In Strasbourg on Tuesday 24 October, the European Commission presented its 2018 work programme, which features new initiatives, but also lists 15 pending proposals for which no agreement is likely and which the institution plans to withdraw (see EUROPE 11890).
These include the controversial proposed regulation setting out structural measures to improve the resilience of EU banks, which was presented in 2014.
This withdrawal marks an “unfortunate turning point in the European agenda on regulating large banks”, German MEP Jakob von Weizsäcker said on Wednesday 25 October, who is tasked with leading discussions on behalf of the S&D Group on this dossier.
This legislative proposal aimed to prevent some 30 major European systemic banks from speculating on their own account, in other words investing on the market using their own funds or borrowing at low rates thanks to the implicit guarantee granted to them by the member states due to their 'too big to fail' status (see EUROPE 11007).
From the beginning, the initiative was roundly criticised by Germany and France, which felt that its ambition exceeded the scope of the French and German legislation. The bank industry underlined the risk of dramatically upsetting the structure of the banking sector, when the European economy is scarcely out of crisis (see EUROPE 11808).
Over at the European Parliament, the report was rejected at the committee on economic and monetary affairs in May 2015 by 30 votes to 29 and one abstention, showing that no agreement could be reached (see EUROPE 1322). The deadlock was down to the position held at the time by rapporteur Gunnar Hökmark (EPP, Sweden), the S&D Group argues in a press release.
The organisation Finance Watch, which also regretted the European Commission's decision, considers that the separation of the major European banks presenting excessive risks on their investment portfolios was a vital element of the financial rules to reduce the likelihood of another financial crisis.
In a document explaining the withdrawal decision, the Commission says that the dossier has made no progress since 2015, adding that the “main financial stability rationale of the proposal has in the meantime been addressed by other regulatory measures in the banking sector”, such as reinforcing the quantity and quality of banks' equity and new liquidity requirements. (Original version in French by Marion Fontana)