Wednesday

22nd Nov 2017

Banking union to put 6,000 banks under ECB supervision

  • Belgium's Dexia, bailed out twice: The ECB supervision should prevent taxpayers' money being used again in bank rescues. (Photo: Valentina Pop)

The European Central Bank will have the "ultimate decision-making authority" on supervising 6,000 euro-area banks, with some day-to-day tasks delegated to national bodies, a commission spokesman has said.

"There is a clear need to cover all banks through a single supervisory mechanism, for all 6,000 banks of the euro-area," Stefaan De Rynck, spokesman for financial issues said during a press conference on Friday (31 August).

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  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.

The commission will table proposals on 12 September on granting the ECB sweeping supervisory powers to help early detection of troubled banks and force them to fix their balance sheets before having to ask for public money.

But Germany finance minister Wolfgang Schaeuble has poured cold water on the plan, saying it was a matter of "common sense" that one could not expect a single body to oversee 6,000 different banks. In his view, only big "systemic" banks should come under the direct supervision of the ECB, he wrote in the Financial Times.

German regional banks and savings banks in recent days have also voiced "great concern and irritation" at the EU commission's plans, insisting that they should remain under national supervision. In Germany, banking supervision is shared by the Bundesbank and the Federal financial supervisory body (BaFin).

The commission spokesman, however, said it was important to have all banks under the new supervision scheme, because in recent years "we have seen non-systemic banks popping up and posing systemic risks."

Spain's fourth-largest lender Bankia, which was the result of merged regional banks, is one such case where bad loans piled up unreported, to the extent that the state had to bail them out, as well as Belgium's Dexia, which was bailed out twice by the state.

"The ECB should be given supervisory powers on all matters about financial stability, but national supervisors will continue to play a role, for instance to prepare and implement such decisions," De Rynck said.

"They will also remain in charge of supervisory task on matters not related to financial stability matters, such as consumer protection or overseeing payment services," he added.

As for resolution - who takes over loans and assets of banks gone bust - it will remain the competence of national bodies for now. But plans are being drafted to set up a European resolution authority and a joint fund financed by the banks themselves.

"Resolution is a key point of the new banking model we're looking at, to make sure that tax payers no longer have to pay the cost of restructuring banks," the spokesman said.

The ECB will retain some "links" with these national resolution authorities and possibly some "early-warning" competences so as to force the recapitalisation of banks that become cash-strapped before their problems get out of hand and need a bailout.

In any case, European supervision and resolution authorities will be designed as separate entities, the spokesman added.

He gave no details, however, on how the separation of powers within the ECB will take place, so the bank's core mandate - a stable euro and no inflation - remains unaffected.

Merkel under pressure over ECB banking union role

Angela Merkel is coming under mounting pressure from the Bundesbank and the sister party of her Christian Democrat group to block EU plans to make the European Central Bank the central supervisor of a eurozone banking union.

Investigation

The European Central Bank: a hamstrung firefighter

The European Central Bank is an important firefighter in the euro-crisis. But increasingly divergent eurozone economies are limiting the effects of its policies and democratic scrutiny remains an issue.

Analysis

The battle for banking union

The EU commission will next week unveil keenly-awaited proposals on banking union. But Germany is trying to strip the law of its usefulness.

ECB to become bank union supremo

The ECB will supervise Europe’s biggest banks from mid-2013, according to controversial banking union proposals to be announced Wednesday.

News in Brief

  1. December euro summit still on, Tusk confirms
  2. EU calls for end to Kenya election crisis
  3. Report: Israeli PM invited to meet EU ministers
  4. French banks close Le Pen accounts
  5. Commission relaxes rules on labelling free range eggs
  6. Commission issues €34m fine over car equipment cartel
  7. Estonian presidency 'delighted' with emissions trading vote
  8. Mladic found guilty of genocide and war crimes

Stakeholders' Highlights

  1. Idealist Quarterly"Dear Politics, Time to Meet Creativity!" Afterwork Discussion & Networking
  2. Mission of China to the EUAmbassador Zhang Ming Received by Tusk; Bright Future for EU-China Relations
  3. EU2017EEEstonia, With the ECHAlliance, Introduces the Digital Health Society Declaration
  4. ILGA EuropeFreedom of Movement For All Families? Same Sex Couple Ask EU Court for Recognition
  5. European Jewish CongressEJC to French President Macron: We Oppose All Contact With Far-Right & Far-Left
  6. EPSUWith EU Pillar of Social Rights in Place, Time Is Ticking for Commission to Deliver
  7. ILGA EuropeBan on LGBTI Events in Ankara Must Be Overturned
  8. Bio-Based IndustriesBio-Based Industries: European Growth is in Our Nature!
  9. Dialogue PlatformErdogan's Most Vulnerable Victims: Women and Children
  10. UNICEFEuropean Parliament Marks World Children's Day by Launching Dialogue With Children
  11. European Jewish CongressAntisemitism in Europe Today: Is It Still a Threat to Free and Open Society?
  12. Counter BalanceNew Report: Juncker Plan Backs Billions in Fossil Fuels and Carbon-Heavy Infrastructure

Latest News

  1. Mali blames West for chaos in Libya
  2. Orban stokes up his voters with anti-Soros 'consultation'
  3. Commission warns Italy over high debt level
  4. Mladic found guilty for Bosnia genocide and war crimes
  5. Uber may face fines in EU for keeping data breach secret
  6. EU counter-propaganda 'harms' relations, Russia says
  7. The EU's half-hearted Ostpolitik
  8. Glyphosate: 1.3 million EU citizens call for ban