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Brussels, 15 October 2013
Statement by President Barroso and Commissioner Barnier following the Council's final approval of the creation of the Single Supervisory Mechanism for the eurozone
President Barroso said:
“It is good news that the Council has given the final sign-off to the Single Supervisory Mechanism, the first leg of our Banking Union. The Commission is ready to help in any way with the European Central Bank's intensive preparations to ensure the SSM begins its work next year. Now it is urgent to put the second leg in place by agreeing the single resolution mechanism and fund and the single rule book for bank resolution tools and deposit guarantees. These new rules will help build a stable financial sector, restore fair lending conditions across the EU and ensure that banks, not taxpayers, pay for their own mistakes. We owe it to our citizens to deliver before the European Parliament's elections in May.”
Commissioner Barnier said:
“Today, the Council has given its final approval for the Single Supervisory Mechanism, the first pillar of the Banking Union. We have written regulatory history. This is a momentous step: the start of a new era for the supervision of Eurozone banks.
The ECB will soon take on vast new powers. Many challenges lie ahead but I am confident that it will succeed. The credibility of the banking system is at stake.
I would in particular like to acknowledge the crucial roles played by the Cypriot, Irish and Lithuanian presidencies and the European Parliament in finding this agreement.
But better supervision is not enough. A banking union also requires action to restructure non-viable banks when necessary. That is why the supervisory system needs to be complemented by an integrated European resolution system for all countries participating in the banking union.
We have had a useful discussion in Luxembourg today on these issues. We must find a final agreement on the Directive on Banking Resolution for Member States and political agreement in Council on the Single Resolution Mechanism by the end of year.”
On 12 September 2012 the Commission adopted two proposals for the establishment of a single supervisory mechanism (SSM) for banks led by the European Central Bank (ECB). The proposal for the SSM regulation aimed to confer upon the ECB specific supervisory tasks over credit institutions in the Euro area. The accompanying proposal for the regulation on the European banking Authority (EBA) aimed to introduce limited amendments to the Regulation setting up the EBA to ensure a balance in its decision making structures between the euro area and non-euro area Member States.
This legislative package followed the Euro area summit on 29 June 2012, which called on the Commission to present proposals for the setting up of a single supervisory mechanism as a precondition for a possible direct recapitalisation of banks by the ESM (European Stability Mechanism).
A unanimous agreement was reached in the ECOFIN Council on 13 December on the Commission's proposal for a Single Supervisory Mechanism. The European Council of 14 December welcomed the agreement reached and called on the co-legislators “to rapidly agree so as to allow its implementation as soon as possible”.
Following intensive trilogue negotiations during January and February, co-legislators reached agreement on the package on 19 March 2013.
The European Parliament had given its assent in principle to the package in May. This was followed by national parliamentary procedures which have been completed in the meantime. After the EP vote, the Council has formally confirmed the agreement, and the legal texts will be published by the end of October. The SSM is expected to enter into force on 4 November 2013.
The supervisory powers of the ECB will be fully effective and operational one year after the entry into force of the text. New rules adapting the operating rules of the European Banking Authority (EBA) to this new framework will also enter into force in parallel.
Key elements of the SSM:
The establishment of the Single Supervisory Mechanism (SSM) is a first step towards a banking union and one of the pre-conditions for direct recapitalisation by the ESM. An integrated “Banking Union” will also include a common bank resolution mechanism, underpinned by a single rulebook.