Monday

22nd May 2017

Ministers hoping to bridge divide on EU banking supervision

  • The ECB is set to become supervisor of the eurozone banking sector (Photo: Valentina Pop)

EU finance ministers are meeting Wednesday afternoon (12 December) in a bid to reach a deal on rules making the European Central Bank the single supervisor of the eurozone banking sector.

“There are five issues that need to be tweaked", according to one senior EU official.

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.

They include the voting system in the existing pan-EU banking regulator (EBA) and the decision-making process in the supervisory board of the European Central Bank.

There is also expected to be discussion on which banks the ECB will directly supervise.

The Frankfurt-based bank is expected to oversee significant banks, as well as those having received public money and those with cross-border operations.

However, it is not clear what significant means in terms of prompting the Frankfurt supervision. The current draft proposal would classify a 'significant' bank as having for assets worth at least €30 billion or 20% of national GDP, although some governments, including Germany, are bidding for a figure close to the $50 billion threshold used in the US.

The rest of the banks will remain under national supervision but the ECB is likely to have the “legal right” to step in if it wants to.

Negotiations are also expected on maintaining the independence of the bank as well as when the single supervisory mechanism (SSM) should come into force by putting in place a 'Chinese wall' to clearly demarcate the ECB's monetary policy role from bank supervision.

The law governing the SSM is expected to come into force mid 2013 with the ECB to assume the role in 2014.

Current wording allows for the bank to defer its supervisory role until April 2014 if it feels it is not ready.

However pressure from Germany and others may see this potential deferring period extended until July 2014.

But despite the outstanding points, diplomats are relatively confident that finance ministers will reach a deal – if only because no one has much appetite for seeing the issue come to the table of EU leaders, meeting in Brussels for their December summit on Thursday and Friday.

"Clearly the overall success of the summit and of the work this autumn will be very largely judged on whether there is agreement tonight on a single supervisory mechanism,” said one diplomat.

“I am pretty confident that we will find a solution,” said another.

Franco-German rift derails banking union deal

EU finance ministers will return to Brussels on the eve of the December EU summit next week for last ditch talks on the controversial banking union proposals, after failing to reach agreement on Tuesday.

Draghi seeks to allay German concerns on banking union

European Central Bank chief Mario Draghi sought to downplay a clash of views with the German government over the scope of a new banking supervisor by suggesting a bigger role for national supervisors when it comes to small regional banks.

'Disappointment' for those expecting ambitious EU summit

EU leaders will gather in Brussels Thursday and Friday but as market pressure has waned so too have member states' ambitions. Draft summit conclusions have been re-written to reflect the reduction in reform zeal.

Portugal held up as symbol of EU recovery

Portugal to sail out of troubled waters after eight years of financial crisis, EU commission predicted, amid broad but "fragile" recovery in European economy.

EU wary over Ukrainian weapons in South Sudan

Ukraine, which had signed an EU arms embargo on South Sudan, has since sold attack helicopters used by the government forces in Juba against civilians and hospitals.

Stakeholders' Highlights

  1. Dialogue Platform"The West Must Help Turkey Return to a Democratic Path" a Call by Fethullah Gulen
  2. ILGA-EuropeRainbow Europe 2017 Is Live - Which Countries Are Leading on LGBTI Equality?
  3. Centre Maurits CoppietersWhen You Invest in a Refugee Woman You Help the Whole Community
  4. Eurogroup for AnimalsECJ Ruling: Member States Given No Say on Wildlife Protection In Trade
  5. European Heart NetworkCall for Urgent Adoption of EU-Wide Nutrient Profiles for Nutrition & Health Claims
  6. Counter BalanceInvestment Plan for Europe More Climate Friendly but European Parliament Shows Little Ambition
  7. Mission of China to the EUPresident Xi: China's Belt and Road Initiative Benefits People Around the World
  8. Malta EU 2017EU Strengthens Control of the Acquisition and Possession of Firearms
  9. International Partnership for Human RightsThe Cost of Speaking Out: Human Rights Violations Committed in Belarus
  10. ACCABanishing Bias? Audit, Objectivity and the Value of Professional Scepticism
  11. Nordic Council of MinistersNew Oslo Climate Declaration Focuses on Rising Temperatures in the Arctic
  12. European Healthy Lifestyle AllianceAbdominal Obesity: A Causal Risk Factor for Cardiometabolic Diseases