, which is deeply committed to the universal bank model, of the compromise reached between the two MEPs. Paris believes that it is unbelievable, from the point of view of the single market, that a Community legislative text can cover just “three banks” in the EU - BNP Paribas, Société générale and Deutsche Bank - and afford the United Kingdom differentiated treatment. At least a dozen banks should be covered by the text, according to the establishments identified by the G20 and the informal agreement reached by the Ecofin Council in June (see EUROPE 11339).
The French authorities also argue that it will be impossible for the banks in question to prove that their market activities do not present any excessive risks for financial stability, contrary to what is laid down in the Hökmark/von Weizsäcker agreement and that furthermore, no supervisor could reasonably issue a public statement in writing to the effect that it is reasonable to believe that the risks inherent to a universal bank will not materialise. (Original version in French by Mathieu Bion)