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Banking Union report: European Parliament wants financial reforms to continue


The European Parliament today adopted an initiative report assessing the state of play of the Banking Union. The report requests solutions to the problems connected with non-performing loans (NPLs), and excessive variability of bank-internal risk-weighting models. The final text also contains a large number of Green proposals, including calls for: coordinated action against the growing shadow banking sector; improved supervision of macro-prudential risks; enforcement of retail investor protection; enhanced proportionality; and streamlined supervisory reporting.

The aim of the Banking Union annual report is to participate in the discussion on the future course of European banking regulation. Before today’s vote in plenary, the report had already been voted in the Economic and Monetary Affairs Committee in January.

MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:

 

“MEPs today made clear that they want financial reforms to continue. A decade after the pinnacle of the financial crisis in 2007, we have to admit that fundamental reforms have not materialised. Through additional reporting obligations, we have made activities of markets’ participants more transparent. We have put in place new rules protecting taxpayers from the costs of possible bank failures. However, the financial system remains too big and too complex. We must not bend to pressure from parts of the financial industry to roll back financial regulation, as the new US government has announced. Instead, we must further increase capital requirements for the weakest and riskiest market players.

Europe and its Member States must comply with the spirit of current legislation and honour their promises. Now that the new rules on bank recovery and resolution (BRRD) have become effective, loss-making banks must no longer be rescued from bankruptcy by taxpayers’ money. Therefore, we are pleased that the majority of MEPs today sent a clear signal to the EU Commission on Monte dei Paschi di Siena by adopting our amendment that precautionary recapitalisation may only be strictly exceptional and may not cover losses likely to occur in the near future. It is a pity that the Social Democrats, backed by the European People’s Party (EPP), prevented tough statements to tackle risks stemming from sovereign zero risk weights and from climate change. Likewise, the EPP and the Liberals together deleted the important call for a Bank Structural Reform to end the problem of very large institutions being too big to fail. As a whole, the report of the European Parliament still sends a clear signal to the financial markets: there can be no reform fatigue. The problems have not been solved.”

 

The report adopted today requests to urgently tackle the following problems

  • high volume of non-performing loans (NPLs),
  • interdependency between banks and governments through sovereigns,
  • excessive variability of bank-internal risk-weighting models and
  • regulatory options and national discrections (ONDs) leading to an unlevel playing field.

The final text also contains a huge number of Green proposals, in particular calls for

  • coordinated action against the growing shadow banking sector,
  • remedy to the insufficient macro-prudential supervision,
  • improvements of the current stress test methodology,
  • enhanced proportionality,
  • streamlined supervisory reporting
  • enforcement of retail investor protection
  • allocation of anti-money laundering powers to the European Banking Authority (EBA) and the Single Supervisory Mechanism (SSM).

 

The final report on the Banking Union adopted in plenary can be found here:

Hübner report adopted in plenary Feb 2017

 

The report on the Banking Union tabled for plenary can be found here:

Report Hübner plenary sitting

 

The amendments tabled by the Greens only or together with other groups can be found here:

Green AM Report Hübner plenary sitting

Joint AMs Report Hübner plenary sitting

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