The European Commission has “always been open” to the possibility of national Deposit Guarantee Schemes (DGS) to intervene in favour of banks “on a voluntary basis”, said Financial Services Commissioner, Valdis Dombrovskis, on Tuesday 2 April, in a dialogue with the European Parliament's Economic Affairs Committee.
When asked by Marco Valli (EFDD, Italy) about the recent General Court ruling validating alternative support in respect of the Italian deposit guarantee fund, FITD, for the Italian bank Tercas, Mr Dombrovskis did not believe that this raised any State Aid issues, arguing that the Commission had given the green light to Italian public support for Banca Carige (see EUROPE 12175/7).
He recalled that in 2015, in the context of the resolution of small Italian banks including Banca delle Marche and Banca Popolare dell'Etruria (see EUROPE 11436/5), depositers had remained protected at all times and retail investors who were victims of misselling of bonds were compensated. “We did it for social reasons”, he said.
The Commission is currently in contact with the Italian authorities regarding the establishment of a €1 billion fund to compensate Italian retail investors who were misled in the acquisition of financial securities that were too risky for their profile.
At the end of March, the General Court annulled a decision of the European Commission, according to which a preventive intervention by the Fondo Interbancario di Tutela dei Depositi (FITD) to support the failing Tercas Bank constituted State Aid (see EUROPE 12219/23). Mr Dombrovskis indicated that the Commission was studying the “implications” of the ruling.
Earlier, before MEPs, the President of the Single Resolution Fund (SRB), Elke König, reiterated her wish that this ruling should trigger a debate on the exact and harmonised role of national deposit guarantee schemes (see EUROPE 12222/27).
EDIS. When asked by Jonás Fernández (S&D, Spain) about the European legislator's inability to implement the European Deposit Guarantee Scheme (EDIS), the third aspect of the banking union in the euro zone, Mr Dombrovskis said he felt the same “frustration”.
Unfortunately, he admitted that “there will be no progress before the EU elections”, either in the European Parliament or in the Council of the EU, whereas, according to him, “with the significant efforts undertaken on the financial risk reduction side, the time has come to move forward on the risk sharing side”.
The only positive thing, in Mr Dombrovskis' view, is that “the work stream is not entirely blocked with the working group at the EU Council” who are responsible for working on the issue and presenting a proposal by June, even if the Commissioner is “not entirely happy with this intergovernmental approach”.
The Eurogroup will discuss the issue on Friday 5 April in Bucharest (see EUROPE 12226/8).
NPL. With regard to non-performing loans (NPLs), Mr Dombrovskis noted the progress made in reducing the stock of non-performing bank loans.
In Italy, the ratio of NPL to banking assets was 9.5% at the end of the third quarter of 2018; this was 12.5% a year earlier. It was highest in Greece (40%) and in Cyprus (21.8%).
The Commissioner welcomed the efforts made in the European Parliament to reach a position on the proposal for a Directive to stimulate the creation of secondary markets for NPLs, with a view to a rapid agreement with the EU Council (see EUROPE 12226/7). (Original version in French by Mathieu Bion)