On Monday 18 November, the Chair of the ECB’s Single Supervisory Mechanism (SSM), Claudia Buch, warned MEPs against weakening European prudential rules for the banking sector in order to achieve other political objectives, such as boosting European economic competitiveness or reducing the administrative burden.
“Regulation and supervision are a response to the risks” that have been identified, and we have seen just how damaging and costly banking crises can be, said Ms Buch during a debate in the European Parliament's Committee on Economic and Monetary Affairs, in response to a question from Fernand Kartheiser (ECR, Luxembourger), who was questioning whether all of the rules adopted at national, European and international level were really necessary.
Questioned by Gilles Boyer (Renew Europe, French) and Dirk Gotink (EPP, Dutch), she did not deny that the existing rules are “complex”, because the banking profession has itself become very complex. Added to this are features specific to different countries, in particular the rules governing mortgage credit.
This is why the single supervisor of the major banks within the banking union is trying to focus its action on the most relevant risks as well as better communicating its expectations when supervisory deficiencies are detected. Banks are also invited to improve the collection of data to assess and manage the risks to which they are exposed, for example geopolitical risks or exposure to alternative banking sectors.
However, insisted the President of the SSM Council, “I would warn against reducing the complexity [of EU rules] and giving up in terms of the resilience [of the banking sector] that we have achieved”. Nor did she look favourably on the creation of a 28th regime for the European banking sector, as recommended in the Draghi report mentioned by Fernando Navarrete Rojas (EPP, Spanish). My preference would be to fill in the gaps in the existing framework in terms of resolution and to complete the banking union “rather than to create a different regime”, she argued.
Jonás Fernández (S&D, Spanish) asked Ms Buch about an analysis that illustrated that capital requirements for European banks would be higher if current prudential rules were applied to them, as revealed by the Financial Times. The Chair of the SSM Council indicated that this analysis, which will be published shortly, applied only to the major systemic banking groups (G-SIBs). (Original version in French by Mathieu Bion)