16 April 2013

President Barroso/Commissioner Barnier: Statement following EP's approval of new rules to impose stronger prudential requirements on banks

President J M Barroso:

I welcome the vote in the European Parliament today on the Capital Requirements Directive, CRD IV. This is the foundation for the single rulebook for banks and will ensure that banks across the EU build up the necessary capital to absorb future shocks themselves, without asking the taxpayer for help. The rules will put an end to the culture of excessive bonuses, which encouraged risk-taking for short-term gains. With these rules we will ensure a dynamic and responsible financial sector. This is a question of fairness. If taxpayers are being asked to pick up the bill after the financial crisis, banks must also make a contribution.

Commissioner M Barnier:

I welcome the vote by Parliament on a package that sets stronger prudential requirements for banks, requiring them to keep sufficient capital reserves and liquidity. I would like to thank all those involved in the process leading to today’s vote in plenary, and in particular the text’s Rapporteur Mr Karas, as well as the shadow rapporteurs Mr Bullman, Mrs Bowles, Mr Lamberts and Mrs Ford.

The new framework will make EU banks more solid and will strengthen their capacity to manage properly the risks linked to their activities, and absorb any losses they may incur in doing business while still preserving the financing of the real economy. We have for example taken targeted measures to ease access to small and medium enterprises to financing, notably a measure allowing the reduction of the level of own funds required to covered loans to SMEs.

Furthermore, these new rules will strengthen the internal governance of banks. Remuneration policies will have to be aligned with sound and effective risk management. Shareholders are given a special responsibility and an appropriate and reasonable maximum ratio is introduced between the fixed salary and the bonus for all risk takers. The European Parliament’s contribution was essential on this point and I am convinced that this will contribute to boosting the confidence of Europe’s citizens in the financial sector.

Supervisory Authorities will also have more power to impose sanctions to ensure compliance.

This vote is a milestone since it consolidates the strides forward that we have made in creating a stronger banking system. We are setting up a body of unique rules, a Single Rulebook for all the banks in the single market with rules that are directly applicable in Member States without any possibility of regulatory arbitrage. And at the level of Banking union, the Single Supervisory Mechanism will use this essential tool, once it will be fully operational.

Finally, with this vote, the European Union is fulfilling its international commitments by enacting all G20 decision.

I hope now that we can move forward with the implementation of our in-depth reforms of the European financial sector with the same efficiency and determination. I am notably thinking of the texts on resolution of bank crises and protection of bank deposits, which will also strengthen the banking system – something the single market of 27 countries profoundly needs for its growth agenda.

Negotiations in the European Parliament and the Council have been challenging since the Commission made its proposal in July 2011. But thanks to the proactive attitude of all parties involved, we have put in place last night an important tool for making banks in Europe more resilient. I would like to thank all actors involved in the process, and in particular the rapporteur Mr Karas and the shadow rapporteurs Mr. Bullman, Mrs Bowles, Mr Lamberts and Ms Ford as well as the Polish, Danish, Cypriot and Irish Presidencies. I'm looking forward to the European Parliament confirming this political agreement in its forthcoming plenary session.

Press release

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