Tuesday

22nd Jan 2019

ECB to become bank union supremo

  • Commission President Jose Barroso will today unveil an EU bank union package (Photo: consilium.europa.eu)

The European Central Bank will supervise Europe’s biggest banks from mid-2013, according to the controversial banking union proposals to be announced Wednesday (12 September) by the European Commission.

Under the plans, the ECB will assume supervisory control over the eurozone’s most systemically important banks from July 2013, before covering all other banks from January 2014.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The proposals, which will be formally unveiled by Commission President Jose Manuel Barroso in his state of the union speech in the European Parliament on Wednesday, are the most radical step taken by the EU to break the link between debt-laden banks and sovereigns.

Meanwhile, in a bid to appease MEPs, angry at the prospect of the Parliament being side-lined from the reforms, the EU executive wants to revise the rules governing the European Banking Authority (EBA), one of three financial sector watchdogs created in 2011.

The move is unlikely to pacify German criticism that the plan would undermine the ECB’s independence and directly conflict with its primary task under the EU treaties of maintaining price stability.

Last week, German Finance minister Wolfgang Schauble insisted that the ECB would not be able to supervise the EU’s banking sector. “The ECB has itself said it does not have the potential to supervise the European Union’s 6,000 banks in the foreseeable future,” he said. Berlin is also likely to demand that its state-owned regional Landesbanks are excluded from the ECB’s remit.

Under the blueprint, the ECB would be given powers to authorise and withdraw banking licenses, apply rules on bank capital requirements and carry out stress-tests and on-site inspection. It would also have oversight on assets bought and sold by banks as well as the right to impose sanctions for non-compliance.

Less clear is the impact of the banking union package on EU countries outside the single currency. The plan states that national regulators in non-eurozone countries would have to work in “close co-operation” with the ECB, raising the possibility of the bank playing a near identical supervisory role in the ten non-eurozone member states.

Green MEP Sven Giegold will pilot the revised EBA regulation in the Parliament’s Economic committee, with the centre-right EPP group claiming responsibility for drafting the assembly’s position on the Council regulation.

Under the legal basis proposed by the Commission for the proposals, from Article 127, the Parliament’s involvement will be limited to a non-binding opinion.

The move has outraged MEPs, who had co-decision powers with Council during negotiations to create the three financial supervisory bodies and the European Systemic Risk Board (ESRB) which came into being at the start of 2011. Some feel that the London-based European Banking Authority would be better suited to act as bank supervisor.

In a resolution to be voted on Thursday, MEPs launched a broadside against the Commission’s plan to leave the banking union plan solely in the hands of governments, claiming that it would undermine democratic legitimacy and accountability.

Denying Parliament an equal say on the legislation would send “a negative signal at a time when the need for more transparency and democratic support is widely acknowledged” according to the committee text.

The Commission will also publish outlines for a road-map to complete the banking union. Legislation to tighten the rules on bank capital requirements and deposit guarantee schemes are currently being negotiated by MEPs and ministers. The EU executive also intends to set up a resolution mechanism for banks facing insolvency.

Banking union to put 6,000 banks under ECB supervision

The European Central Bank will have the "ultimate decision-making authority" on supervising 6,000 euro-area banks, a commission spokesman has said. But Germany would like fewer banks included in the new system.

Analysis

The battle for banking union

The EU commission will next week unveil keenly-awaited proposals on banking union. But Germany is trying to strip the law of its usefulness.

News in Brief

  1. EU hits Mastercard with €570m fine
  2. Romanian minister prepares to cancel corruption cases
  3. Sefcovic: no gas supply problems this winter
  4. Report: Commission warning on passport-sale schemes
  5. France summons Italian ambassador over colonial remark
  6. May U-turn on fee for EU nationals in UK
  7. French data watchdog gives Google €50m fine
  8. EU hits Russians with sanctions over Salisbury attack

Opinion

Salvini and Kaczynski - the new 'axis' powers?

Populists and Eurosceptics are slowly realising that the goal of dismantling the EU is not only unrealistic, costly and unpopular - but also deprives them of valuable opportunities to accumulate political capital and exert influence.

Stakeholders' Highlights

  1. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  2. Nordic Council of MinistersSeminar on disability and user involvement
  3. Nordic Council of MinistersInternational appetite for Nordic food policies
  4. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  5. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  6. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  7. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  8. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  9. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  10. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  11. Nordic Council of MinistersThe Nordic gender effect goes international
  12. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General

Latest News

  1. May pushes defeated Brexit deal, offers no Plan B
  2. European Parliament targets 'fake' political groups
  3. What is fate of non-euro EU states after Brexit?
  4. Turkish NBA star takes on Erdogan
  5. 'Meme ban' still on table in EU copyright bill, says MEP
  6. Brexit power grab by MPs hangs over May's 'Plan B'
  7. Polish mayor's funeral marred by Tusk TV dispute
  8. Salvini and Kaczynski - the new 'axis' powers?

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  2. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  3. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  4. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  5. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  6. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  7. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  8. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  9. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  10. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  11. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  12. Mission of China to the EUChina: Work Together for a Better Globalisation

Join EUobserver

Support quality EU news

Join us