The Parliament and the Council negotiators took a major step towards reducing risks in the banking system and building the Banking Union.
On Tuesday, two deals were concluded on banks’ resilience and on a clear roadmap for banks to deal with losses.
A deal to amend the EU’s prudential requirements should help to boost the EU economy by increasing lending capacity and creating deeper and more liquid capital markets.
“This is a big step towards global financial stability. The EU is drawing further lessons from the financial crisis and delivering on its promise to protect taxpayers’ money by further regulating the financial sector. In the future, banks will be subject to stricter leverage and long-term liquidity rules. Furthermore, we made sure that systemically important banks must have significantly more own funds to cover their losses in order to strengthen the principle of bail-in in the EU,” said Peter Simon (S&D, DE) the rapporteur for the prudential requirements.
A separate deal on a clear roadmap for banks to deal with losses, should ensure that they hold enough capital and debt to not have to resort to taxpayer bailouts and define conditions for early remedial measures.
“This is a very important step in the completion of the Banking Union and in reducing risks in the financial system. The agreement is balanced, as it sets requirements on banks but at the same time also ensures that banks can play an active role in financing investments and growth,” said Gunnar Hökmark (EPP, SE), the rapporteur for the recovery and resolution package for banks.
“The European Parliament has contributed significantly to delivering a comprehensive and balanced package which reduces risks in the EU banking sector and protects taxpayers, while providing the necessary incentives to sound lending to the real economy and to the reduction of NPLs. We now call on the next European Council to take the necessary steps and to be sufficiently ambitious on completing the Banking Union and deepening the Economic and Monetary Union. I would also like to thank the Austrian Presidency for the excellent cooperation,” said Roberto Gualtieri (S&D, IT), the Chair of the Economic and monetary affairs committee.
“We welcome the agreement reached on the Bank Recovery and Resolution Directive (BRRD2). It is a positive compromise between the political concerns of the European Parliament and those of the Council. We are convinced it will contribute to the consolidation agenda for the Banking Union and the reform of the Economic and Monetary Union (EMU). This is to be delivered by the Euro Summit next week. Risk sharing should go hand-in-hand with risk reduction,” stated S&D negotiator for BRRD/SRM, Pedro Silva Pereira.
“To avoid a repeat of the recent tax scandals, from Panama Papers to CumEx, strict prudential rules on money laundering will be established. Supervisory authorities and anti-money laundering authorities will finally be obliged to cooperate closely and exchange information in the future. This will put an end to the shameful situation with member states not warning each other about potential money laundering efforts and leaving perpetrators run away undisturbed,” added Peter Simon.
The Commission welcomed the provisional political agreement, which marks an important milestone in reducing risk in the Union banking sector and reinforcing the resilience of banks. Together with the encouraging data on risk reduction presented by the Commission last week, this prepares the path for further progress on the common backstop to the Single Resolution Fund and on the completion of the Banking Union at the December Euro Summit in inclusive format. This package contributes significantly to further reducing risks in EU banks and it is an essential element for the completion of Banking Union. It builds on existing banking rules, implements international standards, and aims to complete the post-crisis regulatory agenda, making sure that outstanding challenges to financial stability are addressed. At the same time it increases the ability of banks to finance the real economy.
“I am delighted that the European Parliament and the Council found a political agreement on the banking package, after months of very complex and technical discussions. This very important risk-reducing package complements the progress that has already been achieved over the past years, and lays the basis for further progress on strengthening the Banking Union,” said Commission Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union.
The Plenary will have to officially adopt the agreement; the vote should take place early next year.