Wednesday

1st Mar 2017

Ministers at odds on banking supervision

  • Troubled Spanish banks like Bankia would come under ECB supervision (Photo: Carlos Blanco)

Finance ministers on Tuesday (13 November) remained at odds over how to include non-euro countries in a planned banking supervision scheme for the eurozone, making a 1 January deadline increasingly unlikely.

Sweden led the charge against the plan tabled by the EU commission, which is aimed at setting up a new supervisory body within the European Central Bank and gradually extending its oversight on the 6,000 banks in the eurozone.

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.

At the core of the problem is how to include the euro "outs" in the supervisory scheme if they want to opt in, given that the governing council of the ECB is legally a eurozone-only body.

"Either the treaty is changed so that each member state is treated equally, or the supervisory body will have to be placed outside the ECB," Swedish finance minister Anders Borg told journalists after the meeting.

Treaty change is a taboo among EU decision makers, as it takes years to negotiate and can be rejected in national referendums.

The EU commission sought to reconcile the position of the 'outs' with the legal limitations of the ECB board by suggesting that most of the decisions would be rubber stamped anyway and that on the actual banking supervision panel - a new body to be set up within the ECB - all member states would be represented equally.

"But there are still concerns and we will work on them, hopefully still being able to meet the 1 January deadline," internal market commissioner Michel Barnier said in a press conference after the meeting. In any case, the new body would be set up gradually in 2013-2014, so that "quality" prevails over "speed", he said reflecting a long-standing German demand.

He also poured cold water on hopes that once the new body is set up, troubled banks in the eurozone would be able to tap the bailout fund. "That is a necessary, but not a sufficient condition," he said.

The idea of a centralised banking supervisor for the eurozone was a precondition for Germany to agree in June to the prospect of opening the bailout fund to troubled banks, as a measure to help Italy and Spain lower their borrowing costs.

But since the ECB then unleashed a more forceful plan of "unlimited" bond buying for any troubled euro country once it signs up to a reforms plan, Spanish and Italian borrowing costs decreased and the pressure to quickly agree a banking supervision scheme eased.

In addition, Germany now feels that the Barnier plan is "too French", according to one source, as it "delegates" powers to national supervisors. This means that if something is again covered up at national level - as was the case with Spanish regional banks - the ECB would not know in time.

Instead, Berlin would like to see real auditing powers, even if it means that the ECB would have to start with fewer, bigger banks.

Critics say that is just a way to deflect supervision from Germany's own small regional banks which also needed to be bailed out after the 2008 financial crisis.

ESM bank bailouts will not happen soon, says Schaeuble

German finance minister Wolfgang Schaeuble Monday reiterated that no bank recapitalisation could take place until the EU's planned banking union is up and running but admitted "Spain can't wait that long".

MEPs demand stronger rules against tax evasion

MEPs in the civil liberties and economic committees voted in favour of toughening up EU wide rules on tax evasion, as they gear up for institutional talks in March on the EU's anti-money laundering directive.

Stakeholders' Highlights

  1. Malta EU 20172018 European Year of Cultural Heritage Will Celebrate European History and Values
  2. UNICEFA Deadly Journey for Children: The Migration Route From North Africa to Europe
  3. International Partnership for Human RightsFreedom of Association and Expression Under Threat in Kazakhstan
  4. QS World MBA TourMeet with Leading International Business Schools in Brussels on March 6th
  5. EURORDISJoin Rare Disease Day and Help Advocate for More Research on Rare Diseases
  6. European Healthy Lifestyle AllianceStudents Who Are Considered Fit Get Better Grades in School
  7. QS World MBA TourMeet with Leading International Business Schools in Paris on March 4th
  8. Malta EU 2017Economic Governance: Agreement Reached on Structural Reform Support Programme for Member States
  9. Socialists & DemocratsWomen Have to Work Ten Years Longer to Match Lifetime Earnings of Men
  10. Counter BalanceTrans-Adriatic Pipeline Is a Major Risk for Banks, Warns New Analysis
  11. Swedish EnterprisesTechnology and Data Flows - Shaping the Society of Tomorrow. Join Us on 23 March
  12. UNICEFNearly 1.4 Million Children at Risk of Death as Famine Looms Across Africa and Yemen