Brussels, 21 March 2013
Statement by Commissioner Michel Barnier following the agreement in trilogue on new European rules to impose stronger prudential requirements on banks
I welcome the final agreement reached last night on a package that sets stronger prudential requirements for banks, requiring them to keep sufficient capital reserves and liquidity. The final deal builds on the elements that were identified in the trilogue of 27th February (see MEMO/13/155). After the agreement on the Single Supervisory Mechanism two days ago (see MEMO/13/251), we are taking another fundamental step towards a genuine Banking Union, which will contribute to securing the stability of European banks and benefit our economies at large.
The new framework will make EU banks more solid and will strengthen their capacity to manage properly the risks linked to their activities, and absorb any losses they may incur in doing business.
Furthermore, these new rules will strengthen the internal governance of banks. Remuneration policies will have to be aligned with sound and effective risk management. Shareholders are given a special responsibility and an appropriate and reasonable maximum ratio is introduced between the fixed salary and the bonus for all risk takers. Supervisory Authorities will also have more power to impose sanctions to ensure compliance.
With the package agreed last night, we are reaching two important milestones of our financial regulation agenda.
First of all, banking union is now underway. And we have all elements to make it happen. We have a Single Rulebook for banks in the single market since many of the rules will be directly applicable in Member States without any possibility of regulatory arbitrage, while offering the necessary degree of flexibility to allow national supervisors to tackle the specific risks affecting their banks and markets. And the Single Supervisory Mechanism will use this essential tool, once it will be fully operational.
Second, we are now in a position to enact a key G20 commitment, as CRDIV transposes into EU law the Basel III agreement. With last night's package, the EU translates international standards on bank capital agreed at global level, thereby fully implementing the decisions taken by the G20. This agreement testifies that the EU is in the frontline in promoting a coherent application of Basel III rules to create a level playing field for banks and avoid the instability that would stem from diverging rules in the world's two largest financial markets. We expect other G20 members to also live up to their commitments.
Negotiations in the European Parliament and the Council have been challenging since the Commission made its proposal in July 2011. But thanks to the proactive attitude of all parties involved, we have put in place last night an important tool for making banks in Europe more resilient. I would like to thank all actors involved in the process, and in particular the rapporteur Mr Karas and the shadow rapporteurs Mr. Bullman, Ms Bowles, Mr.Lamberts and Ms Ford as well as the Polish, Danish, Cypriot and Irish Presidencies. I'm looking forward to the European Parliament confirming this political agreement in its forthcoming plenary session.