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Banking union

Barnier and Nouy talk banking union and bank bonuses with MEPs

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Handshake_picWork on setting up the EU's bank supervisor and undertaking the planned asset quality review is "well on track", ECB Bank Supervisor Chairwoman Daniele Nouy told the Economic and Monetary Affairs Committee on 18 March.

Legislators on all sides now need to show willingness to compromise in order to agree on a mechanism for winding down banks that can deliver rapid and reliable decisions and mobilize credible and readily accessible funding, she added. MEPs questioned Ms Nouy about the operational steps ahead of the start of EU bank supervision and negotiations under way on the bank resolution mechanism.

Bank supervision

The key issues raised were the organisation of the asset quality review, how the bank supervisor planned to ensure accountability, and what safeguards it would deploy to limit the risk that banking union would lead to a split between Eurozone and non-Eurozone banks.

Bank resolution

MEPs also asked Nouy about the difficult issues that still need to be resolved between the European Parliament and Council negotiators. Nouy replied that although it is important to agree a deal under the current Parliament, this deal must ensure that "prompt and efficient decisions" can be taken over a weekend at most. "A fire-brigade does not ask the city Council to intervene when there is a fire," she said, of the overly complex decision making process advocated by some EU countries.

She also stressed that the bank-financed resolution fund must be able to borrow, especially in its early years. Moreover the fund should become truly single at most five years after it is set up, although the bank contributions would not need to be accelerated accordingly.

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Michel Barnier

Later in the day, MEPs from all political groups voiced reservations in reply to Commissioner Barnier’s call to conclude negotiations on banking union. They argued that quality matters more than haste, and that it would be better to resolve the outstanding issues with the new Parliament than to have a bad banking union. Replying to Barnier’s appeal to their political will and responsibility, MEPs said their main responsibility was to taxpayers and the key issue of who will pay for a Bank Resolution Fund with no credit line and no clear funding regime must be settled.

For his part, Barnier agreed that EU countries needed to move closer to Parliament’s position and that decisions on winding up specific banks should not be taken through the Council. He also said that a fund needed the ability to borrow money from the day of its inception, so that taxpayers would not be brought in unduly.

Bankers’ bonuses

MEPs also quizzed Barnier about draft technical standards designed to ensure that bankers’ bonus rules, which some claimed are already being circumvented, are consistently enforced across the EU. They noted that these standards had been sent to Parliament as a 'take it or leave it' offer, and in any event too late to allow it to revise them thoroughly before the elections.

Parliament’s key concern was that a loophole in the wording of the rules on “material risk takers” could allow many bank employees to escape a bonus cap. The Commissioner reiterated that the enforcement standards were in line with the bonus curbs legislation and added 15 qualitative criteria to the existing quantitative ones in order to cover all risk takers.

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EU Reporter publishes articles from a variety of outside sources which express a wide range of viewpoints. The positions taken in these articles are not necessarily those of EU Reporter.

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