Friday

20th Jan 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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

EU should raise own taxes, says report

A group chaired by former Italian PM and EU commissioner Mario Monti says Brexit should be used to create EU-level levies to depend less on member states contributions, and to abolish member states rebates in the EU budget.

News in Brief

  1. Report: Hollande thinking of EU council bid
  2. Italy to hold 70% of Monte dei Paschi bank
  3. Nato hit by 500 cyberattacks every month
  4. Hundreds of migrants face German security review
  5. Outgoing US vice-president warns Europe on Russia
  6. German far-right party calls for end to WWII guilt
  7. First Chinese freight train arrives in Europe
  8. Europe has no vision, says Italian minister

Stakeholders' Highlights

  1. Caritas EuropaEU States to Join Pope Francis’s Appeal to Care for Migrant Children
  2. UNICEFNumber of Unaccompanied Children Arriving by sea to Italy Doubles in 2016
  3. Nordic Council of Ministers"Nordic Matters" Help Forge Closer Bonds Between the UK and the Nordic Region
  4. Computers, Privacy & Data ProtectionThe age of Intelligent Machines: join the Conference on 25-27 January 2017
  5. Martens CentreNo Better way to Lift Your Monday Blues Than to Gloss Over our Political Cartoons
  6. Dialogue PlatformThe Gulen Movement: An Islamic Response to Terror as a Global Challenge
  7. European Free AllianceMinority Rights and Autonomy are a European Normality
  8. Swedish EnterprisesHow to Create EU Competitiveness Post-Brexit? Seminar on January 24th
  9. European Jewish CongressSchulz to be Awarded the European Medal for Tolerance for his Stand Against Populism
  10. Nordic Council of Ministers"Adventures in Moominland" Kick Off Nordic Matters Festival in London
  11. PLATO15 Fully-Funded PhDs Across Europe on the Post-Crisis Legitimacy of the EU - Apply Now!
  12. Dialogue PlatformInterview: Fethullah Gulen Condemns Assassination of Russian Ambassador to Turkey

Latest News

  1. 'Be patient,' ECB chief tells Germany
  2. EU cannot copy Australia's offshore asylum model
  3. Brexit men launch anti-EU website
  4. Germany details its 'Marshall Plan' for Africa
  5. IMF predicts 'pain' for UK, as banks prepare London exit
  6. EP deal could help Tusk keep Council job
  7. UN struggles to monitor fate of readmitted Syrians in Turkey
  8. European space chief: Moon village is 'more or less a fact'