19 October 2012

EBF Position on the proposals for a Single Supervisory Mechanism (SSM)

EBF has long argued for further supervisory integration in the EU, and in this regard the proposed SSM is an important step in that direction. EBF finds it important to strike the right balance and to build a solid foundation for further integrated high-quality supervision from the start.

The legislative package includes a proposal for a Council regulation establishing the ECB as the Single Supervisor (2012/0242 (CNS)) and a proposal amending provisions in the EBA regulation (2012/0244 (COD)). Going forward, the Council regulation (2012/0242 (CNS)) will be referred to as the proposal for a Council regulation and the proposal amending the EBA regulation (2012/0244 (COD)) will be referred to as the EBA amending proposal.

Key points

• EBF welcomes the proposals for a Single Supervisory Mechanism (SSM). However, it should be stressed that an important building block to obtain a well-functioning SSM is a “true” Single Rulebook that harmonises rules and ensures consistent outcomes across all 27 Member States. The current CRD IV/CRR trilogue needs to take this into account and revert to its initial aim of maximum harmonisation.
• Furthermore, the role of the European Banking Authority (EBA) must remain the same - to enforce the Single Rulebook for the entire Single Market and to ensure convergent supervisory practices throughout the EU. The new SSM should not weaken this key role of EBA.
• EBF supports the ECB supervising all banks in the eurozone.
• The EBF supports the proposal to phase in the SSM and agrees that it should be possible for non-Euro Member States to opt-in, although this process should be made more attractive and easier. It is important that non-Euro Member States that opt in to ECB supervision will have the same rights within the Supervisory Board as Euro-Member States. Furthermore, banks from Non-Euro Member States should be supervised based on the same supervisory rules and practices as banks from Euro-Member States.
• EBF agrees that there must be clear delineation within the ECB between supervisory and monetary policy functions with clear and transparent governance arrangements.
• The ECB will become the Competent Authority for the eurozone Member States in terms of prudential supervision.
• EBF supports the consequence that the ECB becomes both home and host supervisor for prudential matters within the eurozone.
• For home-host issues, EBF welcomes the fact that for participating Member States the theme of home-host cooperation will no longer be an issue, as ECB assumes these responsibilities. However, as long as not all EU Member States participate in the SSM, it is important to establish clear rules to ensure that Colleges continue to function properly.
• It is not clear whether ECB or national supervisors will be responsible for macro-prudential supervision, and hence how these authorities interact when implementing macro-prudential supervision.
• Banks should not end up paying or reporting twice for local supervision and EU supervision frameworks.
• It should be clarified that banks have a right to appeal ECB supervisory decisions. There needs to be an effective and swift mechanism for providing legal protection.
• The proposed implementation timetable should not compromise the quality of banking supervision – especially in the early stages when the BRRD and possibly CRR/CRD IV will not be in place.
• Going forward the right sequencing of the different elements of the Banking Union is key. The Banking Union should be seen as an evolutionary process where a “true” Single Rulebook, the finalising of the Directives on BRR and DGS and the establishment of the SSM are necessary steps before considering the next proposed items of the Banking Union, e.g. a Single Resolution Scheme.

Full position

© EBF