EU Council Blinks First Over SRM

On 19 February 2014, the EU Council published a press release reviewing the state of play of negotiations over the single resolution mechanism (SRM).

Committed to reaching agreement over the SRM before the upcoming parliamentary elections, EU finance ministers had met the previous day in order to discuss possible adjustments to the Council’s December 2013 general approach to the SRM, with a view to giving more flexibility to the presidency in the forthcoming “trilogue” negotiations.  Wiggle room was noted as existing in the following areas: Continue reading

ECB Wants Beefed-Up SRM

On 12 February 2014, the European Central Bank (ECB) published a speech by Mario Draghi, ECB President, on financial integration and EU banking union.

Mr Draghi conceded that there were improvements that could be made to elements of the Council’s proposal on the Single Resolution Mechanism Continue reading

ECB Consults on Draft SSM Framework Regulation

On 7 February 2014, the European Central Bank (ECB) published a consultation paper on a draft of the ECB Single Supervisory Mechanism (SSM) Framework Regulation.

Pursuant to the SSM, from 4 November 2014, the ECB will assume responsibility for the supervision of significant supervised entities (SSEs) Continue reading

ECB Identifies Banks Subject to SSM

On 6 February 2014, the European Central Bank (ECB) published a decision identifying those banks that are subject to comprehensive assessment under the Single Supervisory Mechanism (SSM) in accordance with Article 33(4) of Regulation 1024/2013. Continue reading

Parliament Offers Olive Branch Over Resolution Funding?

On 4 February 2014, the EU Parliament published a press release on the latest negotiations over bank resolution.

As previously reported (see this blog post for more detail), negotiations over resolution funding seemed largely to have reached an impasse.  However, yesterday’s tone seems somewhat more conciliatory in nature. Continue reading

Single Resolution System- closer to being resolved

MEP’s voted on the 17th to establish their position on critical details of the single resolution system. During yesterday’s Parliamentary hearing, ECB President Mario Draghi said, Continue reading

EU Banking Reform Legislation Expected January 2014

On 11 December 2013, the European Commission published a press release containing remarks made by Michel Barnier, European Commissioner for Internal Market and Services on EU banking structural reform.  Mr Barnier stated that the legislative proposal on EU banking reform will be presented at the beginning of January 2014.  Following the recent publication of the Volcker Rule on 10 December 2013, the Commission will also look at the details of this new rule (see this blog post for more details).  For certain banks deemed too big to fail, he explained that the EU banking reform proposal will consider separation, calibration and treatment of the risks taken by these banks.

Banking Union Details to be Discussed in Emergency Meeting

Yesterday’s meeting of finance ministers in Brussels failed to establish crucial details over bail-in according to the Financial Times. The negotiations did produce a draft compromise broadly based on Germany’s revised position (see this blog post for more details).  The financing details will be left to an emergency meeting on the eve of the next EU summit in Brussels on 19 December 2013.  In the event Brussels rejects the board proposal, the plans would need the approval of the European Commission or a majority vote of banking union member states.

France and Germany inch toward banking union deal

An article in today’s Financial Times reports that, today’s meeting of finance ministers in Brussels is expected to make further progress on the creation of a single banking framework union. Following a meeting of key countries and EU officials in Berlin last Friday, unsubstantiated reports that France and Germany were resolving ongoing differences and a deal was close to completion emerged. Continue reading

SSM Regs Published in Official Journal

On 29 October 2013, the following were published in the Official Journal of the EU (OJ):

The SSM Regulation bestows supervisory powers over “significant” Eurozone banks on the European Central Bank (ECB).  The assessment of whether or not a bank is “significant” will be based on:

  • Size – the presumption being that any bank which fulfils any of the following criteria will be regarded as significant:
    • the total value of its assets exceeds EUR 30 billion; or
    • its total assets represent over 20% of the GDP of the relevant participating Member State (unless the value of those assets is below EUR 5 billion); or
    • both the bank’s national competent authority (NCA) and the ECB confirm that the bank is to be regarded as “significant”;
  • Importance for the economy of the EU or any Member State participating in the SSM; and
  • Significance of cross-border activities.

Any bank which has received public financial assistance shall be regarded as “significant” as are the three most significant banks in each of the participating Member States.  The assessment as to whether or not a bank is “significant” should not be conducted more often than annually.

Pursuant to the SSM Regulation, the ECB will have power over the authorisation (and withdrawal of authorisation) of banks, as well as authority in relation to early intervention and recovery planning (but not resolution).  In addition, it can, inter alia:

  • require banks to hold own funds in excess of capital requirements;
  • restrict, limit or require the divestment of activities of a bank;
  • impose limits on variable remuneration;
  • prohibit distributions;
  • impose additional reporting and liquidity requirements; or
  • remove members of the management body.

The ECB is due to publish a framework for the SSM by 4 May 2014, prior to assuming its supervisory role on 4 November 2014.  In advance of this, it is empowered to require NCAs to provide it with relevant information from 3 November 2013, the same day on which the SSM Regulation enters into force.