The Maltese Presidency of the Council of the EU will be put majorly to the test this semester in the financial dossiers: the start of the inter-institutional negotiations on the Commission's legislative proposals to breathe new life into the market for securitised products in Europe. However, the Slovak Presidency has made life considerably easier for it by concluding a number of dossiers before passing the baton.
The most sensitive dossier concerns securitisation. In 2015, the Council agreed on this text in a record time of three months, but the European Parliament dragged its heels for a year. Parliament's rapporteur, Paul Tang (S&D, Netherlands), was not particularly enamoured with the legislative proposal. He argues that lessons should be learned from the crisis of 2008, when these products came under fire for the part played by 'sub-prime' mortgages.
The main issue likely to be the subject of a difference of opinion with the Council is the risk retention threshold. The Commission set this threshold at 5%, corresponding to the threshold retained by the European Banking Authority (EBA). In their negotiating position, the member states adopted this same threshold. After several months of negotiations, the political groups in Parliament agreed on a figure of 10%, with a small number of exceptions (if the EBA so decides, if market conditions so require). Additionally, banks will be able to reduce this threshold for the 'first losses' tranches.
The Slovak Presidency of the Council of the EU paved the way for several dossiers. At the end of 2016, it scored a number of successes in various financial proposals: the framework for the monetary funds, the proposed regulation modifying the rules on the prospectuses that European companies wishing to raise capital must publish to provide potential investors with information and the directive on shareholders' rights. On these three dossiers, inter-institutional agreements were reached.
The Slovak Presidency also succeeded in obtaining a general approach of the Council to the Commission's proposals to revise the regulations of European legislation on the activities of European venture capital funds (EuVECA) (345/2013) and social entrepreneurship funds (EuSEF) (Regulation 346/2013). Parliament is lagging behind and it is therefore by no means certain whether or not the Maltese Presidency of the Council will have to supervise into-institutional negotiations on this dossier.
General approach. Two other legislative proposals have arrived late in the day. The first of these aims to provide the EU with a single legal framework to deal with corporate insolvency. The aim is mainly to deal with problems as soon as possible in order to give honest entrepreneurs a second chance.
The Commission's entire strategy is based on creating a preventative framework aiming to return companies to viability and avoid bankruptcy. This framework should be available as soon as the possibility of insolvency emerges. The aim is to avoid the costs incurred by legal proceedings and to allow the company to continue its activities. The Commission also recommends creating automatic early-warning mechanisms accessible to accountants, banks or court registrars on the basis of the late payment information of the company, to prevent directors from sitting on their hands.
A further proposed regulation aims to provide a framework for the recovery and resolution of central counterparties (CPP). Under this regulation, the central counterparties would be obliged to draw up recovery plans, including measures to overcome any form of financial difficulty calling for more resources than they have available to them to manage default and more than required of them by EMIR. (Original version in French by Élodie Lamer)