On Tuesday 15 July, Claudia Buch, Chair of the ECB’s Single Supervision Mechanism (SSM), said that “simplification should not weaken [prudential] standards” for banks.
“Lowering resilience [of the banking sector] would be a dangerous road to go down”, Ms Buch told the European Parliament’s Committee on Economic and Monetary Affairs. In her view, “there are no indications of credit supply constraints [...] related to bank capital requirements”.
In response to a question from Fernando Navarrete Rojas (EPP, Spanish), she therefore considered it “very important” for the European Union to apply the ‘Basel III’ international prudential standards, as a “signal” to other jurisdictions.
However, she did not rule out the possibility of improving internal procedures to speed up the application of the rules and reduce the administrative burden. “We are making the decision-making process on capital-related decisions, approvals of securitisations and authorisations faster”, she said. She added: “We are reducing the complexity of internal model approvals and the stress-testing process. And we are mapping reporting requirements to identify and remove overlaps and increase proportionality”.
On this last point, she acknowledged the difficulty of finding the right balance between simplification and preserving the quality of the data banks need to assess risks, particularly climate risks.
Like the Chair of the Single Resolution Board (SRB), Dominique Laboureix (see EUROPE 13681/28), Ms Buch also insisted on another way of simplifying EU rules: harmonisation at EU level. “Many rules related to bank governance, accounting or insolvency legislation differ across Member States because the laws enacting EU directives take national specificities into account, which adds to the complexity”, she noted.
Securitisation. Marie Toussaint (Greens/EFA, French) asked Ms Buch what she thought of the legislative proposal to relaunch the financial securitisation market (see EUROPE 13661/26).
Admittedly, securitisation was one of the causes of the spread of the 2008 financial crisis, she said, rejecting any weakening of the existing rules, while deeming certain “improvements” possible in terms of transparency and speed of decision-making.
Securitisation will not help companies gain greater access to equity finance, she also pointed out.
US tariffs. Finally, Ms Buch discussed the potential impact on European banks of trade tensions between the EU and the US.
The increased volatility seen on the markets has had no real impact on European banks, which are well capitalised. In the event of an increase in the tariffs imposed, the consequences would be visible in the longer term in the form of lower growth, a deterioration in the quality of assets or borrowers’ ability to repay.
As a result, “banks’ provisioning requirements could increase”, noted Ms Buch. (Original version in French by Mathieu Bion)