24th Oct 2016

MEPs strike deal on bank supervision regime

  • The ECB will supervise banks with over €30 billion on their balance sheets (Photo: Valentina Pop)

MEPs and governments have reached a deal on legislation giving the European Central Bank (ECB) new powers to directly supervise the European banking sector.

Under an agreement struck on Tuesday (19 March) the ECB will supervise an estimated 150 banks, including all institutions with balance sheets holding over €30 billion as well as the three biggest banks in each country.

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.

The supervisory powers include the ability to withhold a banking license, approve mergers or acquisitions as well as the right to declare an "emergency' situation.

But the vast majority of the eurozone's around 6000 banks - the small- and medium-sized ones where critics say potential credit problems lie - will remain under national supervision, a key demand of Germany.

The new regime will cover the eurozone, with the ten countries outside the single currency able to choose whether they want to opt-in.

The supervision regime is seen as the first key component of the eurozone banking union aimed at breaking the vicious link that has seen governments plunge into debt as they bailed out banks.

The single-supervisory mechanism (SSM) comprises two regulations increasing the role of the Frankfurt-based ECB and the European Banking Authority (EBA), set up in 2011 as one of three EU agencies to supervise the financial sector.

In a concession to the UK, as well as other countries outside the eurozone, the voting rules in the European Banking Authority (EBA) will be changed to require a double majority of countries inside and outside the single currency area.

Green MEP Sven Giegold, one of two MEPs leading negotiations on behalf of parliament, described the agreement as "a major landmark in the move to create a European Banking Union". He added that the new regime would "overhaul the current disjointed light-touch national supervision".

Giegold's co-rapporteur, centre-right MEP Marianne Thyssen, commented that the regime would "enforce integration of the financial sector and strengthen confidence."

MEPs claimed victory in their bid for equal powers with governments on the hiring and firing of the chair and vice-chair of the SSM.

Speaking with reporters, Giegold said that the rules meant that governments could not ignore objections from parliament on appointees to the supervisory board. "The parliament has the right to say no, and no means no", he said, in a reference to the appointment of Yves Mersch in November to the ECB's executive board despite the opposition of parliament.

Negotiations on the inter-institutional agreement are expected to start immediately, with a view to a final vote by MEPs at the May Strasbourg plenary session.

The European Commission is now expected to table legislation in June to set up a single resolution mechanism to wind up failing banks and measures to harmonise national deposit guarantee schemes to protect savers.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

Stakeholders' Highlights

  1. EFADraft Bill for a 2nd Scottish Independence Referendum
  2. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  3. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  4. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  5. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  6. EASPDJoin the Trip! 20 Years on the Road. Conference & Photo Exhibition on 19-21 October
  7. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  8. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  9. Dialogue PlatformIs Jihadism Blind Spot of Western Intellectuals ? Wednesday 26 October
  10. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum
  11. Crowdsourcing Week EuropeMaster Crowdsourcing, Crowdfunding and Innovation! Conference 21 November - 10% Discount Code CSWEU16
  12. EJCEU Parliament's Roadmap for Relations with Iran a Massive Missed Opportunity