Sunday

29th May 2016

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.

Finance ministers baulk at tax-avoidance rules

Member states will discuss again in June a proposed directive to outlaw practices used by large companies to avoid paying taxes. Meanwhile, the European Parliament makes progress on its probe of Panama Papers.

News in Brief

  1. Syrian refugees sue Denmark over immigration law
  2. Ukraine bans Gorbachev for backing Crimea's seizure
  3. Dozens dead in two shipwrecks outside Libya
  4. Slovak PM says his country is no place for Muslims
  5. Juncker's spin-doctor warns of populist 'horror'
  6. EU urges Hungary to end discrimination of Roma children
  7. Majority of voters think UK will stay in EU
  8. Leading MEP says Greek bailout will not work

Stakeholders' Highlights

  1. ACCAEducation and Training 2020 - Giving Young People the Workplace Skills They Need
  2. EPSUTrade Unions Back New Undeclared Work Platform
  3. European Healthy Lifestyle AllianceCould targeting children’s fitness boost academic performance?
  4. World VisionDeclares the World Humanitarian Summit a Positive Step in a Longer Journey to Ending Need
  5. EJCPresident Dr. Moshe Kantor on Brexit and the Jewish Question
  6. Swedish EnterprisesNew rules for posted workers - Better Protection or the End of Posting ?
  7. World VisionWhy The EU Needs to Put Children at the Centre of Emergencies - In Their Words
  8. ACCASustainability Reporting in Danger of Losing Its Momentum Says ACCA and CDSB
  9. Dialogue PlatformDiversity as Heritage of Humanity! Join the “Colors of the World“ Show at the EP
  10. Centre Maurits CoppietersNew Responses to the Basque Peace Process? MEP Juaristi on Stateless Challenges Conference
  11. European Healthy Lifestyle AllianceImproving Cardiovascular Health Begins by Closing the Gap in Sex Disparities
  12. IPHRBrussels Talks to Take Stock of Human Rights in Turkmenistan