19 September 2012

Initial statement by EBA/Enria at the annual public hearing of the chairpersons of the three ESAs

The sovereign debt crisis has had serious adverse consequences on the banking sector in the euro area and the Single Market. The interconnection between banks and their sovereigns deepened, leading to a segmentation of the Single Market along national lines and to a dangerous volatility of deposits in some Member States. The concerns of investors translated into a freeze in bank funding, especially on the longer maturities, which could have triggered a massive and disordered deleveraging process, with potentially large effects on growth and employment. Since the second half of 2011, the EBA argued for a three-pronged approach to address this situation:

• strengthening banks’ capital, to put them on a stronger footing to finance the real economy and limit deleveraging;
• European interventions to support bank funding and break the link with the sovereigns; and
• actions directly remedying the sovereign debt crisis, thus taking redenomination risk off the table.

The unlimited supply of term liquidity by the ECB and by other European central banks, and the decision to move towards a banking union, which EBA strongly support, are other key components of the policy package to restore stability in the European banking sector. The banking union will have an impact on the responsibilities of the EBA as it will call on the whole Union for an even stronger commitment to the Single Rulebook, and for a leap towards truly unified supervisory methodologies - a Single Supervisory Handbook - to assess the risks at banks and to trigger corrective actions. Without such an effort, there is the risk of a polarisation of the Single Market between the euro area - with single rules and supervisory practices - and the rest of the Union, which would operate with a still wide degree of national discretion in implementing and applying the Single Rulebook.

The EBA has put a lot of effort into contributing to the action of regulatory repair and the establishment of the Single Rulebook, by preparing draft standards in a number of areas defined by the proposed CRD IV-CRR. At the request of the Commission, EBA also finalised a report on the capital requirements for SME lending, a topic that is receiving great attention also in discussions.

The strong pressure EBA faced to address the difficult situation in banking markets and in contributing to the reform of banking rules determined a slower start in the accomplishment of tasks in the area of consumer protection. EBA is now working at a much higher speed in these areas and envisages issuing important guidelines in the area of mortgage lending - on responsible lending and on arrears management.

Full statement

© EBA