ECB may get merger veto in bank­ing union plan

Lux­em­bourg, Fin­land and Nether­lands sought changes to EU’S ini­tial plan to Euro­pean Cen­tral Bank broad pow­ers

The Pak Banker - - Front Page -

de­signed to tame the euro-area’s debt cri­sis.

Na­tional su­per­vi­sors would no­tify the ECB of a pro­posed bank­ing ac­qui­si­tion at least 10 days be­fore the dead­line for a deal to be com­pleted, ac­cord­ing to a com­pro­mise plan ob­tained by me­dia. The ECB shall de­cide whether to op­pose the ac­qui­si­tion, ac­cord­ing to the draft mea­sures drawn up by Cyprus, which holds t h e

Euro­pean Union’s ro­tat­ing pres­i­dency. The pro­pos­als would also cre­ate a panel in the ECB to re­view its su­per­vi­sory de­ci­sions.

EU lead­ers agreed in June and Oc­to­ber to move for­ward with com­mon ECB-led bank su­per­vi­sion to sep­a­rate fi­nan­cial- sec­tor risks from sov­er­eign debt trou­bles, with the goal of agree­ing on a po­lit­i­cal frame­work by Jan. 1. If a com­mon su­per­vi­sor is set up next year, it would open the door for the euro area’s fire­wall-fund to of­fer di­rect aid to banks. “The panel of re­view shall have suf­fi­cient le­gal ex­per­tise to pro­vide ex­pert le­gal ad­vice on the le­gal­ity of the ECB ex­er­cise of its pow­ers,” ac­cord­ing to the doc­u­ment, dated Nov. 16.

The pro­pos­als would also give the ECB pow­ers to re­quire in­di­vid­ual banks to raise cap­i­tal, re­duce the risk­i­ness of their ac­tiv­i­ties and dis­close in­for­ma­tion on how liq­uid their as­sets are. Ste­faan de Rynck, spokesman for the Euro­pean Com­mis­sion de­clined to com­ment on the doc­u­ment. Nikos Christodoulides, a spokesman for the Cypriot pres­i­dency, didn’t re­spond to a call seek­ing com­ment.

Euro­pean Cen­tral Bank Vice Pres­i­dent Vi­tor Con­stan­cio said on Nov. 14 that a com­mon bank su­per­vi­sor un­der its con­trol would need power over all euro- area in­sti­tu­tions, coun­ter­ing Ger­man Fi­nance Min­is­ter Wolf­gang Schaeu­ble’s push to limit cen­tral over­sight to sys­tem­i­cally im­por­tant firms.

The ECB must be able to as­sert con­trol over all banks in par­tic­i­pat­ing coun­tries, even if the sys­tem is set up “in a very de­cen­tral­ized way,” Con­stan­cio told EU fi­nance chiefs.

Lux­em­bourg, Fin­land and

the Nether­lands have also sought changes to the EU’s ini­tial plan to grant the ECB broad pow­ers. “You should come up with a di­vi­sion of tasks that lets na­tional su­per­vi­sors do a big part of the work, yet al­ways un­der ul­ti­mate re­spon­si­bil­ity” of the ECB, Dutch Fi­nance Min­is­ter Jeroen Di­js­sel­bloem said in Brus­sels last week. “A group of small banks can cause risks for the fi­nan­cial sec­tor or for the real econ­omy. If those risks oc­cur, the ECB should be able to in­ter­vene,” Di­js­sel­bloem said.

The plan has also drawn skep­ti­cism from coun­tries out­side the 17-na­tion euro area. Swe­den’s Anders Borg said there might be a need for “tech­ni­cal treaty change” if the new su­per­vi­sor is housed at the ECB with the po­ten­tial to su­per­vise banks out­side the cur­rency bloc, as pro­posed.

The Euro­pean Cen­tral Bank would have veto pow­ers over any bank merg­ers in na­tions that sign up to ECB-led su­per­vi­sion, un­der draft bank­ing union rules

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.