Brussels, 13/06/2016 (Agence Europe) - On Monday 13 June, the president of the Single Supervisory Board of the ECB, Danièle Nouy, called for the creation of the 'bank deposit guarantee' plank as the third pillar of banking union in the eurozone, to follow the 'supervision' and 'resolution' pillars.
“I cannot imagine banking union without its three pillars. These three pillars mutually reinforce each other”, Nouy told a public hearing at the committee on economic and monetary affairs of the European Parliament, in response to a question by Pablo Zalba Bidegain (EPP, Spain). The European deposit insurance scheme in its own right must be phased in, so as to take account of the “differing starting positions of national deposit guarantee schemes”, said the former head of the Banque de France.
Nouy approves of the work underway at the Council of the EU to make progress “in parallel” on the reduction and sharing of financial risks in the banking sector. On the reduction of risks, the priority must be given to the full application of the European legislation ('deposit guarantee' and 'bank recovery and resolution' directives). Further priorities, she said, include the work to: - harmonise the national options and discretions laid down in the banking prudential rules, with a full guide on the issue to be completed by July; - introduce a minimum level of own funds ('MREL') which can be mobilised immediately in the event of a failing bank (see EUROPE 11556).
The Dutch Residency of the Council of the EU will submit a roadmap to the member states on the finalisation of banking union, which is expected to be adopted at the Ecofin Council to be held in Luxembourg on Friday 17 June (see EUROPE 11565). With regard to this, the president of the single supervisory committee of the ECB referred to a document laying down a timetable of work up to 2020, including measures such as the EDIS system, the treatment of sovereign risk (adjusting the banks' exposure to government debt and the weighting of the sovereign risk) and the creation of a backstop for the Single Resolution Fund (SRF), the financial arm of the 'resolution' plank of banking union. “Risk reduction is music to the supervisor's ears. It is for the legislator to decide”, she said in response to a question from Peter Simon (S&D, Germany).
At the European Parliament, Esther de Lange (EPP, Netherlands), rapporteur on the proposed EDIS, is putting the finishing touches to her draft document. Due to be presented this Tuesday or Wednesday, in other words a few days ahead of the Ecofin Council, it is reported to cover themes other than the EDIS proposal, according to a source close to the dossier.
Pervenche Berès (S&D, France) asked Nouy to respond to comments by the Director General of the European Stability Mechanism, Klaus Regling, to the effect that the function of single banking supervision could be entrusted to an entity independent of the ECB. “I don't see any reason not have support of the ECB in full respect of the principle of separation” between the monetary policy and banking supervision activities, Nouy said, adding that she had seen no conflicts of interest in the matter in 20 years of experience at national and European levels.
When asked by Brian Hayes (EPP, Ireland) about the banks' state of preparedness for the possibility of the UK leaving the EU, Nouy reiterated that the single European supervisor had asked the banks to submit “plans” to deal with any turbulence. “Any bank could be affected”, she stressed. (Original version in French by Mathieu Bion)