Wednesday

27th Jul 2016

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).

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.

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.

EU to tweak rules on Chinese 'dumping'

The EU Commission has tried to fudge the issue of whether China is a “market economy” amid efforts to protect European industry from cheap exports.

Stakeholders' Highlights

  1. GoogleHelping Emergency Services Find You When You Need It Most
  2. Counter BalanceWhat's New in the Investment Plan for Europe: Business as Usual or True Innovation ?
  3. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event 2016
  4. GoogleHow Google Fights Piracy: Creating Value While Fighting Piracy
  5. EJC"My Visit to Israel" - Opinion by MEP Lopez Aguilar, Chair of the EP Working Group on Antisemitism
  6. World VisionChildren Migrating, Out of School and at Work as Hunger Deepens in Southern Africa
  7. European Healthy Lifestyle AllianceStand-Up (and Exercise) to Prevent Chronic Diseases
  8. Centre Maurits CoppietersLaunches a Real-time News Hub Specialised in EU Stakeholders
  9. Dialogue PlatformFethullah Gulen Calls for International Probe Into Turkey Coup Allegations
  10. GoogleEU-US Privacy Shield: Restoring Faith in Data Flows and Transatlantic Relations
  11. World VisionWorld Leaders & Youth Advocates Launch Partnership to End Violence Vs. Children
  12. Counter BalanceReport: Institutionalised Corruption in Romania's Third Largest Company