25 November 2012

FT: Barnier seeks political will on bank union

The French commissioner backed a “maximum ceiling” on bankers’ bonuses relative to fixed pay, found fault with banking union safeguards demanded by the UK, and argued EU treaties could eventually be changed to reinforce the new supervision regime. Banking union talks have badly stalled in recent weeks as Germany, Sweden and others restate fundamental concerns, ranging from the supervisor’s powers to the disenfranchisement of non-eurozone members. Some senior negotiators expect the year-end deadline to be missed.

While a German-led bloc insists its priority is ensuring quality, there is growing frustration in Brussels at alleged foot-dragging, especially since EU leaders endorsed the framework and timetable. A meeting of finance ministers next week will be an important test of whether a deal is possible in 2012. While avoiding direct criticism, Mr Barnier said ministers received “loud and clear” instructions from two EU summits.

Mr Barnier expresses understanding for German worries – namely the European Central Bank’s remit over small banks – and Sweden’s view that the current EU treaties are a poor base for the reform, given the restrictions on the rights of non-euro countries that join. Berlin also worries the legal constraints make it hard to split ECB monetary and supervision roles.

Mr Barnier insists the deal must be done on the basis of “good solutions in the existing treaties”. But he adds that a second step could involve changing primary laws of the EU to make the banking union stronger. “Maybe we can imagine that later on we can consolidate things, improve things”, he said.

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