Brussels, 14/05/2008 (Agence Europe) - In the wake of their informal Brdo meeting, European finance ministers continued their work on Wednesday 14 May on financial stability, once again examining implementation of the three specific roadmaps adopted during the second half of 2007 on: revision of the European supervision framework for financial institutions operating in more than one member state; the European response to the crisis shaking the financial markets; and financial crisis prevention and management resulting from cross-border bankruptcies (EUROPE 9637). In connection with the strengthening of European level cooperation in financial supervision, ministers agreed on strengthening the role of the committees of supervisors controlling the activities of cross-border financial institutions. These committees bring together the national supervisory authorities from member states where a financial institution is operating. Ministers are convinced that these entities are promoting “greater” supervision of such institutions, insofar as they facilitate information exchange and delegation of the work between the supervisory colleges from the country of origin and the host country, where a common platform is provided for decision making. The Ecofin Council is therefore appealing for the setting up of colleges of supervisors for all financial groups operating in different member states. It will tackle the question of deposit guarantee systems before a strategic debate in the autumn. Another complete inventory of the European Financial Stability Agenda will take place before the end of the year.
In the conclusions they adopted, ministers underline the importance of colleges of supervisors ensuring “an appropriate balance between home/host supervisors”. This declaration is aimed at reassuring member states, particularly those in Central and Eastern Europe where the financial services sectors is often dominated by groups implanted in older member states and who fear a loss of influence in their national supervisory authority when controlling the activities of these groups in their countries. The Ecofin Council also believes that, “appropriate coordination tasks should be given to the home country supervisory authorities, while at the same time ensuring that all information that is relevant for the assessment of a financial group and its components, is made available to the host country authorities”. Ministers also underline the need for the colleges to operate according to the same principles and objectives, no matter if the financial institutions are banks, insurance companies, conglomerates etc. In this context, the three European national regulatory committees (CEBS for banks, CESR for securities and CEIOPs for insurance) are expected to produce mid-2008 operational guidelines to guarantee coherence of the different colleges' working procedures and promote an exchange of best practices.
The Ecofin Council also highlights the importance of taking into account, in discussions on sharing competences and responsibilities between supervisory authorities in the country of origin and the host country, the financial burden sharing between member states that have to intervene to resolve a cross-border financial crisis. Poland has appealed for the Council to recognise the need to deepen its work on this complex and politically sensitive subject. This position has met opposition from Austria, Spain, Netherlands and the United Kingdom. In Brdo, finance ministers, central bank governors and supervisory authorities developed an expanded Memorandum of Understanding (MoU) on financial crisis management resulting from cross-border bankruptcies. This MoU will enter into force once all stakeholders sign it. One of the principles in the expanded MoU involves financial burden sharing (EUROPE 9503). Andrej Bajuk, the Slovenian minister for finance declared that they had agreed on the importance of burden sharing in financial crises and underlined the “primacy of initiatives (that should) come from the private sector”.
In connection with revision of the “Lamfalussy” process, characterising adoption of European legislation on financial services, the acting president of the Ecofin Council also mentioned the introduction of “a European dimension” that member states are asked to include in the national supervisory authorities' mandate. This European dimension will promote greater convergence of supervisory practices in Europe, as well as the application of guidelines adopted by the European supervisory committees. The national authorities that do not implement these guidelines will have to explain why they have not done so. Ministers also took note of the European Commission's proposals for enhancing how the European committees of national regulators work (EUROPE 9634). They are calling on the latter to review by the end of the year the decisions establishing these committees in order to ensure coherence in their mandates and work. They also call for qualified majority voting to be introduced into the European committees' decision making, as well as European financial publication formats to reduce the industry's “reporting costs”.(M.B.)