Friday

20th Oct 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 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 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.

Macron puts trade policy on summit table

France's president wants a "political discussion" on EU trade policies at Thursday's summit, amid domestic concerns over Canada and South America deals. But his colleagues are likely to avoid a lengthy debate.

News in Brief

  1. Italian regions hold referendums on more autonomy
  2. EU leaders refuse to mediate Catalonia conflict
  3. Dutch PM: Brexit is 'still a bad idea'
  4. Commission to issue proposal on civil protection
  5. Tusk: 'No space' for EU intervention in Catalonia
  6. Austrian PM calls Brexit talks speed 'big disappointment'
  7. PM Muscat: journalist murder 'left a mark' on Malta
  8. Belgian PM: No crisis with Spain over Catalan remarks

Stakeholders' Highlights

  1. European Jewish CongressEJC Applauds the Bulgarian Government for Adopting the Working Definition of Antisemitism
  2. EU2017EENorth Korea Leaves Europe No Choice, Says Estonian Foreign Minister Sven Mikser
  3. Mission of China to the EUZhang Ming Appointed New Ambassador of the Mission of China to the EU
  4. International Partnership for Human RightsEU Should Seek Concrete Commitments From Azerbaijan at Human Rights Dialogue
  5. European Jewish CongressEJC Calls for New Austrian Government to Exclude Extremist Freedom Party
  6. CES - Silicones EuropeIn Healthcare, Silicones Are the Frontrunner. And That's a Good Thing!
  7. EU2017EEEuropean Space Week 2017 in Tallinn from November 3-9. Register Now!
  8. European Entrepreneurs CEA-PMEMobiliseSME Exchange Programme Open Doors for 400 Companies Across Europe
  9. CECEE-Privacy Regulation – Hands off M2M Communication!
  10. ILGA-EuropeHealth4LGBTI: Reducing Health Inequalities Experienced by LGBTI People
  11. EU2017EEEHealth: A Tool for More Equal Health
  12. Mission of China to the EUChina-EU Tourism a Key Driver for Job Creation and Enhanced Competitiveness

Latest News

  1. May on mission impossible in Brussels
  2. EU seeks to shut down sea route from Libya
  3. Digital debate will be first test of Tusk's new policy crowbar
  4. EU Parliament: EU migrant quotas do have a future
  5. EU countries praise Tusk's new summit plans
  6. Commission employs double standards in Spain
  7. Legal study sounds alarm on 'Baysanto' merger
  8. Health MEPs want to phase out glyphosate by 2020