The President of the Single Resolution Board, the European authority responsible for resolving major failing banks in the euro area, wants a gradual harmonisation of national insolvency regimes for banking groups, without denying the Herculean scale of the task.
“Let’s start small and consider that failing banks need to be safely liquidated”, Elke Koenig told the European Parliament’s Economic and Monetary Affairs Committee (ECON) on Tuesday 3 December in response to Markus Ferber (EPP, Germany). She took as an example the system in force in the United States, where the action of “the FDIC” makes it possible to combine an administrative liquidation procedure with the activation of a federal bank deposit insurance scheme.
Moving forward in this complex area would help the Single Resolution Board to more easily refer cases of failing banks to the competent national authorities, but not sufficiently systemic to be resolved at European level, with a view to their liquidation.
On Wednesday, the ECON Committee is organising a hearing on national insolvency regimes.
Ms Koenig also reiterated her support for the completion of banking union in the euro area by setting up a European Deposit Insurance Scheme (EDIS). The Eurogroup is invited to adopt, on Wednesday, a new roadmap on the finalisation of the banking union (see EUROPE 12381/15).
To Aurore Lalucq (S&D, France), who asked her about the difficulty of selling financial derivatives in banks’ trading portfolios, Ms Koenig replied that this question was a priority and above all related to the “liquidity” of this portfolio.
As for the integration of climate risk into the activities of the Single Resolution Board, this approach is mainly, at this stage, the responsibility of the ECB and national supervisors, its President said.
At the end of 2018, the average MREL capital deficit that could be mobilised in the event of a bank resolution was 2.0% of total risk exposure amount (TREA) compared to the target set by the Single Resolution Board, i.e. a total of €137 billion. (Original version in French by Mathieu Bion)