Strasbourg, 05/07/2006 (Agence Europe) - On 4 July the European Parliament adopted the own initiative report of Joseph Muscat (PES, Malta) on the continued consolidation of the financial services sector. He “considers that it is high time that the EU institutions…open the debate on the precautionary control structure for financial markets” in Europe and therefore calls for “the creation, before the end of 2006, of a committee of wise men” to study and report back six months after it has been set up “the implications of the consolidation of the markets and financial institutions for precautionary control, financial stability and crisis management”. This committee should be capable of “proposing concrete ideas on the simplification of multiple requests for information and the improvement of the current structures”.
In the domain of prudential control, Parliament is pleased that the Capital Adequacy Directive 2006/49/EC, which “focuses on the principle of control by the country of origin” and includes new “cooperation” provisions between national authorities and “demands for transparency” from the surveillance authorities. It is encouraging the three European committees of national regulators (CECB, CESR and the CECAPP) to continue their work. MEPs consider that the current networks of authorities and control systems are, however, in danger of not being able to deal with the serious crises produced by market failures and call on the Commission and the national authorities to elaborate “appropriate proposals for effective crisis management”.
Parliament points out that cross-border consolidation is less developed than consolidation at a national level and “takes note of the obstacles identified by the Commission investigation”. At the end of 2005, the Commission made a report public that identified the main barriers to cross-border consolidation in financial services and proposed ways for rectifying the situation, such as increased control convergence by the national surveillance authorities and the lifting of certain legal and tax constraints (EUROPE 9067). The EP is said to be “concerned” by the fact that the financial institutions involved in cross-border activities are “often confronted by costly regulatory and precautionary practices, in terms of money and the different demands for information”. It calls on “the Commission to formulate proposals on how to overcome” the tax-based obstacles, such as “inter-group VAT” and “fiscal processing of dividends”. MEPs also want the Commission to put forward a strategy for integrating the wholesale financial markets.
The EP also points out that, “mergers and acquisitions remain the most frequent growth strategy for financial institutions”. The EP explains that such a process in the sector “certainly has a positive effect on competitiveness” but is “often accompanied by a negative perception” of it due to “fears of job losses”. It therefore calls on the sector to “assume all its responsibilities in social affairs and develop accompaniment measures” for training personnel for changes in the financial institutions.