19th Mar 2018

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.

Merkel in Paris for eurozone reform talks

Angela Merkel - who started her fourth term as Germany's chancellor earlier this week - is wasting no time on big issues like eurozone reforms. On Friday she is meeting Emmanuel Macron where the two will seek common ground.

EU insists on US tariffs exemption

Europe is "an ally, not a threat", the EU Commission says - as the US is poised to impose duties in steel and aluminium. Common action on Chinese steel overcapacity could help diffuse the crisis.

VW dismisses complaints on Dieselgate fix

'I think customers who want to get information (...) are able to receive information if they want," VW management board member Hiltrud Werner told EUobserver. Consumer groups disagree.

Stakeholders' Highlights

  1. Counter BalanceConmtroversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  2. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  3. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  4. Martens CentreEuropean Defence Union: Time to Aim High?
  5. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  6. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  7. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  8. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  9. EPSUWill the Circular Economy be an Economy With no Workers?
  10. European Jewish CongressThe 2018 European Medal of Tolerance Goes to Prince Albert II of Monaco
  11. FiscalNoteGlobal Policy Trends: What to Watch in 2018
  12. Human Rights and Democracy NetworkPromoting Human Rights and Democracy in the Next Eu Multiannual Financial Framework

Latest News

  1. EU states pledge solidarity with UK on alleged Russian attack
  2. 'Decisive step' in Brexit ahead of EU summit
  3. Moria refugee camp is no place for people
  4. No free EU wifi for UK cities without Brexit deal
  5. Selmayr case symptomatic, warns EU novel author
  6. Germany: Russia is 'partner' despite alleged UK attack
  7. Kiev wants EU sanctions on former German chancellor
  8. North Korea: time to put the 'E' in engagement

Stakeholders' Highlights

  1. Mission of China to the EUDigital Cooperation a Priority for China-EU Relations
  2. ECTACompetition must prevail in the quest for telecoms investment
  3. European Friends of ArmeniaTaking Stock of 30 Years of EU Policy on the Nagorno-Karabakh Conflict: How Can the EU Contribute to Peace?
  4. ILGA EuropeCongratulations Finland!
  5. EUobserverNow Hiring! Sales Associate With 2+ Years Experience
  6. EUobserverNow Hiring! Finance Officer With Accounting Degree or Experience
  7. UNICEFCyclone Season Looms Over 720,000 Rohingya Children in Myanmar & Bangladesh
  8. European Gaming & Betting AssociationEU Court: EU Commission Correct to Issue Guidelines for Online Gambling Services
  9. Mission of China to the EUChina Hopes for More Exchanges With Nordic, Baltic Countries
  10. Macedonian Human Rights MovementCondemns Facebook for Actively Promoting Anti-Macedonian Racism
  11. Nordic Council of MinistersGlobal Seed Vault: Gene Banks Gather to Celebrate 1 Million Seed Collections
  12. CECEIndustry Stakeholders Are Ready to Take the Lead in Digital Construction