Saturday

23rd Sep 2017

EU turf war on banking union may pose risks to Spain

  • The European Parliament wants to have a say over the entire banking union proposal (Photo: Luc Mercelis)

The European Parliament is fighting for a bigger say in shaping the eurozone banking supervisor in a move which could hurt Spain.

Putting the eurozone's banks and national supervisors under the ultimate authority of the European Central Bank (ECB) should have been a relatively easy task, or so EU leaders thought back in June. This was Germany's precondition for agreeing that ailing banks may access the eurozone fund directly, a demand made by Spain so that the €100 billion loan from the eurozone could be taken off its government debt.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  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 plan was to get a final deal in December, so that the new authority can start early 2013 and Spain's debt be alleviated soon afterwards.

But a turf war between the European Parliament and the EU Council representing member states over who has the final say on the freshly tabled legislation is likely to derail the calendar way beyond December.

From a legal point of view, the European Parliament has an equal footing with the Council only when it comes to the existing European Banking Authority (EBA) - a two-year old umbrella organisation of national banking supervisors in all 27 member states.

EBA legislation also has to be amended so as to explain how it will relate to the new supervisor in the eurozone. Voting rights within EBA will be a tricky negotiation, as the 10 non-euro states led by Great Britain fear that the eurozone 'superstate' will overrule them in disputes.

The other legislative proposal, regarding the re-organisation of the ECB and its relation to national supervisors, is to be decided by unanimity within the Council, with the parliament having only a consultative role.

"There is a clear legal base, article 127, and it does not refer to co-decision," Olivier Bailly, spokesman for the EU commission said during a press conference on Thursday (13 September).

The members of the European Parliament responsible for these dossiers have already announced that they want the two draft laws to be dealt with as a "package," however.

"If we are serious about the need for more democratic accountability, Parliament needs to have co-decision powers for this proposal," Belgian centre-right MEP Marianne Thyssen said in a press statement.

German Green MEP Sven Giegold, who will be responsible for the draft bill amending the London-based EBA, told this website that "we will treat the two files together, there will be no separate meetings in the negotiations."

"It all depends on how much the two sides will compromise, but we are willing to do everything as fast as possible. When it comes to risks of banking crises, thoroughness is more important than speed," he added.

Asked whether he shares the worry of some EU diplomats that Spain will run into trouble if there will be no deal by December, Giegold said: "I don't see Spain as a casualty, the current fund is big enough and they have not made the requests yet for bank recapitalisation. This condition to link the ESM and direct bank recapitalisation with European supervision was voted by the council. So it's them who have to speed up."

EU officials point to the fact that most anti-crisis legislation which was supposed to come quickly into force is stuck in the European Parliament: the draft law on obliging banks to hold more capital is blocked because MEPs and member states cannot agree on how to limit bonuses for bankers.

"The debate will be tense. It is not because Council defends its turf, but because MEPs take so long. We simply cannot lose another year," one EU diplomat told journalists on Wednesday.

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.

Discord simmers ahead of EU summit

It is being billed - by the Germans at least - as a "stepping stone" summit leading to firm decisions on further EU integration in December. But others want answers now.

EU takes time to ponder tech giant tax

The EU commission published a paper that outlined several options on how to increase tax income from internet companies' activities, but fell short of proposing legislation.

EU commission changes gear on trade

The EU executive seeks new deals with Australia and New Zealand, while aiming to overhaul the global investment protection system. It also wants to screen foreign investments.

Investigation

EU bank accused of muzzling watchdog

An ongoing review of the the European Investment Bank's "complaints mechanism" could make the oversight branch less independent and less effective.

News in Brief

  1. Dutch state appeals ban on taking air-polluting measures
  2. May proposes 2-year transition period after Brexit
  3. May to call on EU's 'sense of responsibility'
  4. Catalonia has 'contingency plans' for independence vote
  5. Last German polls confirm Merkel's lead
  6. EU to step up sanctions on North Korea
  7. Tusk calls 'euro summit' in December
  8. Report: May to seek two-year EU transition

Stakeholders' Highlights

  1. EU2017EEEU Finance Ministers Agreed to Develop New Digital Taxation Rules
  2. Mission of China to the EUGermany Stands Ready to Deepen Cooperation With China
  3. World VisionFirst Ever Young People Consultation to Discuss the Much Needed Peace in Europe
  4. European Jewish CongressGermany First Country to Adopt Working Definition of Antisemitism
  5. EU2017EEFour Tax Initiatives to Modernise the EU's Tax System
  6. Dialogue PlatformResponsibility in Practice: Gulen & Islamic Thought
  7. Counter BalanceHuman Rights Concerns Over EIB Loan to the Trans Anatolian Pipeline Project
  8. Mission of China to the EUChina Leads the Global Clean Energy Transition
  9. CES - Silicones EuropeFrom Baking Moulds to Oven Mitts, Silicones Are a Key Ingredient in Kitchens
  10. Martens CentreFor a New Europeanism: How to Put the Motto "Unity in Diversity" Into Practice
  11. Access MBAGet Ahead With an MBA Degree. Top MBA Event in Brussels
  12. Idealist QuarterlyIdealist Quarterly Event: Building Fearless Democracies With Gerald Hensel