“In this respect, we are of the opinion that clear mandates should apply to the system of supervision and duties and responsibilities between the ECB, the EBA and the national competent authorities should be assigned in a proportionate, clear and comprehensive manner.”
ESBG Managing Director Chris De Noose underlined that this principle should be accompanied by a clear-cut description of the competences that would be undertaken by the European Central Bank as the leader that gives impetus to the single supervisory mechanism (SSM), and by national competent authorities within their national jurisdictions.
The ESBG Board also warned against regulatory overkill. “CRD IV, Banking Union, RRD, MiFID, the Liikanen Report – it all adds up to a crushing burden for all banks, especially retail banks, when in fact retail banking is a stable activity that did not cause the crisis in the first place”, said Mr De Noose. “Any regulation that is implemented should aim to foster the economically productive and useful activities of financial institutions, eliminating at the same time excessively risky and harmful activities. However, structural reform is not the right answer at this point in time, as current legislative banking measures need to be fully implemented and their effectiveness assessed.”
If structural reform proceeds nonetheless, a reasoned approach is an absolute necessity in order to allow the banking industry to continue to play its role. “Retail activities cannot be burdened with further capital requirements, as acknowledged by the Liikanen Report, which moved away from the Vickers approach”, said Mr Pérol. “But at the same time some activities such as market making, that are useful to clients and the economy, must not be hampered by overly strict ring-fencing.”
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