Plan to urge ECB supervision of banks

The European Commission will propose next month giving the European Central Bank supervision over all of the eurozone’s major banks, German business newspaper Handelsblatt said yesterday, citing Commission sources.

That would include Sparkassen savings banks and Genossenschaftsbanken co-operative banks which Germany had hoped would be exempt when it signalled it wanted supervision only over the biggest 25 banks, the paper reported.

The commission’s plan, due on Sep 11, envisages national authorities supervising day-to-day business and the ECB only intervening where it sees “dangerous risks”, Handelsblatt said.

Outside the eurozone, national banking supervisors would stay in charge of their banks, the paper reported.

EU leaders agreed at the end of June to set up a single banking supervisor in Europe as a pre-condition to letting the eurozone’s rescue funds directly inject cash into lenders, without lending to a government first.

Stefaan de Rynck, spokesman for Michel Barnier, the commissioner for financial services who is drafting the proposal, said how the ECB would work with local regulators and with the pan-EU European Banking Authority was still being fleshed out.

The ECB may need to have supervisory power over all banks as not just large ones have had problems.

“It is hard to define what is a major bank, what is a systemic bank, so we need to make sure that in the banking union that supervisory system is able to cover all banks,” Mr de Rynck told the EU executive body’s regular briefing.

“The ECB has to play the pivotal role... The EBA will have to maintain a key role in terms of unity and coherence of the single market in a number of tasks there and how that relates to the new role of the ECB is what we are working on right now.”

Reuters