28th Oct 2016

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.

Poland defies EU on rule of law

Prime minister Szydlo said the European Commission concerns over rule of law in Poland were political grudges.

Stakeholders' Highlights

  1. ANCI LazioAnci Lazio Definetely has a lot to Celebrate This Year
  2. EU-China ForumDebating the Future of the EU-China Relations on 28 November in Prague
  3. COMECEMigrants: From Fear to Compassion
  4. Birdlife EuropeBusiness as Usual - Juncker Snubs Environment and Protects Broken CAP
  5. EFADraft Bill for a 2nd Scottish Independence Referendum
  6. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  7. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  8. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  9. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  10. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  11. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  12. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum

Latest News

  1. Greece to probe UN allegations of illegal returns
  2. Poland defies EU on rule of law
  3. Belgium breaks Ceta deadlock
  4. Left MEPs thwarting Dieselgate probe, say right MEPs
  5. Cars should be allowed to exceed emissions limits, say experts
  6. EU case against Google is bad for developers
  7. Privacy activists mount court challenge to EU-US data pact
  8. Thousands of Nato soldiers go to Baltic states, Romania