Vitas Vasiliauskas

1
Banking Union Where Are We Now and Where Are We
Going?

• Vitas Vasiliauskas
• Chairman of the Board
• 17 October 2013

2
Outline

• Key elements of the Banking Union
• Single Supervisory Mechanism
• Single Resolution Mechanism
• Deposit Guarantee Framework.
• Other financial sector reforms

3
Why a Banking Union?

• A well-functioning single market requires
  integrated financial regulation and oversight
• The same high-quality standards for banks
• Safeguarding taxpayers money
• Timely intervention and effective crisis
  resolution.

4
Single Supervisory Mechanism

• The ECB will assume new supervisory powers in
  November 2014
• Responsible for supervising significant banks
  (130) and the functioning of the SSM as a whole
• Relies on the national authorities that remain
  responsible for supervising less significant
  banks.
• Asset quality review followed by stress-testing
  to be announced in October
• Work on ensuring backstop arrangements.

5
Bank Recovery and Resolution Directive

• Harmonises crisis management and resolution
  tools minimises taxpayers exposure to losses
• On-going negotiations with the Parliament
• Main issues
• National discretion in using bail-in instruments
  and creditors hierarchy
• Minimum loss-absorbing capacity of banks
• Designation of the national resolution authority.
• Presidency objective final agreement by end-2013.

6
Single Resolution Mechanism

• Aims at effective resolution of cross-border
  banks
• First discussions at the informal ECOFIN in
  Vilnius
• Main issues
• Role of the Commission
• Voting modalities in the Resolution Board
• Centralisation of decision-making powers.
• Presidency objective general approach in the
  Council by end-2013.

7
Deposit Guarantee Framework

• Deposit Guarantee Schemes Directive aims at
  harmonising national frameworks
• The Presidency has recently started negotiations
  with the Parliament
• Presidency objective final agreement by
  end-2013
• A European deposit guarantee scheme should be
  seen as a final objective.

8
Controlling systemic risks

• Macro-prudential, or system-wide, regulation
  targets at preventing systemic risks
• Progress on establishing a European framework
• Establishing the European Systemic Risk Board
• Assigning macro-prudential mandates to national
  institutions
• Binding macro-prudential powers to the ECB.
• Complements the Banking Union.

9
Structural Banking Reforms

• Need to address the complexity of banking,
  distorted incentives and the too big to fail
  problem
• National initiatives on bank structural reforms
  in a number of countries
• A legislative proposal expected in November
• Presidency objective initiate discussions
• Should complement the Banking Union.

10
Conclusion

• Main priority the Banking Union and resolution
  framework in particular
• Our main goal should be to have a complete
  framework
• The Banking Union needs to be complemented with
• A sound European macro-prudential framework
• Structural reforms of the EU banking sector.