European banking union

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The European Banking Union refers to the transfer of national competencies to central institutions, decided in May 2014, or the creation of uniform, common guidelines and regulations in the field of financial market supervision and the restructuring or resolution of credit institutions within the European Union or the euro zone .

Components of the banking union

The two central pillars of the banking union are:

  • Single supervisory mechanism (English Single Supervisory Mechanism , SSM) - introduction of a central bank supervision of banks in the Euro zone by the ECB
  • Single resolution mechanism (English Single Resolution Mechanism , SRM) - creation of a central settlement authority (SRB) for processing illiquid banks; Under certain conditions it can fall back on a joint fund (SRF) to finance resolution measures.

A joint deposit insurance scheme was discussed as a possible third pillar of the banking union, since settlement and deposit insurance are closely linked. It was particularly controversial that such a joint deposit insurance would automatically lead to a pooling of bank losses. Instead, as a compromise, common standards for the national deposit guarantee systems were developed.

The banking union is underpinned by a uniform set of rules, which is applicable to all 28 EU member states and which are drawn up by the various authorities of the European Financial Supervisory System (in particular the European Banking Authority ). The core elements of the uniform set of rules are the following three directives, which apply to the entire EU:

  • Capital Requirements Directive: Directive 2013/36 / EU of June 26, 2013, which implements the capital requirements according to Basel III
  • Deposit Protection Directive: Directive 2014/49 / EU of April 16, 2014, which harmonizes deposit protection for investors
  • Resolution Directive: Directive 2014/59 / EU of May 15, 2014, which regulates the recovery and resolution of illiquid banks

Reasons for Banking Union and Development

The crisis in the euro area revealed weaknesses in the architecture of the monetary union . It became apparent that the common monetary policy requires common banking supervision . Bank crises and bailouts at the taxpayer's expense were ultimately the result. A banking union - consisting of a European banking supervision, bank resolution and common standards for deposit insurance - was necessary as a regulatory framework. To stabilize the banking sector, it should address the following problem areas:

  • Loosen the risk network of banks and states so that bank and sovereign debt crises no longer reinforce each other,
  • prevent the possibility of regulatory arbitrage by raising banking supervision and resolution to the European level, and
  • Reduce distortions of competition due to systemic importance by placing large and systemically important banks under special European supervision.

Plans of the European Commission for a central European banking supervision - after the insolvency of the American investment bank Lehman Brothers in 2008 - initially failed due to resistance from the EU member states, as they did not want to give up their powers in national supervision of the banks. In 2011, the European System of Financial Supervision was established with three financial supervisory authorities for banking ( EBA ), insurance ( EIOPA ) and securities ( ESMA ). The main task of the financial supervisory authorities is the development of uniform supervisory standards; monitoring continues to lie primarily with the national supervisory authorities of the member states. In the further course this system proved to be insufficient to deal with the financial crisis in Europe. In particular, the experience from the sovereign debt crisis in Cyprus since 2011 has shown that the national banking supervision had not responded adequately to the crisis.

In June 2012, the President of the European Commission, José Manuel Barroso, reiterated the plans for central banking supervision: According to him, the largest banks from all 28 member states should be placed under the supervision of a European authority. At the Brussels EU summit of the heads of state and government, they decided on June 29, 2012 that the European Stability Mechanism (ESM) may only give direct financial aid to banks if there is efficient banking supervision at European level with the participation of the European Central Bank (ECB) for the euro zone had been installed. At the same time, the summit instructed the EU Commission to present a corresponding mechanism shortly; These original plans for comprehensive European banking supervision met with criticism, especially in Germany and Great Britain. In September 2012, Barroso presented the EU Commission's plans in his “State of the Union” speech to the European Parliament : According to this, the ECB should take over the supervision of the banks that apply for ESM aid as early as January 1, 2013. In a second step, the ECB should take control of systemically important large banks in the euro area from July 2013 and over all banks in the euro area from the beginning of 2014. Ultimately, the ECB would have been responsible for overseeing more than 6,000 banks. In December 2012, the European finance ministers agreed on the key elements for the creation of uniform banking supervision mechanism ( Single Supervisory Mechanism, SSM ) . On March 19, 2013, the Council of the European Union announced that an agreement had been reached with the European Parliament on the establishment of a central European banking supervisory authority for the euro zone. According to this, the ECB should in future monitor all banks in the euro zone whose total assets account for over 30 billion euros or 20 percent of a country's economic output. This means that around 120 of the total of around 6,000 banks in the eurozone fall directly under the control of the ECB. The remainder should continue to be monitored by the national supervisory authorities, which was a central concern of the German government: In Germany, the savings banks and Volksbanks in particular are excluded from central control.

In March 2014, the European Commission agreed on the final modalities of the banking union. This culminated in the publication of the EU Resolution Directive (BRRD) and the Single Resolution Mechanism (SRB) in May 2014. From November 2014, the ECB took up its new role in banking supervision under the SSM.

Communityization of costs and contaminated sites

The banking union plans to pool the costs of a future bank bailout by 2023 through the resolution fund of the SRM. A pooling of liability for capital gaps already existing in 2014 in the bank balance sheets (so-called legacy assets ) should be prevented: Such gaps still arose under national banking supervision and should therefore be corrected nationally before liability is pooled. Only then can the banking union start with Europeanized liability for failures that arise under the control of the SSM. Against this background, the comprehensive assessment of the SSM banks, which was carried out under the direction of the ECB until October 2014, was of crucial importance.

As part of the balance sheet audits, the balance sheets of 130 major banks in the Eurozone were checked. The audit consisted of a retrospective examination of the assets (English asset quality review ) and future-oriented, scenario-based stress tests . The results were published at the end of October 2014; In the process, 25 European banks (including one in Germany) were found to have insufficient capital resources. The contaminated sites identified in this way are to be cleared up under national responsibility.

literature

  • Hans Peter Grüner : Banking Union as Part of a Fiscal and Financial Policy Strategy for Europe , Perspektiven der Wirtschaftsppolitik, 2013, 14, 219–233.

Web links

Individual evidence

  1. ↑ Markus Demary: Why the monetary union needs a banking union. (PDF) In: European Banking Union - Status of Implementation and Need for Improvement. Institut der Wirtschaft Köln / Konrad Adenauer Stiftung, March 2014, p. 6ff , accessed on March 1, 2015 .
  2. ↑ Peter Spiegel: Barroso pushes EU banking union. In: Financial Times (registration required). June 11, 2012, accessed July 1, 2012 .
  3. ^ The banking union is available , Handelsblatt.de, March 20, 2014, accessed on February 20, 2015
  4. ↑ A detailed review by the ECB shows that the banks need to take further measures. ECB press release. October 26, 2014, accessed February 20, 2015 .
  5. ↑ 25 banks fail the ECB stress test - one German, nine Italian. manager magazin online, October 26, 2014, accessed on February 20, 2015 .