Saturday

19th Aug 2017

Member states and MEPs agree battle lines on bank rules

  • Belgium: Bailed-out Dexia bank was rebranded 'Belfius' (Photo: Valentina Pop)

EU finance ministers on Tuesday (15 May) agreed to start negotiations with the European Parliament on stricter capital rules for banks, one day after MEPs adopted their own stance on the dossier.

The new rules should kick in next year and prevent banks from taking too high risks and being in the need for public bail-outs.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Ministers agreed unanimously on the compromise text tabled by the Danish EU presidency, amid a more conciliatory stance from Britain.

Earlier this month, British finance minister George Osborne refused to sign up to the text in a 16-hour long session, saying he was not willing to agree to something that would make him "look like an idiot."

But on Tuesday, Osborne referred to the "considerable uncertainty in the eurozone" and said new rules for the European banking system were badly needed.

A resurgence of banking troubles hit southern countries in recent weeks, with Spain's government taking over major lender Bankia and pushing for its own national reform of the banking sector. Meanwhile, 26 Italian banks were downgraded by Moody's ratings agency on Monday.

The new rules, which still have to be negotiated with the European Parliament, implement globally agreed standards called the "Basel 3 capital requirements" asking banks to increase their "core capital" from two to seven percent.

Britain, initially supported by Sweden, Poland and the Czech Republic, argued that its national regulators should be allowed to go beyond that requirement, without having to ask EU institutions for permission.

But the EU commission, the European Banking Authority, Germany and other countries argued that it would create an uneven playing field and that lending to poorer economies would be hampered. The compromise solution allows them to put an extra five percent requirement for banks in their own country and three percent for their branches abroad.

"The presidency has found a balanced solution where deviations are possible within certain limits and with the common monitoring and coordination necessary to protect the internal market," the Danish EU presidency said in a statement.

Transparency of banks' lending and stricter rules on corporate governance are also part of the package in negotiations with the European Parliament.

On the other side of the European district in Brussels, MEPs dealing with this dossier on Tuesday were happy to announce that they also had agreed unanimously among the 44 economics committee members on the principles for negotiations with ministers.

"We want to stabilise and Europeanise the banking sector. We want justice and fair play amongst bank," Austrian centre-right MEP Othmar Karas said in a press conference.

"When it comes to bonuses, we don't think ECB cheap money should be used," he added, in reference to the €1 trillion worth of cheap loans issued by the European Central Bank to eurozone banks.

Fo his part, EU financial services commissioner Michel Barnier, who drafted the original text, said that while bonuses were not included in the basket of measures, he thought it was "a good idea" to bring them up.

"Some of these bonuses are very difficult to justify," he said at a press conference after the finance ministers' meeting.

NGOs monitoring the influence of banks on the new laws are unimpressed with the text.

"Thanks in part to lobbying by the banks, the proposal tabled by the Commission and discussed by the European Parliament and in the Council at the time of writing, is indeed weaker, driving standards lower than the global level," Corporate Europe Observatory, a Brussels-based NGO said in a statement.

UK minister furious at EU bank talks

Britain's George Osborne at a 16-hour-long meeting on bank capital said some versions of the deal would make him "look like an idiot."

Airbnb too 'different' to pay EU tax

US home rental firm said its “model is unique” because most of the money stays in pockets of local people, as France and Germany prepare EU tax crackdown.

EU cautious with German diesel plan

The European Commission welcomed the German carmakers' pledge to update software in diesel cars, but is waiting for details on how emissions will be reduced.

News in Brief

  1. Macedonia sacks top prosecutor over wiretap scandal
  2. ECB concerned stronger euro could derail economic recovery
  3. Mixed Irish reactions to post-Brexit border proposal
  4. European Union returns to 2 percent growth
  5. Russian power most feared in Europe
  6. Ireland continues to refuse €13 billion in back taxes from Apple
  7. UK unemployment lowest since 1975
  8. Europe facing 'explosive cocktail' in its backyard, report warns

Stakeholders' Highlights

  1. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  2. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  3. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  4. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  5. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  6. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  7. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  8. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  9. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  10. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  11. ACCAAnnounces Belt & Road Research at Shanghai Conference
  12. ECPAFood Waste in the Field Can Double Without Crop Protection. #WithOrWithout #Pesticides