The European Parliament’s Committee on Economic and Monetary Affairs adopted its negotiating position with the Council of the European Union on Wednesday 2 February, on the ‘Daisy Chain’ proposal for a directive revising the regulatory framework for the resolution of large failing banking groups.
Adopted by a large majority (45 votes in favour, 2 against and 11 abstentions), the draft report improves on the initial proposal via “the introduction of a cap for the deduction mechanism (‘Daisy Chain’) [Editor’s Note: own funds that can be mobilised in the event of bank resolution] proposed by the Commission” and “the inclusion of a request for the Commission to assess the impact of the ‘Daisy Chain’ framework on the different banking group structures to avoid any unintended consequences”, said Jónas Fernández (S&D, Spain), rapporteur on this file, in a statement.
Another improvement is “the establishment of a transitional arrangement that allows the application by the European resolution authority of a transitional deduction regime applicable to MPE [multiple point of entry] groups under certain restrictive conditions”.
In an earlier debate, Mr Fernández had been accused by the EPP group of defending the Spanish cause instead of seeking a European solution (see EUROPE 12868/16). He cited the example of Spanish banks, active in Latin America, which had been forced by the Bank of Spain to use the MPE model. This model was more costly from a prudential point of view, but better guaranteed financial stability.
EPP group negotiator Othmar Karas welcomed the agreement, which provides “sufficient time for institutions to implement the new regime and for markets to digest additional issuances”. According to Karas, “safeguards” have been introduced when dealing with large banks that use the MPE model and that have subsidiaries in third countries.
By the end of 2021, the EU Council had adopted its negotiating position on this proposed directive (see EUROPE 12859/7), which is part of the legislative package finalising the integration of the ‘Basel III’ agreement in the EU (see EUROPE 12821/2). (Original version in French by Mathieu Bion)