The European Parliament’s Committee on Economic and Monetary Affairs (ECON) continued its examination on Monday 13 June of the legislative package aimed at finalising the transposition in the European Union of the ‘Basel III’ agreement on banking prudential requirements (see EUROPE 12935/17).
Rapporteur on this dossier, Jónas Fernández (S&D, Spain) hopes that the discussions between the negotiators of the political groups on the “good basis” of the European Commission’s proposal (see EUROPE 12821/2) will lead to a compromise after the summer break. The deadline for tabling of amendments to these two draft reports is 11 July.
On the creation of an output floor for banks using internal models to calculate their capital requirements, the rapporteur wishes to “preserve the calibration” for the threshold set at the consolidated level of a banking group, while introducing “a new conditionality”. In his view, the Regulation will have to have an effect on groups “that have abused internal models”. Otherwise, “the effect would be a decrease in capital in the banking sector and that is what we must avoid”, he said.
In order to take into account the specificity of the European sector and to give it time to adapt to the rules deriving from ‘Basel III’, transitional measures should apply for bank exposures to unlisted companies (until 2032) and for low-risk residential mortgage credits.
In the first case, Mr Fernández said that the measure would apply to companies with an annual revenue of less than €500 million. In the second case, the rapporteur wants the measure to be extended to the EU in its entirety from the outset, removing the option for Member States to apply it, and linking the measure to the environmental performance of the property for which the loan was taken out.
Unlike the rapporteur, Markus Ferber (EPP, Germany), speaking on behalf of his Austrian counterpart Othmar Karas, said it was necessary to wait for the European Banking Authority’s report, due in 2023, before introducing more stringent reporting requirements on environmental, social and governance (ESG) risks.
Gilles Boyer (Renew Europe, France) repeated his call for an anti-dumping clause that would penalise banks from third country jurisdictions that do not fully comply with the ‘Basel III’ agreement, as the EU is ahead of its international partners in its legislative work. On the transitional provision for unlisted companies, he wished to differentiate between those that cannot benefit from a rating and those that do not want one.
Italians Marco Zanni (Identity and Democracy) and Raffaele Fitto (ECR) warned against imposing capital requirements that would excessively penalise banks for financing the economy in a period of great uncertainty such as the current one. The output floor provision should not be more stringent than the one included in the ‘Basel III’ agreement, said Mr Zanni. In addition, in his view, linking the environmental performance of a property to the transitional period for residential mortgage credits may penalise less affluent households.
Finally, Dimítrios Papadimoúlis (The Left, Greece) stressed the importance of transitional clauses and, for the one related to mortgage credits, suggested distinguishing between first-time home buyers and real estate investments.
See the ‘Fernández’ draft reports on the legislative package:
- the Regulation: https://aeur.eu/f/23e
- the Directive: https://aeur.eu/f/23f (Original version in French by Mathieu Bion)