In Paris on Tuesday 18 September, the chair of the Single Supervisory Board of the ECB, Danièle Nouy, said that cross-border banking groups should be able to benefit from the advantages of Banking Union in the Eurozone, for instance by granting broader waivers in terms of solvency, liquidity and large exposures.
“Countries still tend to put fences around their banking sectors. Such ring-fencing was deemed reasonable during the crisis, but times have changed”, she told a conference in Paris. She went on to say: “in my view, we should pull down these fences. In particular, supervisors should be able to grant cross-border waivers for solvency, liquidity and large exposures. When it makes sense of course, and with supervisory conditions where appropriate”.
This was echoed by the President of the ECB, Mario Draghi. “While the free movement of liquidity across borders is made possible by cross-border waivers, the practical application of these waivers is hampered by the remaining national prerogatives in the regulatory framework which allow national authorities to apply large exposure limits on intragroup lending and ring-fence equity”, he told the same conference.
Lifting these restrictions is one of the issues of the inter-institutional negotiations underway on the 'banking risk reduction' package (see EUROPE 12045). (Original version in French by Mathieu Bion)