Room: PHS 5B1
Main issues in Financial Services
2 October 2007
EXCHANGE OF VIEWS with Mrs. Danièle NOUY
Chairperson of CEBS (Committee of European Banking Supervisors)
Danièle Nouy, Chair of CEBS, demanded the European Parliament to “consider endowing the Committee with the appropriate status and tools to achieve its objectives.” “We do not ask to be transformed into an EU regulatory agency”, Nouy said, “but we find odd that a Committee entrusted with such a daunting task cannot be mentioned and attributed tasks in Community legislation.”
Speaking before the EP’s ECON Committee, Mrs Nouy said that 2007 is the year “in which you and the other EU institutions are reviewing the working arrangements of the so-called Lamfalussy architecture”.
As areas for improvements to promote convergence in day to day supervisory practices Mrs Nouy mentioned the right balance between principles and detailed rules, as well as further improving public consultation processes.
CEBS work on supervisory cooperation moves in two parallel and mutually reinforcing directions, she explained:
- multilateral cooperation, in which the Committee is directly involved as a hub for information exchange; and
- cooperation within colleges of supervisors, i.e. between the home and host authorities in charge of a specific cross-border banking firm.
“In the first area, we had an important test with the recent turmoil”, she said. “We had an extensive exchange of confidential information of quantitative and qualitative nature, and an in depth discussion on recent market developments.”
“In the second area, CEBS provides a framework for cooperation and an interconnection between the different supervisory colleges. Our key project to improve the cooperation and coordination of the supervision of cross-border groups, the so-called ‘operational networking’”
“We held a preliminary discussion on the lessons to be learned”, the Chair concluded, noting that there is agreement in the supervisory community to look more carefully at valuation methods and transparency for structured products. “But, in doing that, we need to find the right balance between falling into the temptation of “supervisory overkill” or being complacent”, she stressed.
Full speech
Insurance and reinsurance - Solvency II
Rapporteur: Peter Skinner (PSE)
First exchange of views
In a first exchange of views on the recently published draft proposal on Solvency II, Rapporteur Peter Skiner (GB, PSE) outlined his views and presented a working document.
“There are still several open issues including the geographical diversification effects for groups, and harmonisation of actuarial methodologies”, Mr Skinner said. “Moreover, issues such as securitisation in particular regarding credit default swaps need to be discussed.”
“The proposal touches also on several sector specific issues like the use of members' calls to cover capital requirements by mutual insurance companies”, he continued. As to the health insurance providers, there are no changes proposed by the new solvency framework. As to the smaller and medium sized companies (SMEs), the directive includes some provisions to allow them a proportionate and manageable implementation. The results of the quantitative impact studies will contribute to this process.
With regard to supervisory activities “the accountability of supervisors and transparency of their way of work needs to be assured”, he stated. “Clear allocation of competences between group and local (solo) supervisor, and effective mechanisms for cooperation and information sharing need to be put in place.”
During the discussion Mr Hoppenstedt (D, EPP) said that next to the purely technical issues important aspects also include political items, namely Competition issues and Consumer Protection. His views were supported by Mr Höckmark (SWE, EPP), Mrs van den Burg (NL, PES) and other Parliamentarians.
Mrs van den Burg also outlined the importance of supervisory issues, namely on aspects of group supervision and the role of a lead supervisor and how this is linked to issues like burden sharing and risk of default.
Referring to the UK experience with “Equitable Life” Mrs Bowles (UK, ALDE) underlined that risk-based supervision is something that cannot be under-resourced.
Mrs Starkeviciute (LIT, ALDE) questioned whether the risk based approach has failed, referring to the recent financial turmoil. She warned to give too much guarantees to policyholders and of the role of the government as a lender of last resort.
Mrs Beres (F, PES) reminded to think about a “proper level of harmonization at level 1” and to learn from the discussions about the Basel II arrangements. Finally, she demanded Solvency II to cover also Pension Funds.
A Public Hearing will be held on 18 December followed by a second exchange of views on the 19th December.
Mr Skinner plans to produce a draft report in January which will then be presented in ECON Committee on 26 February. According to this timetable, the deadline for amendments would be in May 2008, followed by a vote in ECON Committee due in June or July.
However, all these dates are subject to change.
Working paper by Peter Skinner
3 October 2007, 15.00 – 17.00
EXCHANGE OF VIEWS with Mrs. Neelie KROES, Commissioner for Competition
Speaking before the EP’s Economic and Monetary Affairs Committee, Competition Commissioner Neelie Kroes said her services hope to complete an inquiry into MasterCard and rule on the credit card group's interchange fee payments network by the end of the year. She said that her services will also look at Visa.
Responding to the question of Irish MEP Eoin Ryan she said that the inquiry found a number of issues that are worrying, particular with regard to costs and hidden costs for the customer. Kroes is concerned that consumers are paying with debit cards or cash and subsidise consumers paying with credit cards.
She reiterated that she is "concerned" by the effect of interchange fees on competition and that scrutiny of the payment cards sector remains a "priority for action". The Commission banking and payment card sector inquiry said that while it would not abolish interchange fees, it would continue to assess the legality of current fee levels.
Responding to questions from MEPs on the “bail out” of banks, namely IKB and Northern Rock, during the recent financial tourmoils she stated that state aid is allowed ‘under certain circumstances’. However, it is too early to judge whether these were justified.
POSTPONED TO 9 OCTOBER
International Financial reporting Standard (IFRS) 8 concerning disclosure of operating segments
Adoption of motion for a resolution
Rapporteur: Pervenche Berès (PSE)
© Graham Bishop
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