Brussels, 08/11/2007 (Agence Europe) - A public hearing of the EPP-ED group on Wednesday 7 November looked at future surveillance of the banking industry, discussing how to improve cooperation among national banking regulators since it is proving impossible to create an EU banking watchdog at this stage.
Kerstin af Jochnick, a member of the Committee of European Banking Regulators (CEBR), said it would be possible to improve cross-border prudential surveillance by strengthening networking among national regulators called upon to cooperate to control cross-border banks, and strengthening the possibility for the CEBR to make greater use of the opinions it delivers during the legislative process.
Freddy Van den Spiegel, director of Belgian bank Fortis, described the EU banking market as comprising establishments only active in one country and four dozen cross-border companies which already control 50% of the market. Bringing up incoherence between the rapid integration of markets and control practices which tend to depend on the situation in particular member states, he said cross-border banks were frustrated at the mosaic of local practices. He said the EU had responded to this by setting up European Level 3 committees under the Lamfalussy Approach (CEBS, CEBR and CEIOPS) but politicians were calling for greater convergence in terms of controls without saying what exactly they wanted to converge. The CEBS' inability to introduce coherent reporting at company level, and the differing interpretations by national regulators of the term 'insolvency' bore witness to this, he said. Believing it was too early politically to call for an EU regulator, he called for a beefing up of the instruments already available to the European committees along with the concept of 'lead supervisor' at company level, as set out in the report by the expert group on market surveillance he belongs to (see EUROPE 9523).
A representative of a German regional bank welcomed the way national regulators are close to their markets, saying that the current control structures should continue. He added that introducing an EU regulator would necessarily lead to longer reaction times. Paul Wright, speaking for the Financial Services Authority (FSA) in the UK, said there was further potential for cooperation on Level 3 committees. To improve the situation, he agreed that a change of behaviour would be required from regulators. They would have to agree to be challenged by their peers and accept a more results-based culture. He called for generalised use of the 'lead supervisor' idea. (M.B.)