FROM BOARD OF THE EUROPEAN BANKING FEDERATION:
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Banks call for improving Europe’s global economic competitiveness in upcoming EU policy cycle
- EBF Board reiterates commitment to sustainably and responsibly financing businesses and households
- Achieving stable, efficient regulatory framework for financial services should be a priority under EU agenda 2019-2024
- Inappropriate transposition of Basel IV capital requirements would put at risk the capacity of banks to provide financing
BUCHAREST, Romania, 10 May 2019 — European banks, represented by the Board of the European Banking Federation, today urged the European Union to step up its efforts for improving Europe’s global competitiveness as part of the agenda of the next European Commission. Specifically, the EBF Board called on governments in Europe to recognize the key economic role of banks in funding growth and supporting prosperity.
Looking ahead to the upcoming policy cycle in the European Union, the Board reaffirmed the European banking sector’s constructive commitment to sustainably and responsibly financing businesses and households. Specifically, banks recognize their role in society when it comes to developing sustainable finance and supporting the energy transition together with other industries in order to meet international climate change objectives.
Banks are fully committed to supporting further European integration, specifically in the EU financial services markets through the completion of the Banking Union and the creation of an effective Capital Markets Union (CMU). This is particularly important at a time of increasing political and regulatory global fragmentation, in order to ensure that sufficient financing will remain available for the European economy.
Members of the Board also emphasized the sector’s unabated commitment to supporting the fight against financial crime and against money laundering and called on EU policymakers and national governments to move towards a more efficient and coherent framework for Anti-Money Laundering. The banking industry is keen to establish more effective cooperation with public authorities when it comes to dealing with financial crime and tax evasion.
As the start of the 2019-2024 EU policy cycle draws closer the EBF Board also underlined the need for the European Commission to thoroughly analyse the impact of the financial regulation that has been introduced in recent years and to properly determine any unintended consequences. A comprehensive impact analysis is necessary to ensure concrete and proportionate future proposals that will prevent further fragmentation of global markets and regulation, a G20 goal supported by the EU.
Members of the EBF Board acknowledged the importance of further pursuing the digital transformation in the banking sector, in order to provide clients – businesses as well as households – with innovative and secure financial services.
Looking ahead, the Board wants to draw attention to the potential adverse effects of Basel IV on the European economy. Implementing the additional Basel IV measures would mean a further significant increase in capital requirements for European banks of possibly more than 20 percent. This could lead to a severe reduction in the funding available for the economy.
Says Frédéric Oudéa, President of the EBF:
“Significant progress has been achieved in recent years, but there still are many challenges ahead. Governments and policymakers should ensure that banks can operate under the right conditions to sustainably and responsibly finance businesses and households. Ineffective and excessively burdensome regulation clearly has a negative impact on the European economy. An inappropriate transposition of Basel IV for example would undermine the EU’s capacity to finance its economy at a time of increasing fragmentation in the global economy.”
“As banking sector we will be in a very collaborative mood for the coming years. We look forward to working closely together with the renewed European institutions. We are very much willing to engage positively and contribute to building a great future for Europe.”
Says Giovanni Sabatini, Chairman of the EBF Executive Committee:
“We need a new push to reinforce the use of financial markets by companies in Europe. Both banks and capital markets are natural partners in the European financing ecosystem; they are complementary. It is clear though that the European CMU project needs a reset. The fundamental and structural obstacles that stand in the way of an integrated Capital Markets Union need to be identified and removed.”
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The post EBF Board Communiqué – May 2019 appeared first on EBF.
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BRUSSELS, 25 June 2019 – The European Banking Federation, together with the Japanese Bankers Association and the Canadian Bankers Association, has written to the U.S. authorities, including the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, on the tailoring of Enhanced Prudential Standards for Foreign Banking Organizations and on the proposed changes to the applicability thresholds for certain regulatory requirements related to capital and liquidity that were aiming to match rules for foreign banks with the risks they pose to the U.S. financial system.
The proposals are known as the ‘FBOs tailoring proposals’.
The EBF welcomes efforts to tailor U.S. regulations and improve the efficiency of the FBO regulatory regime by the U.S. federal banking Agencies (FRB, FDIC and OCC). Among other things, we welcome the introduction of an entry-level category of intermediate holding company (IHC) consistent with the U.S. Treasury Report on Banking and Credit Unions from June 2017.
However, EBF member banks are concerned that certain elements of the FBO tailoring proposals could increase the risk of global fragmentation and that others may create a competitive disadvantage for the U.S. operations of FBOs in comparison to U.S. Bank Holding Companies (BHCs) of similar size, which could have a negative impact on U.S. economic growth. One key contributing factor is that, while nominally using the same framework of risk-based indicators (RBIs) as that of domestic banks, the classification of FBOs’ U.S. operations in fact places more of them in the more severe categories than it does comparable U.S. BHCs. Of course, some of the proposed changes may indeed provide welcome relief to certain FBOs.
Moreover, the EBF and its member banks have significant concerns about potential application of standardized liquidity requirements on the U.S. branches of FBOs. Doing so would pose a serious risk of increasing global fragmentation and duplicative regulation by ring fencing additional liquidity buffers at the U.S.-branch level, since these branches are legally part of the home legal entity and covered by home-country liquidity regulation. The EU’s rules sufficiently mitigate any risk of liquidity shortages for the U.S. branches of EU banks and, consequently, we urge the Agencies to consider deference to the home-country supervisor, rather than taking action that would further fragment the global financial system.
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