Friday

24th Feb 2017

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.

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 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.

Opinion

Don't blame Trump for Europe's insecurity

Europe's security architecture was already showing cracks well before Trump's arrival and requires urgent repair work whether he had won or not.

News in Brief

  1. WTO says Russian pork ban was illegal
  2. Belgian nuclear plant made 'significant progress' on safety
  3. Report: Commission gauging EU support for Poland sanctions
  4. Irish PM expected to quit amid police scandal
  5. After Brexit vote, 100,000 UK firms registered in Ireland
  6. Bayrou to support Macron in French presidential election
  7. British by-election tests Ukip strength after Brexit
  8. Romanian parliament buries controversial corruption decree

Stakeholders' Highlights

  1. QS World MBA TourMeet with Leading International Business Schools in Paris on March 4th
  2. Malta EU 2017Economic Governance: Agreement Reached on Structural Reform Support Programme for Member States
  3. Socialists & DemocratsWomen Have to Work Ten Years Longer to Match Lifetime Earnings of Men
  4. Counter BalanceTrans-Adriatic Pipeline Is a Major Risk for Banks, Warns New Analysis
  5. Martens CentreEU and US Migration Policies Compared: Join the Debate on February 28th
  6. Swedish EnterprisesTechnology and Data Flows - Shaping the Society of Tomorrow
  7. UNICEFNearly 1.4 Million Children at Risk of Death as Famine Looms Across Africa and Yemen
  8. Malta EU 2017End of Roaming Fees: Council Reaches Agreement on Wholesale Caps
  9. Nordic Council of MinistersNordic Innovation House Opens in New York to Help Startups Access US Market
  10. Centre Maurits CoppietersMinorities and Migrations
  11. Salzburg Global SeminarThe Child in the City: Health, Parks and Play
  12. UNICEFNumber of Ukrainian Children Needing Aid Nearly Doubles to 1 Million Over the Past Year

Latest News

  1. Don't blame Trump for Europe's insecurity
  2. EU rules out post-Brexit 'hard border' with Northern Ireland
  3. Fewer EU pupils being taught two foreign languages
  4. Women and child refugees face abuse in French camp
  5. Russian military creates 'information force'
  6. Spain MPs to probe €60bn bank bailouts
  7. Crowded race to win EU medicines agency
  8. Fighting environmental injustice in Europe