General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
November 28, 2017

The EC Vice President Valdis Dombrovskis spoke about the future role of local and regional banks in Europe, at an event in Brussels. He highlighted the post-crisis achievements in areas such as Banking Union, single rulebook, and supervisory and resolution mechanisms, in addition to the challenges that still remain—particularly in the context of small and medium-size banks.

Mr. Dombrovskis stated: "Legacy risks from the crisis are still evident in the high levels of non-performing loans (NPLs) in certain member states. A few parts of the post-crisis regulatory agenda for banks still need to be completed. And there is not enough financial integration and private risk-sharing across member states. This reduces the capacity of our economy to absorb economic shocks and shifts more of the burden onto taxpayers to pay for the mistakes of the banking sector." Additionally, he discussed the three elements in the banking sector that the EC is focusing on to tackle these challenges:

  • Finalize the post-crisis regulatory agenda, including the banking reform package. The package, which EC presented last November, implements international standards into EU law, such as a binding leverage ratio, the net stable funding ratio, and the Fundamental Review of the Trading Book.  It also introduced measures to facilitate resolution for systemic banks. With regard to proportionality, EC proposed to reduce the reporting burden for smaller banks, simplified the calculation of capital requirements for trading-related positions, and proposed a discount on capital requirements for bank investments in certain infrastructure projects. "These adjustments were based on the Call for Evidence, our assessment of the combined impact of financial services regulation.It was the first example globally of such a holistic exercise, and others are now following suit, including the US. We will soon come out with a follow-up report taking stock and setting out future work in this regard."
  • Address legacy risks such as high NPLs. Mr. Dombrovskis highlighted the progress in this area, with rate of NPLs having come down from 6.7% to 4.5% since mid-2014. Next spring, EC is expected to present a package of measures to accelerate this trend and prevent the stock from building up again. "Among other things, it will include a blueprint for national asset management companies, measures to foster secondary markets in non-performing loans, and possible prudential backstop measures for new loans that turn bad."
  • Complete the Banking Union. This can be done by progressing in parallel on risk reduction and risk sharing. It would also lead to an Economic and Monetary Union that can better withstand and absorb any future economic shocks. He also highlighted that, "We are still missing the third pillar of the Banking Union: a European Deposit Insurance Scheme [EDIS]." Progress in this area is slow and, therefore, EC has "recently put forward new ideas to help reach an agreement. These include a more gradual phase-in, with additional safeguards to avoid moral hazard."

In conclusion, he stated: "The economic upswing is an opportunity for Europe. Let us tackle the challenges ahead quickly and work together to build a diverse, profitable, and crisis-resistant European banking sector. Local banks will continue to play an important role in the future as they face economic and technological development."

 

Related Link: Speech

Keywords: Europe, Banking, SME, Proportionality, NPL, Banking Union, EDIS, Banking Reform Package, EC

Related Insights
News

BoE Publishes the Schedule for Statistical Reporting for 2019

BoE published the updated schedule for statistical reporting for 2019. The reporting institutions use the online statistical data application (OSCA) to submit statistical data to BoE.

January 16, 2019 WebPage Regulatory News
News

PRA Delays Final Direction on Reporting of Private Securitizations

PRA and FCA have delayed the issuance of final direction, including the final template, on reporting of private securitizations, from January 15, 2019 to the end of January 2019.

January 15, 2019 WebPage Regulatory News
News

SNB Updates Forms on Supervisory Reporting for Banks

SNB published Version 1.7 of reporting forms (AUR_U, AUR_UEA, AUR_UES, AURH_U, AUR_K, AUR_KEA, and AURH_K) and the related documentation for supervisory reporting on an individual and consolidated basis.

January 15, 2019 WebPage Regulatory News
News

BCBS Finalizes Market Risk Capital Framework and Work Program for 2019

BCBS published the final framework for market risk capital requirements and its work program for 2019. Also published was an explanatory note to provide a non-technical description of the overall market risk framework, the changes that have been incorporated into in this version of the framework and impact of the framework.

January 14, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: First Update for January 2019

EBA published answers to 13 questions under the Single Rulebook question and answer (Q&A) updates for this week.

January 11, 2019 WebPage Regulatory News
News

PRA Proposes to Amend Supervisory Statement on Credit Risk Mitigation

PRA published the consultation paper CP1/19 that is proposing changes to the supervisory statement (SS17/13) on credit risk mitigation.

January 10, 2019 WebPage Regulatory News
News

FASB Issues Q&A on Estimating Credit Loss Reserves

FASB issued a question-and-answer (Q&A) document that addresses particular issues related to the weighted average remaining maturity (WARM) method for estimating the allowance for credit losses.

January 10, 2019 WebPage Regulatory News
News

FED Updates Reporting and Supplemental Instructions for Form FR Y-9C

FED published the updated reporting instructions and supplemental instructions for the FR Y-9C reporting form. The reporting frequency for FR Y-9C is quarterly, as of the last calendar day of the quarter.

January 09, 2019 WebPage Regulatory News
News

PRA Updates Policy on Liquidity Reporting Under FSA047/048 and PRA110

PRA published the policy statement PS1/19 that provides feedback to responses to the consultation paper CP22/18 titled "Liquidity reporting: FSA047 and FSA048" and the proposal in CP16/18, which intended to correct the level of consolidation of the PRA110 reporting requirements.

January 08, 2019 WebPage Regulatory News
News

FED Proposes to Amend Company-Run Stress Testing Requirements

FED proposed to modify company-run stress testing requirements to conform with the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

January 08, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2468