Brussels, 20/11/2008 (Agence Europe) - Member States' representatives to the EU decided by a qualified majority on general guidelines on Wednesday 19 November 2008 on the draft directive updating EU rules (Directive 2006/48/EC) on capital requirements for lending establishments (see EUROPE 9752). Austria is reported to be the only country that decided to keep a reservation on one element of the draft compromise submitted to the national delegations by the French Presidency of the EU. The French authorities have a mandate to negotiate the draft deal with the European Parliament in order to reach agreement in codecision in first reading. EU finance ministers will confirm the general guidelines for the draft legislation at their meeting in December 2008.
Colleges. EU Member States endorsed the European Commission's idea of automatically setting up colleges of supervisors for the forty or so pan-European banking groups. The colleges would comprise the Member State supervisory authority in the country where the bank has its headquarters (the 'host supervisors'), and would have the job of encouraging the exchange of information in general and with the competent authorities of other countries, voluntarily delegating work and drawing up supervisory programmes. The colleges' mode of operations will be based on guidelines drawn up by the Commission of European Banking Supervisors (CEBS). Member States stress the need for a 'home supervisor' to chair the college meetings, keep all members duly informed and take timely measures.
In their supervision of banks, Member States believe that the supervisory authorities should take account of the potential impact of their decision on the stability the financial system. For cross-border banks, home supervisor and host supervisors will do all in their power to take joint decisions within six months on capital adequacy requirements for the bank. The Member States will change the measures suggested by the Commission wherever disagreements between supervisors make it impossible to take a joint decision. Under these amendments, the group supervisor will decide for the bank and the 'host supervisor' will decide on the supervision of subsidiaries in their country, taking account of the views expressed by the group supervisor. All these decisions can be revised, on a bilateral basis where necessary, upon request from the supervisor of a subsidiary. The CEBS can be consulted, give its opinion and issue specific guidelines.
Securitisation. The Commission proposal suggests that banks should be forced to act more responsibly by requiring them to have reserves of at least 5% of the value of the loans they have issued that they bundle up and then sell on using the 'securities' technique. Member States back this idea. On lending establishments' exposure to severe risks, the delegations' view is aligned with that of the Commission: banks will no longer be allowed to issue loans to any one bank of over 25% of its capital. A small bank will only be allowed to lend above 25% if the total loan does not exceed €150 million. The eligibility criteria and caps on hybrid capital (financial securities can take the form of either shares or bonds) have also been welcomed by the mss. (M.B. trans fl)