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From November, the ECB will supervise directly around 130 of the bloc's largest lenders, as part of a broader push towards closer integration of Europe's banks that aims to create a more level regional playing field for the sector. The region's other 5,900 or so banks will remain under the brief of national supervisors, though the ECB will have powers to intervene if it deems necessary. "The ECB... will be exclusively competent to grant and withdraw authorisations for credit institutions and to assess acquisitions of qualifying holdings in all credit institutions", it said in a draft document that laid out how the ECB and national supervisors will cooperate under the new Single Supervisory Mechanism (SSM).
The ECB said that it will assume powers to set higher capital requirements than those applied at national level, as well as to take other "more stringent measures aimed at addressing systemic or macro-prudential risks at bank level".
The paper also confirmed previously flagged criteria for determining whether a bank should be supervised directly by the ECB, or by its national supervisory authority. Those criteria include the total size of a bank, its importance to its national economy and to the economy of the EU, and the extent of its cross-border activities. In all events, the bank will be supervised by the ECB if it has received aid from a European bailout vehicle, or if it is one of the largest three banks in its home country.
The ECB's powers will relate mainly to issues of capital adequacy and financial stability. They won't extend to other areas such as anti-money-laundering issues or consumer protection.
Written questions ahead of the ECON-Open-Coordinators meetings of 4 February 2014
Further reporting © Reuters
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