Navigation path

Left navigation

Additional tools

Other available languages: none

European Commission

[Check Against Delivery]


Member of the European Commission, responsible for Internal Market and Services

Creating a financial architecture that supports cross-border banking

Conference on Ensuring Sustainable Finance in Transition Economies

Warsaw, 16 May 2014

Thank you Ralph Atkins for moderating, and thanks to President Marek Belka and the National Bank of Poland, Suma Chakrabarti and the European Bank for Reconstruction and Development, and to Tim Adams and the Institute of International Finance for inviting me to this conference.

It is a pleasure to be back in Warsaw. I have been here many times during this mandate as a Commissioner. Not least during the Polish EU Presidency in 2011.

The Polish Presidency accomplished many things. And in particular in my field, it started the important – but complex – negotiations on the Single Rule Book for EU banks, the CRD 4 package.

These new rules are now in force. And they are central to the topic we will discuss here today – cross-border banking.

A topic that is key for Poland and key for Europe.

This city is a suitable setting for this discussion. Many banks are headquartered here. And around 75% of the Polish commercial banking market is owned by foreign investors.

Poland has succeeded in managing risks, while growing a financial system that is focused on the real economy.

Following consolidation in the banking sector during the last 20 years, the Polish financial system not only survived – but actually worked pretty well during the financial crisis.

This is also reflected in the latest economic forecasts. According to the figures the Commission published on 5 May, estimated growth for Poland is 3,2% for 2014 and 3,4% for 2015. This is well above the EU average.

And your unemployment rate is decreasing.

All of Europe needs the kind of growth and renewal that Warsaw exemplifies.

This means having a sound financial system that supports the real economy. In particular the EU's 22 million SMEs, including 1,5 million Polish SMEs.

Cross-border banking is an essential element in all this.

During the crisis, the banks looked inwards and considerably reduced their cross-border lending activities. The situation is improving, as we saw in the Financial Integration Report published some weeks ago. But difficulties remain. The market is too fragmented.

I have quoted these figures before, but I will repeat them here because I find them very illustrative: Only 33% of Greek SMEs get the loans they demand from their bank. The figure for Spain and Italy is 50%. For Germany it is 87%!

So the funding is there, but it does not always flow cross-border.

The Banking Union, no doubt the most important reform of recent years, should help to improve that situation. Make the single market for banking better integrated.

Two years ago, the Banking Union was only an idea.

It has now become a reality.

As regards the first pillar, the Single Supervisory Mechanism, Danièle Nouy and her colleagues at the ECB are preparing to take over supervision in November.

The recent adoption of the second pillar, the Single Resolution Mechanism, aligns bank resolution with supervision at European level. The SRM is built around a strong Single Resolution Board and Single Resolution Fund.

  1. It will allow bank crises to be managed faster and more effectively. The SRM will be much more efficient and impartial than a network of national resolution authorities.

  2. It will ensure that everyone with a stake in the failing bank - depositors, investors and creditors - are treated fairly. Regardless of where they are located within the EU.

  3. Last but not least, it will help ensure that taxpayers' money will no longer be used to save failing banks.

The Banking Union is a historic achievement.

But we need to stay vigilant.

We need to monitor potential macro-economic risks - emerging within Europe or outside.

Because we know that, what happens at our borders, has a very direct and significant impact on the economic situation in Europe. I am thinking of Ukraine but not only. We need to promote stability, democracy, security, but also economic development at our eastern borders and on the other side of the Mediterranean.

And every new crisis will be different from the last one.

Let me now be more specific on the subject of this morning's discussion: the impact of the new architecture.

Many of you wonder what this new structure will mean for the single market. How will the Banking union affect non-Eurozone Member States?

The clear answer is that all our actions, including the establishment of the Banking Union, have been guided by one fundamental principle: protecting the unity and integrity of the Single Market.

If we look at the SRM:

We have built-in safeguards against discrimination, and safeguards to avoid any potential negative impact on non-participating Member States.

The Single Market will be preserved because the SRM builds on the Bank Recovery and Resolution Directive – the BRRD - which applies to all Member States.

Concretely, if a failing banking group operates both within the euro area and outside, the BRRD rules on the functioning of the resolution college will continue to apply. The mediation powers of the European Banking Authority will also apply.

Now that all the elements of the Banking Union are known, countries that are not in the euro can freely decide whether to join or not.

It is a national choice.

Needless to say, in my view, there are many benefits for non-euro Member States:

  1. they would have a strong voice in the single supervisory mechanism;

  2. as a 'host country' supervisor, they would have influence over the supervision of cross-border banking groups as a whole;

  3. they would benefit from more efficient crisis management procedures;

  4. and - if any bank were to fail - they would have the fire-power of the single resolution fund to back them up.

Joining the Banking Union is also a clear signal of commitment to Europe.

But I acknowledge that it is a complex choice.

Finally, let me also in this context mention the Vienna initiative which has played a key role in several countries of Central, Eastern and South-Eastern Europe.

The Vienna initiative has been instrumental in enhancing cooperation between supervisors in the region and avoiding disorderly deleveraging by the banks. This initiative should be continued. It has made an important contribution to financial stability in the EU.

Ladies and gentlemen, let me conclude:

Completing the new financial architecture - the Banking Union - means that banks will no longer be 'European in life but national in death'.

We promised to make the Banking Union a reality before the European Parliament elections. I'm very happy that we have delivered with the support of the Polish government.

However, recent events remind us that Europe faces a number of fundamental challenges. That it cannot be taken for granted that our entire continent can live in peace for ever.

Let us turn a new page now that we are on more solid footing and focus on accelerating the economic recovery in Europe.

So that we can together face other challenges as a strong European Union.

I am thinking of renewed efforts and cooperation in security and defence. I am thinking also of the need for an ambitious industrial strategy for Europe. It should be one of the two first priorities of the next European Commission and Parliament to build this industrial strategy. Based on more common investment in research, key enabling technologies, and strategic sectors. We also need to monitor together foreign investment, in line with the Treaty provisions. There should be no protectionism, but we should not be naive either. The second top priority – and I say it here in Warsaw echoing to the proposals of Prime Minister Tusk: we need a European Energy Union to forge our independence, recreate energy security, and also contribute to the competitiveness of our economy and industry. This means having the capability – and above all the will – to invest together, produce together, negotiate together more, and better.

Thank you for your attention.


Side Bar