A former Portuguese Finance Minister, Maria Luís Casanova Morgado Dias de Albuquerque intends to draw on her experience during the 2008 financial crisis to ensure that her work as European Commissioner for Financial Services focuses on financial stability.
In her written answers to questions put to her by MEPs ahead of her hearing on Wednesday 6 November, Ms Albuquerque puts the creation of a ‘European Savings and Investments Union’ at the top of her priorities. “My vision is clear: the Savings and Investments Union should be a key instrument to support the EU’s broader objective of boosting the Union’s sustainable competitiveness and facilitating the (climate) transition”, in particular through the Clean Industrial Deal (see EUROPE 13511/17), she said.
Since the public authorities cannot finance this transition alone, “our main aim”, says the Portuguese Commissioner-designate, should be that “European savings are channelled as effectively as possible to finance productive and strategic investments, maximising the benefits for citizens and businesses”.
In her view, citizens can be “big winners” from such a policy if they invest their savings in the capital markets via a specific product that is “simple and inexpensive”. To do this, they should be well informed of the risk associated with an investment while remaining “adequately protected”. Efforts will also be needed to improve their financial education.
“Within the first few months” of taking office, if confirmed, Ms Albuquerque will present “a global approach” to setting up a Savings and Investment Union by 2032.
In terms of concrete measures, she draws on the ‘Letta’ report on the internal market (see EUROPE 13393/3), the ‘Draghi’ report on European competitiveness (see EUROPE 13478/1) and the ‘Noyer’ report on the Capital Markets Union (see EUROPE 13411/13), citing in particular the need to: - expand incentives for ‘business angels’; - increase the appeal of European stock markets; - reduce regulatory fragmentation in the areas of insolvency and taxation; - encourage retail investment; - advance towards more integrated supervision.
On the question of whether to go further in the supervision of financial players at EU level, the former Morgan Stanley investment banker does not take a position, simply promising to consult stakeholders. As for relaunching the securitisation market, which enables banks to lighten their balance sheets by reselling loans in the form of securities, Ms Albuquerque first wants to study “the problems” inherent in this market, referring to a specific consultation currently underway (see EUROPE 13501/27).
“If there is evidence that immediate action is justified, we will have to act”, she adds.
Banking Union. The Commissioner-designate also stresses the importance of completing the Banking Union in the euro area.
This will involve an Interinstitutional Agreement on the ‘CMDI’ legislative package, which aims to strengthen the management of a banking crisis. While the European Commission has openly criticised the position of the Council of the EU (see EUROPE 13437/4), Ms Albuquerque merely promises to work on drawing up rules to improve existing arrangements.
The same applies to the creation of a European Deposit Insurance Scheme (EDIS): she wants to help find a solution that protects savers and minimises the risk of contagion in the event of a bank failure. Adopted before the European elections, the position of the European Parliament’s Committee on Economic and Monetary Affairs is “interesting” in this respect, as it identifies “the starting point for a compromise” (see EUROPE 13394/14).
Basel III. On the finalisation of the integration into the EU of the so-called ‘Basel III’ banking prudential standards, the former minister is seeking a balance. “We must implement the rules, not roll back. But we must also be mindful of international competitiveness, and the possible consequences of delays and divergences in the implementation of standards by other important jurisdictions”, she stresses.
The EU is the first jurisdiction to have incorporated the Basel III standards, which will apply from January 2025, into its legislation. However, it has postponed until January 2026 the entry into force of provisions concerning the market activities of investment banks (FRTB) (see EUROPE 13460/9).
More generally, Ms Albuquerque advocates a “regulatory pause” to allow the new framework to take shape, although “targeted adjustments” may be necessary, particularly with regard to barriers to the cross-border provision of banking services.
It should also be noted that the Commissioner-designate is in favour of a “consolidation”of the banking landscape in the EU as a factor for efficiency and innovation, while Germany takes a dim view of the attempted takeover of Commerzbank by the Italian bank Unicredit (see EUROPE 13493/20).
Finally, with regard to the banking sector’s exposure to non-bank financial institutions, Ms Albuquerque notes the existence of “vulnerabilities”, such as inadequate preparation for the drying up of liquidity or excessively leveraged debt. She will draw on a consultation currently underway to assess whether action is needed, for example, to better understand the liquidity risks emanating from money market funds.
Sustainable finance. The portfolio proposed for the Commissioner-designate includes the regulatory framework governing sustainable finance.
In the Commissioner-designate’s view, the European rules in place, in particular the Sustainable Finance Disclosures Regulation (SFDR), are showing “early (...) encouraging signs”. It is true that this framework entails “new costs in the short term”, but “the costs of inaction on the climate challenge are becoming ever more apparent”, she points out. She is not announcing any substantial new reporting rules in this area, but only “targeted tweaks” designed to simplify reporting and make it easier to implement, particularly for small financial players.
The delegated acts designed to apply the EU Taxonomy Regulation will also be reviewed to ensure that it covers “more economic activities”and facilitates the implementation of the “do no significant harm” environmental principle. Similarly, changes to the environmental, social and governance (‘ESG’) reporting requirements for financial products will be considered to improve the reliability and comparability of the data.
Anti-money laundering. Lastly, with responsibility for combating money laundering and the terrorist financing, the former minister will, if confirmed, have to support the Member States in implementing the revised regulatory framework by 2027 (see EUROPE 13420/20).
The European Commission will also present specific delegated acts. These texts “will set out in detail how entities in the financial and non-financial sector alike are expected to comply with important requirements. Work on the common tools and methodologies for supervising these sectors is also being prioritised”, says Ms Albuquerque. And she promises to act firmly to ensure that the EU does not repeat “the mistakes” of the past, “where late or incorrect measures adopted or implemented at national level jeopardised our collective ability to fight financial crime”.
To see Mrs Albuquerque’s written answers: https://aeur.eu/f/dzu (Original version in French by Mathieu Bion)