The Economic and Monetary Affairs Committee (ECON) of the European Parliament today voted on an initiative report assessing the state of play of the Banking Union. The report adopted today includes requests for solutions to the problems connected with non-performing loans (NPLs), too-big-to-fail institutions, and excessive variability of bank-internal risk-weighting models. The final text also contains a large number of Green proposals, including calls for: coordinated action against the growing shadow banking sector; improved supervision of macro-prudential risks; enforcement of retail investor protection; enhanced proportionality; and streamlined supervisory reporting.
The aim of the Banking Union annual report is to contribute to the discussion on the future course of European banking regulation. After today’s vote in committee, the report still needs to be adopted in February’s plenary.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“MEPs today made clear that they want reforms in financial regulation to continue. A decade after the pinnacle of the financial crisis in 2007, we have to admit that fundamental reforms have not materialised. Activities of markets’ participants have become more transparent through additional reporting obligations and we have put in place new rules protecting taxpayers from the costs of possible bank failures. However, the financial system remains too big and too complex. We must not bend to pressure from parts of the financial industry to roll back financial regulation, as the new US government has announced. Instead, we must further increase capital requirements for the weakest and riskiest market players.
Additionally, it is key that Europe and its Member States comply with current legislation and honour their promises. Now that the new rules on bank recovery and resolution (BRRD) have become effective, banks must now be allowed to go bust, just like any other business. It is therefore a pity that the Social Democrats, backed by the EPP, avoided to name precautionary recapitalisation as the explicit exception in the State Aid framework. Both also blocked the request for full transparency on bank-specific capital requirements (Pillar 2) and prevented tough statements on addressing risks associated with sovereign debt. We will try to correct this in the upcoming plenary vote on the report.”
The report adopted today includes requests for solving the problems connected with
- non-performing loans (NPLs),
- bank-sovereign risk,
- too-big-to-fail institutions,
- excessive variability of bank-internal risk-weighting models and
- options and national discrections (ONDs) leading to an unlevel playing field.
The final text also contains a huge number of Green proposals, in particular calls for
- coordinated action against the growing shadow banking sector,
- remedy to the insufficient macro-prudential supervision,
- improvements of the current stress test methodology,
- enhanced proportionality,
- streamlined supervisory reporting
- enforcement of retail investor protection
- allocation of anti-money laundering powers to the European Banking Authority (EBA) and the Single Supervisory Mechanism (SSM).
The compromises adopted in today’s ECON vote can be found here:
Some of the additional amendments that were adopted today can be found here: