The European Parliament adopted by 351 votes to 112, with 30 abstentions, a resolution on the Banking Union – Annual Report 2015.
1) Single Supervisory Mechanism (SSM)
Parliament welcomed the establishment of the SSM, which has been successful since its creation both from an operational point of view and in terms of supervisory quality.
In particular, in relation to the operational set-up, it welcomed:
Reducing in the administrative burden: a very significant share of work is routinely devoted to administrative procedures. Members are ready to examine proposals to reduce the operational burden on structures at all levels and to improve the effectiveness of the SSM supervision. They also emphasised the need to avoid unnecessary administrative burden on credit institutions, in particular smaller banks, and to ensure that the proportionality principle is upheld.
The ECB is called upon to ensure that the creation of a comprehensive credit risk database (Analytical Credit Dataset, AnaCredit) pays particular attention to the proportionality principle and to the need to avoid disproportionately high administrative costs, especially for smaller institutions.
Bank assessments: Parliament called for a systematic review of comprehensive assessments of ECB-supervised institutions, as well as for appropriate improvements of the methodology in the light of lessons learned. It emphasised the limitations of the current stress test methodology which evaluates third-country exposure on the basis of banks’ internal assessment.
Non-performing loans: Members recalled that the ability to write off or sell-on non-performing loans is vital, as it frees up capital to fund new loans, in particular to SMEs. They stressed the need to address the issue of non-performing loans at European level, notably by facilitating the setting-up of asset management companies in those countries where this is deemed to be necessary, as was the case in Spain and Ireland.
The resolution noted that:
Own resources: Parliament stated that the worldwide drive towards more and better quality bank capital and less leveraged banks is a necessary condition for a sound banking system capable of supporting the economy and for avoiding any repeat of the enormous bailouts witnessed during the crisis.
It is however stressed that an increase in capital requirements beyond a certain threshold may in the short term create unintended consequences, limiting banks’ lending capacity (i.e. this risk should therefore be considered when determining the level of capital).
Members considered that more appropriate attention should be paid to increased exposure in the form of off-balance sheet items, in particular for global systematically important banks (G-SIBs). They underlined the need to be vigilant over the development of the shadow banking sector.
Sovereign exposures of banks and other financial intermediaries: Parliament called on the EU institutions to carefully and thoroughly assess possible changes in the medium term to the current regulatory framework, without reducing available funding for Member States, without creating unintended market or competition distortions and without affecting financial stability, and as part of a coordinated effort at the global level. It stressed that in order to have a comprehensive risk reduction, parallel measures should be taken among others to reduce level 2 and level 3 assets exposure and to ensure the full convergence of internal ratings-based (IRB) systems for the measurement of credit risk.
Single Supervisory approach: Parliament stressed that national options and discretion attributed to Member States prevent the SSM from developing a single coherent supervisory approach within the euro area in order to ensure a true level playing field. It emphasised the need for the review of national options and stands ready to cooperate at the legislative level in order to further improve regulatory and supervisory.
Adaptation of the legislation: the Commission is called upon to:
2) Single Resolution Mechanism (SRM)
Parliament welcomed the efficient setting-up of the Single Resolution Board (SRB) and the establishment of national resolution authorities (NRAs) in the Member States. It highlighted the importance of establishing efficient cooperation between the SRB and the NRAs for the smooth functioning of the SRM.
The resolution:
Parliament also stressed the need, as a consequence of the existence of the national compartments in the SRF, to rapidly put in place an adequate bridge financing mechanism in order to provide the fund, if necessary, with sufficient resources in the period before its completion and guarantee the effective separation between banks and sovereigns.
Lastly, Members regretted the decision to set up the SRF through an IGA rather than through Union law. They called on the Commission swiftly to take the necessary steps, as provided for in Article 16 of the Agreement, for a quick integration of the IGA into the framework of EU law.
3) Third pillar
Parliament recalled that, together with the SSM and the SRM, the capacity to afford a uniform and high level of protection of deposits, irrespective of their location, should be ensured in an effective Banking Union. Any system of protection of deposits must always avoid the introduction of any moral hazard, while ensuring that risk takers remain liable for their risk taking.
In this context, the resolution welcomed the Commission’s proposed package on risk sharing and risk reduction in the Banking Union of 24 November 2015. It noted that the creation of a European Deposit Insurance Scheme (EDIS) requires the implementation of the single rulebook as well as of the first and second pillars of the Banking Union, and of the transposition of the BRRD and the Deposit Guarantee Schemes Directive (Directive 2014/49/EU) by all the participating Member States.