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Debates
Monday, 15 April 2019 - Strasbourg Revised edition

Capital Requirements Regulation - Capital Requirements Directive - Loss-absorbing and recapitalisation capacity for credit institutions and investment firms -Loss-absorbing and recapitalisation capacity of credit institutions and investment firms and amending Directive 98/26/EC (debate)
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  Valdis Dombrovskis, Vice-President of the Commission. – Madam President, the banking package legislative proposal was adopted by the Commission almost two-and-a-half years ago in November 2016. The proposal built on existing EU banking rules aimed to complete the post-crisis regulatory agenda. The proposal was a major step in risk reduction, and also fulfilled our international commitments by implementing internationally agreed standards, while ensuring that banks can continue to support the real economy.

The Council reached a general approach in May 2018 after intensive negotiations of three consecutive presidencies, the European Parliament followed in June 2018, and political agreement was reached in December. So I’d like to take this opportunity to thank the honourable Members involved in negotiating this package for their commitment and their political will to reach a compromise, and in particular the rapporteurs, Mr Simon and Mr Hökmark. Your efforts and dedication were instrumental in reaching this agreement.

Parliament helped to improve several elements of the original Commission proposal. You enriched the package with additional elements that were absent in the initial proposal, for example in the areas of sustainable finance and anti-money laundering. The package on which you will vote tomorrow includes important measures to strengthen the resilience of banks. For instance, it introduces a binding leverage ratio as a backstop to prevent institutions from excessive leverage, and it establishes a binding net stable funding ratio to address excessive reliance on short-term wholesale funding.

The package will also enhance the rules on governance and supervision of banks and will give macro-prudential supervisors additional flexibility to address macro-prudential risks more effectively. In addition, the new rules also improve the resolvability of banks when they are in difficulties. In particular, the new rules transpose into EU law the international total loss-absorbing capacity standard applicable to globally systemically important institutions. This will set a harmonised minimum requirement for own funds and eligible liabilities (MREL) that has to be met with capital or debt instruments of high quality and, together with numerous other enhancements, this will ensure that banks are building robust buffers that can be used in case of resolution so as to avoid a spillover on public finances and ensure a clear and transparent process vis-à-vis banks, authorities and the markets. At the same time, the package pays close attention to a number of issues that matter to the financing of the real economy.

Your agreed rules improve banks’ lending capacity to support the real economy. In particular, they enhance capacity to lend to SMEs and to fund infrastructure projects. In this sense, these aspects are very much in line with our jobs and growth agenda.

The package also injects more proportionality into the prudential framework for banks. It will reduce the administrative burden stemming from reporting, disclosure and remuneration requirements for small non-complex banks, and in areas where we introduce new standards, we have calibrated simple but conservative alternatives for small non-complex banks which they can use.

The package will introduce for the first time the considerations of environmental, social and governance risks in bank prudential regulation, for example through the obligation for large listed banks to disclose the environmental and social risks they are exposed to. And last, but not least, following the recent money laundering scandals you included measures to enhance cooperation and information exchange between prudential and AML supervisory authorities and the European Banking Authority’s role in this context, together with the ESA review, those are important steps.

This package constitutes a major step in completing the European post-crisis regulatory reform. All of these reforms together will make our banks more stable and solid. So it’s a very important step forward in risk reduction and now it’s time to move also on risk-sharing. We need to implement the agreement on the backstop to the Single Resolution Fund, and we need to move forward with the discussions on a European deposit insurance scheme.

 
Last updated: 8 July 2019Legal notice