On Tuesday 2 September, AFME, the advocacy organisation for European wholesale financial markets, put forward proposals to stimulate the integration of the banking market in the European Union.
AFME recommends measures to facilitate the movement of assets within the same banking group, by creating a legal regime that excludes all national specificities (‘country blind jurisdiction’). According to its calculations, “over €225 billion of capital and €250 billion of liquidity” are trapped in the subsidiaries of banking groups, a situation that limits cross-border operations and the competitiveness of European banks.
The financial industry also feels that it is at a disadvantage compared with its international competitors because of rules deemed to be ‘excessive’ in terms of ‘MREL’ assets eligible for bank resolution. And, by being subject to both ‘MREL’ asset requirements and ‘TLAC’ international prudential standards, the EU’s large systemic banks (EU GSIBs) are suffering from an overlap of applicable rules, the organisation adds.
Furthermore, at a time when the Italian bank Unicredit is struggling to acquire the German Commerzbank due to opposition from the German government, AFME points to the complexity and slowness (285 days in the EU, 219 days in the US and 187 days in China) of the procedures inherent in bank acquisitions. This situation would be conducive to “interference” by national supervisors.
Finally, the organisation criticises the inconsistent limits set for large exposures to entities in the same banking group. And it calls for a review of the large banks’ contribution to the Single Resolution Fund (SRF), the financial arm of the ‘resolution’ component of the banking union.
Link to the AFME report: https://aeur.eu/f/i8j (Original version in French by Mathieu Bion)