Banks, EU – Baltic States, Financial Services, Legislation

The first issue in the agenda is the implementation of the Single Supervisory Mechanism, SSM. Already in September 2012, the Commission adopted two proposals for the establishment of a single supervisory mechanism (SSM) for banks led by the European Central Bank (ECB).

The proposal for the SSM regulation aimed to confer upon the ECB specific supervisory tasks over credit institutions in the Euro area. This is the accompanying proposal for the regulation on the European banking authority (EBA) aimed to introduce limited amendments to the Regulation setting up the EBA to ensure a balance in its decision making structures between the euro area and non-euro area states (see IP/12/953).

The operating rules for the EBA in the new financial framework entered into force on 30 October 2013 (on 4 November 2013, the SSM Regulation entered into force). However, the whole mechanism will be fully operational in November 2014.

In the meantime, the ECB is actively preparing to take up its new supervisory role: it is currently carrying out a comprehensive assessment of all banks (as well as the balance sheets of those banks, which will be under its direct supervision. In parallel, it is recruiting high quality supervisory staff and building up a new supervisory structure that integrates national supervisors before it commences its activities (see MEMO/13/1155).

The establishment of the Single Supervisory Mechanism (SSM) is a first step towards a banking union and one of the pre-conditions for direct recapitalisation by the ESM. An integrated “Banking Union” will also include a common bank resolution mechanism, underpinned by a single rulebook.

Commissioner Barnier welcomes the significant progress made towards operationalizing the SSM over the last months, which will allow for a smooth transition to the new supervisory regime.

The Commission agrees that the member states’ focus should be on effective implementation of the economic governance mechanisms (including the European semester) and on improving the financing of the economy. It is also essential to finalise the legislative work underpinning the banking union before summer 2014.

For an overview of what has been done so far to create a robust financial framework for all 28 member states and the situation in building the banking union, see MEMO/14/57.

Progress in taxation issues

Besides, the Commission welcomes the member states’ efforts in other key tax files. These include agreement on widening automatic exchange of information within the EU (Administrative Cooperation Directive IP/13/530), progressing the Financial Transaction Tax under enhanced cooperation, and pushing forward the political debate on the Common Consolidated Corporate Tax Base (IP/11/319). The Greek Presidency will also seek progress on other important tax files, including the Standard VAT Return (IP/13/988) and VAT Vouchers (IP/12/464).  

More information:

= http://ec.europa.eu/internal_market/finances/banking-union/index_en.htm; and

= European Commission - MEMO/14/56 “Preparation of Economic and Finance Ministers Council” (28 January in Brussels), 24 January 2014. 

Implementation of the Compact for Growth and Jobs

Heads of State or Government at the European Council agreed on the Compact for Growth and Jobs   in June 2012 (see MEMO/12/497). It contains a number of measures to help the EU states move beyond the economic and financial crisis and to create smart, sustainable, inclusive, resource-efficient and job-creating growth. It is designed to ensure faster progress towards the goals set out in the EU-2020 strategy.

The conclusions of the European Council meeting (20 December 2013) highlighted that the Compact for Growth and Jobs remains one of the EU's major tools to restore sustainable, job-creating growth and strengthen EU competitiveness. 

The European Council underlined that the European Investment Bank had met its 2013 lending targets under the Compact and that the adoption of the 2014-20 Multiannual Financial Framework and associated financial programmes support the achievement of the EU-2020 Strategy.

While substantial progress has been achieved in a number of areas, efforts should be pursued to ensure that the potential of the Compact is used to its fullest extent. In particular, the European Council called for enhanced efforts as regards the swift adoption of remaining legislation under the Single Market Acts I and II, and the swift implementation of the measures they contain. Further actions to reduce the burden of regulation are also necessary.

More information:

= http://ec.europa.eu/europe2020/pdf/compact_en.pdf; and

= http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/140245.pdf

Current legislative proposals

The Council will be updated on current legislative proposals. Enormous progress made in recent weeks to find compromises on a whole raft of legislative procedures which ensure that we are learning all the lessons of the financial and implementing the G20 commitments.

The following weeks will be crucial to finalise those compromise amendments and reach agreement on outstanding files. Particular attention shall be given to the single resolution mechanism.

= Single Resolution Mechanism - SRM

The supervisory system needs to be complemented by an integrated European resolution system for all countries participating in the banking union, which also requires action to restructure non-viable banks when necessary.

That is why the European Commission has proposed a Single Resolution Mechanism (SRM) for the Banking Union on 10 July 2013 (IP/13/674), which includes a single resolution board and a single resolution fund to tackle future bank crisis efficiently with minimal costs to taxpayers and the economy.

The SRM will basically apply the substantive rules of the draft Bank Recovery and Resolution Directive (see IP/12/570 and MEMO/12/416) in a coherent and centralised way ensuring consistent decisions for the resolution of banks.

During the upcoming ECOFIN Council meeting, the Greek Presidency will update the Economic and Finance Ministers on the on-going trilogues on the SRM proposal and on discussions on the intergovernmental agreement regulating the functioning of the Single Resolution Fund.

Commissioner M. Barnier welcomes the efforts and commitment of the Greek Presidency to achieve rapid agreement on the SRM proposal and member states' overall support for an effective single resolution mechanism.

Flexibility on both sides will be essential to find a final compromise text. The timetable is critical to allow finalising the legislative work underpinning the banking union before the end of this legislature.

More information:

= http://ec.europa.eu/internal_market/finances/banking-union/index_en.htm;

= http://europa.eu/rapid/press-release_MEMO-14-56_en.htm?locale=en