Completing EU banking union: European Parliament votes on three key legislative texts

Since the start of the financial crisis, the European Union and its member states have engaged in a fundamental overhaul of bank regulation and supervision. As the financial crisis evolved and turned into the eurozone debt crisis in 2010/11 it became clear that, for those countries that shared a currency, more had to be done, in particular to break the vicious circle between banks and national finances.

In June 2012, heads of state and government agreed to create a banking union to centralise the delivery of EU-wide rules for the euro area (and any non-euro Member States that want to join).

All texts on which the banking union is being constructed are now in force or are due to be adopted by the European parliament during its next plenary session. They will be complemented by an Intergovernmental Agreement to be signed by member states in May.

On 15 April, the European Parliament will vote on these three key texts to complete the legislative work underpinning the banking union.

• Bank Recovery and Resolution Directive (BRRD) - Rapporteur Gunnar Hökmark
• (Recast) Directive on Deposit Guarantee Schemes (DGS) - Rapporteur Peter Simon
• Regulation on the Single Resolution Mechanism (SRM) Rapporteur Elisa Ferreira

On this occasion, Commissioner Barnier will be participating in a press conference jointly with the three rapporteurs.

Background

The profound reform of the European banking sector aims to make it more robust and resilient, to reduce the impact of potential bank failures, and ensure the financial sector is at the service of the real economy.

The eurozone crisis highlighted the potentially vicious circle between banks and sovereign debt. The need for a better governed and deeper economic and monetary union for a single currency to work in the long run became clear. For that circle to be broken, a more robust financial sector is not enough. In particular for countries which share a currency, a deeper more integrated approach is necessary - basically ensuring centralised delivery of the rules for all 28 Member States.

This is why heads of state and government committed to a banking union in June 2012. The vision was further developed in the European Commission's blueprint for economic and monetary union in November 2012.

The first leg of the banking union is now in place with the Single Supervisory Mechanism: the ECB will be the ultimate supervisor of all 6,000 banks in the euro area as from autumn 2014. In the meantime, a comprehensive assessment of the banks' financial health is being carried out.

On 15 April, the European Parliament is due to adopt the second leg of the banking union, the Single Resolution Mechanism, which will allow bank crises to be managed more effectively, along with two legislative proposals on which the banking union is building the recast Directive on Deposit Guarantees Scheme and the Bank Recovery and Resolution Directive.

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