Bank capital rules: reform to boost risk resilience and lending to the real economy
Bank capital requirements must be strengthened to make banks more risk-resilient and the risk weighting of loans to small firms must be reduced to facilitate lending to the real economy, said Economic and Monetary Affairs Committee MEPs in a vote on Monday. Bankers' bonuses must not exceed their fixed pay, they added.
Adopted by 44 votes in favour with no abstentions or votes against, the position of the committee sends out a strong message to Member States that Parliament is calling for reforms with a very strong voice.
"The outcome of the vote is a very strong statement by Parliament to the Council that all political parties are determined to go ahead with stabilizing banks and financing growth. The new capital requirements are not only a pivotal piece of banking regulation, but a law to finance the real economy. The main challenge is to find the right balance. We must have the banks build more solid security buffers and finance the growth needed now in the real economy. Parliament wants to facilitate SMEs’ access to finance with the new rules”, said rapporteur Othmar Karas (EPP, AT).
New rules for resilience
The proposed legislation would require banks to hold enough capital to protect themselves against unexpected losses. "Systemically important" banks would be required to hold a supplementary capital buffer of 3%, which could be raised to 10% if this were considered necessary by the authorities.
The capital requirements system would thus be more flexible, but should also be better supervised by EU Member States' competent authorities, in collaboration with the European Banking Authority (EBA), whose supervisory powers would be extended.
Under the new rules, every financial institution would be required to have "robust" governance agreements, including consistent lines of responsibility, effective processes for identifying and managing risks and sound and fair remuneration policies.
Bankers pay should be consistent with effective risk management; not encourage unjustified risk-taking and reflect real-world performance, say MEPs. Bankers' bonuses must not exceed their fixed salaries, they add.
Lending to small firms and consumers
To boost growth and job creation, MEPs inserted new rules to reduce the risk weighting of loans to small and medium-sized enterprises (by 30%) and also of loans to start-ups.
Member States and Parliament negotiators will now enter into negotiators in the coming days to hammer out a deal between the two sides.
In the chair: Sharon Bowles (ALDE, UK)