Monday

22nd Jan 2018

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. Belgium lowers terror alert level
  2. France, Spain set to gain seats in post-Brexit EU parliament
  3. Orban family probed over 'fraudulent' EU projects
  4. Spanish judge rejects Puigdemont arrest warrant
  5. Austria plans to sue Commission over Hungary's nuclear plant
  6. Puigdemont proposed as sole candidate for Catalan leadership
  7. Abbas in Brussels to discuss Palestinian state recognition
  8. Exiled Catalan leader leaves Belgium for first time

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Solutions for Sustainable Cities: New Grants Awarded for Branding Projects
  2. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  3. Nordic Council of MinistersOresund Inspires Other EU Border Regions to Work Together to Generate Growth
  4. Mission of China to the EUTrade Between China, Belt and Road Countries up 15%
  5. AJC Transatlantic InstituteAJC Calls on EU to Sanction Iran’s Revolutionary Guards, Expel Ambassadors
  6. Dialogue PlatformRoundtable on "Political Islam, Civil Islam and The West" 31 January
  7. ILGA EuropeFreedom of Movement and Same-Sex Couples in Romania – Case Update!
  8. EU2017EEEstonia Completes First EU Presidency, Introduced New Topics to the Agenda
  9. Bio-Based IndustriesLeading the Transition Towards a Post-Petroleum Society
  10. ACCAWelcomes the Start of the New Bulgarian Presidency
  11. Mission of China to the EUPremier Li and President Tusk Stress Importance of Ties at ASEM Summit
  12. EU2017EEVAT on Electronic Commerce: New Rules Adopted

Latest News

  1. MEPs may bar killer robots and drones from EU research cash
  2. Europe's social democrats are having a hard time
  3. How Oettinger's CO2 permit sale could fill Brexit blackhole
  4. New Polish foreign minister tries to charm EU commission
  5. Middle East, Messi and missing MEPs on agenda This WEEK
  6. Instagram and Google Plus join EU anti-hate speech drive
  7. EU wants 'entrepreneurship' in education systems
  8. UK loses EU satellite centre to Spain