Wednesday

22nd May 2019

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.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

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."

EU top court backs Canada trade deal in ruling

The European Court of Justice ruled on Tuesday that the EU-Canada free trade agreement, and its controversial dispute settlement mechanism, is in line with the bloc's rules.

EU and Japan in delicate trade talks

The Japanese PM comes to Brussels to discuss the first results of the new EU-Japan free trade deal, plus WTO reform - a sensitive topic before he moves onto Washington to face Donald Trump.

News in Brief

  1. German MPs show interest in 'Magnitsky' sanctions
  2. CoE: Rights violations in Hungary 'must be addressed'
  3. EU affairs ministers rubber-stamp new ban on plastics
  4. Private companies campaign to boost turnout in EU poll
  5. Austrian government chaos as far-right ministers step down
  6. Farage hit by milkshake during campaign tour
  7. New president dissolves Ukraine's parliament
  8. Sweden Democrat MEP ousted for revealing sex harassment

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic commitment to driving global gender equality
  2. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  3. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  4. Nordic Council of MinistersNordic talks on parental leave at the UN
  5. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  6. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  7. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  8. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  9. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  10. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  11. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  12. Nordic Council of MinistersNordic ministers take the lead in combatting climate change

Join EUobserver

Support quality EU news

Join us