French Socialist Pervenche Berès is of the opinion that if the Banking Union in the Eurozone is to be finalised, the way to do so is to create a 'banking deposits' pillar, based on genuine solidarity between the national regimes.
"The European Parliament needs to reach a position as soon as possible that is as balanced as possible and allows for the creation of a genuine third pillar of the Banking Union. If we say that we have achieved the third pillar, when in actual fact we have not added solidarity to anything, it's not worth it!", the coordinator of the S&D group in the committee on economic and financial affairs of the European Parliament told EUROPE in an interview on Thursday 1 December (our translation). Expressing frustration at the slow pace of the discussions in Parliament, she said that her group would start again on the basis of the Commission's initial proposal to table its amendments, which it would do by mid-December.
The Commission's proposal, which was presented in November 2015, provides for the creation, in three stages, of a European deposit insurance system (EDIS), to be fully pooled by 2024 (see EUROPE 11437).
Berès criticised the approach championed by Esther de Lange (EPP, Netherlands), who has "completely rewritten the Commission's text". Instead of ending up with a fully pooled European deposit insurance system, Parliament's rapporteur has come up with a European system in two phases: - between 2019 and 2024, a reinsurance mechanism gradually covering the liquidity requirements of the national deposit guarantee schemes; - post-2024, an insurance system that gradually covers losses suffered (see EUROPE 11664). "The first stage no longer accounts for much, apart from extremely difficult conditions to move to the second pillar, which actually brings the process to an end, because the third pillar is no longer mentioned", the MEP observed.
According to the French Socialist, de Lange's approach, which mobilises the national guarantee instruments in the first instance, certainly has the merit of responding to the concerns of member states such as Germany, which are extremely reluctant to allow their banking sector to rescue the defaulting banks of other member states. But it contributes to the imbalance between the three pillars of banking union, Berès argued.
At European level, work on the finalisation of Banking Union is going hand in hand with the work on reducing the financial risks, in line with the roadmap adopted by the Ecofin Council in June (see EUROPE 11575). In this regard, the Commission recently presented a legislative package to tighten up banking prudential rules (see EUROPE 11674). On this dossier, "you can see the same tensions coming through: there are those who want to take risk reduction right to the very end, who feel that the MREL requirements (for own funds that can be mobilised in the event of bank resolution: Ed) don't go far enough", Berès said, and those holding a much more flexible position in order to avoid hampering the financing of the economy.
The S&D group has been given the responsibility for drafting a report on the revision of the banking prudential rules (CRD-CRR package), whilst the EPP group will be responsible for steering the discussions in Parliament on the revision of the 'BRRD' directive governing the national bank recovery and resolution schemes.
As an agreement at the G20 requires the TLAC standard to enter into force in 2019, the Europeans have no choice but to make progress in 2017 on the 'reduction of the financial risks' chapter. However, the French Socialist does not believe that a political agreement at Council on the EDIS proposal is at all likely before the German general elections scheduled for autumn 2017. (Original version in French by Mathieu Bion)