Tuesday

14th Aug 2018

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. Malta to allow Aquarius migrants to disembark
  2. Juncker sends condolences over Genoa bridge collapse
  3. EU pledges €500,000 more for Indonesian earthquake island
  4. EU commission in talks with states on new Aquarius migrants
  5. Man held after car crashes into UK parliament security barrier
  6. Brexit delays better readability of medicines' instructions
  7. Masked youths set dozens of cars alight in Sweden
  8. Spain and Italy refuse new Aquarius-rescued migrants

UK poll suggests Brits would now vote Remain

Most UK voters in a YouGov survey said they would remain part of the European Union should a second referendum be held now. The poll follows reports the EU is willing to make a concession on British exit demands.

Stakeholders' Highlights

  1. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  2. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  3. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  4. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  5. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  6. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  7. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  8. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  9. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  10. Mission of China to the EUChina: Work Together for a Better Globalisation
  11. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  12. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma

Latest News

  1. EU commission steps up legal case against Poland
  2. Separation of powers instead of 'Spitzenkandidat' process
  3. Revealed: ExxonMobil's private dinner with Cyprus' top EU brass
  4. What Salvini teaches us about Operation Sophia
  5. 14 lobbyist meetings with Oettinger and Canete went unminuted
  6. UK poll suggests Brits would now vote Remain
  7. Some EU states face delays in 5G preparation
  8. Nordic and Baltic farmers urgently need EU support

Stakeholders' Highlights

  1. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  2. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  3. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  4. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  5. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  6. FIFAGreen Stadiums at the 2018 Fifa World Cup
  7. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  8. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  9. FIFARecycling at the FIFA World Cup in Russia
  10. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  11. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  12. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up

Join EUobserver

Support quality EU news

Join us