There were many reactions on Friday 17 July to the European Commission communication on the measures it intends to present in order to strengthen the competitiveness of the European banking sector (see EUROPE 13912/15).
On behalf of the EPP group in the European Parliament, the German MEP Markus Ferber welcomed “the change in approach” by the EU institution, albeit a late one, with the emphasis previously placed on resilience and now on economic competitiveness (see EUROPE 13828/13).
As regards the Banking Union and the ‘deposit insurance’ component, the German Christian Democrat supports the withdrawal of the ‘EDIS’ legislative proposal and warns that the proposal replacing it must “not advocate, through the back door, the pooling of deposits”.
As for the introduction of proportionate rules, Mr Ferber warns against “exemptions” from which small and less complex European banks would benefit. “We have made that mistake in the EU for years, and it does not fit. Carve-outs from an overly complex regime remain a complex regime; what we need is a genuinely separate regime for small, domestically focused banks”, he argued.
Also in the European Parliament, the S&D group welcomes the Commission’s diagnosis of the obstacles to integration in the banking single market. However, notes Spanish Socialist Jonás Fernández, its conclusions are wrong: “The excessive regulation that needs correcting is that which fragments the single market” (see EUROPE 13853/22).
As regards EDIS, Mr Fernández is calling for more ambition. The Commission’s new proposal “cannot be a second-best solution that does nothing to stem the flow of financial contagion from bank balance sheets to public treasuries”, he said. On the contrary, he stresses, completing the Banking Union should be placed “at the heart” of the strategy aimed at strengthening the sector’s competitiveness.
Among supervisors and regulators, the Single Resolution Board (SRB) welcomes the Commission’s overall approach, notably on deposit insurance and liquidity in the context of bank resolution. “This aligns with the SRB view that competitiveness is best fostered not only by simpler, fewer rules, but also by completing the Banking Union to reap the benefits of a true Single Market”. On the industry side, the European Savings Banks Group (ESBG) views some of the ideas put forward favourably, such as: - appropriate rules for less complex banks to facilitate financing of the economy, simplification of the interaction between prudential requirements linked to supervision; - resolution and macroprudential factors; - raising the minimum ‘output floor’ applicable to banks using an internal model to calculate their capital requirements (see EUROPE 13865/8).
For the French Banking Federation (FBF), the Commission communication sends “a positive signal” that must be translated into “concrete and rapid” reforms so that Europe can rise to the challenge of the massive investment required. The organisation is calling in particular for proposals on “financing housing, major projects and international trade”.
On behalf of the employers’ organisation BusinessEurope, Markus J. Beyrer said that, for the Commission, the priority is to deliver “targeted amendments” in order to “strengthen banks’ ability to finance the European economy, while safeguarding financial stability and preserving a global level playing field”.
By contrast, the organisation representing the financial interests of European citizens, Finance Watch, warns against proposals which, in its view, will lead to a “less resilient” Europe. It points to a sound diagnosis, but many “wrong responses”. “Instead of genuine progress on the shared European safety net necessary to advance market integration, the report targets the safeguards” put in place after the 2008 financial crisis, it adds.
As for the proposals revising prudential requirements, Finance Watch states these measures will weaken the banking sector, notably by placing financial supervision within a competitiveness agenda. “It is striking to see how the initiative inspired by Mr Draghi (...) has degenerated into an initiative aimed at boldly boosting short-term profitability, mainly for the largest banks”, Finance Watch researcher Julia Symon said. In her view, “reducing capital requirements would give banks some one-off room for manoeuvre on their balance sheets, but this would not translate into more productive investment in the economy”. (Original version in French by Mathieu Bion)