Today, the European Parliament Committee on Economic and Monetary Affairs (ECON) approved the extension of the term of office of Elke König as Chair of the Single Resolution Board (SRB) for five years as of 24 December 2017. The shortlist of candidates provided by the Commission comprised only one candidate, namely the current Chair. After today’s approval in ECON, the re-appointment of Elke König needs to be adopted by the European Parliament’s Plenary next week in Strasbourg and finally by the Council. The re-election of Elke König is not uncontroversial, partly because, for the first time, the shareholders and creditors were held liable for the resolution of Banco Popular Espanol rather than the taxpayers.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“Continuity at the top must be used by the Single Resolution Board to set binding MREL requirements for the riskiest banks in Europe. Ms König must no longer use kid gloves on the riskiest banks in Europe but must require that material impediments to resolvability be promptly removed. The SRB’s 2020 target is far too late. We expect Ms König to make the preventing of new state aid the objective of future resolution decisions. The principle of liability must no longer be undermined by circumventing the rules of the European banking union.
We Greens have today voted in favour of extending Ms König’s term of office, even though the Single Resolution Board still falls well short of what the law requires. After all, Ms König bears only part of the responsibility, all too often she has been slowed down in the past by the Member States and the members of her own board.
Investors who lost money in the resolution of Banco Popular Espanol have the right to a legal review of the SRB’s resolution decision. However, the extent to which the creditors‘ lawyers are lobbying all groups of the European Parliament with the aim to turn the public opinion against Ms König is totally exaggerated.”
In July 2017, after the sale of Banco Popular Espana to Santander and the liquidation aid granted to Veneto Banca and Banca Popolare di Vicenza, Green MEPs addressed formal written questions to the SRB to get clarification on several questionable SRB decisions. Below you find a compilation of the most striking answers showing that the SRB is far behind what is required by the law.
In its answer to Sven Giegold of 10 August 2017, the SRB stated that it has taken decisions for resolution plans only for 92 out of 120 banks under its remit and that so far no binding and enforceable MREL targets were included. Impediments to resolvability were identified, but the SRB will decide only in 2018 whether these impediments qualify as substantive under Article 10 SRMR.
In its answer to Ernest Urtasun of 10 August 2017, the SRB revealed that so far only 90% of banks under its remit transmitted the Liability Data Reporting providing the SRB with granular information on the liability side so as to allow for an organized resolution and that not all banks are capable to provide this information within 24 hours.
In its answer to Sven Giegold of 10 August 2017, the SRB stated that when deciding that the resolution of the two Venetian banks was not in the public interest, the SRB did not take into account the Italian law granting State aid neither the relevant Commission decision as both were not approved at the moment the SRB took its decision. However, it can be assumed that also the SRB was aware of the discussion about possible State aid granted to the Venetian banks.
On 21 November 2017, Elke König finally replied to a request from Sven Giegold dated 29 March 2016 regarding legal obstacles to resolution and resolvability. However, the answer provided is insufficient insofar as it merely provides for the list already enshrined in legislation.