Blog Post

A banking union of 180 or 91%?

The European finance ministers have agreed on a deal for the banking union. According to the deal, the ECB would be directly responsible for banks with assets exceeding 30bn euro or 20% of GDP, or at least the 3 largest banks of each country member for those nations where fewer than three fulfil the previous criteria. In this chart of the week, we applied the two criteria to the Banker dataset, which includes 754 banks in the euro zone, so 14% of the 5404 banks. In terms of assets, a comparison between the Banker database and ECB aggregate statistics shows a good overall coverage of the banking system.

By: and Date: December 14, 2012

The European finance ministers have agreed on a deal for the banking union. According to the deal, the ECB would be directly responsible for banks with assets exceeding 30bn euro or 20% of GDP, or at least the 3 largest banks of each country member for those nations where fewer than three fulfil the previous criteria. In this chart of the week, we applied the two criteria to the Banker dataset, which includes 754 banks in the euro zone, so 14% of the 5404 banks. In terms of assets, a comparison between the Banker database and ECB aggregate statistics shows a good overall coverage of the banking system.

The graph shows that the threshold allows covering 92% of the total assets of banks in the euro zone and at least 187 banks. For most countries of the euro area, more than 80% of the assets of the banks located in the country will be covered. Notable exceptions are Portugal, Malta, Greece, Slovenia and Slovakia, where only the 3 biggest banks or at most 5 in Greek and Portugal would be under the direct oversight of the ECB according to our database, while in France almost 100% of assets are covered. In terms of the percentage of banks, a relatively low fraction of banks is covered as indicated in the graph.

Going forward, it will be crucial that the actual final implementation of the SSM will provide the ECB with the power to step in for any bank in the euro zone if it deems it necessary. The published compromise seems to point in that direction but is not entirely clear. After all, problems coming from 10% of assets can still be very significant. But overall, it is a big achievement that the ECB will have direct oversight over such a big proportion of assets.

 


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

Topics

Tags

Comments

Read article More on this topic More by this author

Blog Post

Silvia Merler

Italy's Atlas bank bailout fund: the shareholder of last resort

Italy’s new bank fund Atlas might be what is needed in the short run, but in the longer term the fund will increase systemic risk. What ultimately matters is how this initiative will affect the quality of bank governance, a key issue for the future resilience of the system.

By: Silvia Merler Topic: Finance & Financial Regulation Date: April 22, 2016
Read about event More on this topic

Upcoming Event

9 
Jun
2016
13:00

The Spanish financial crisis: Lessons for the European banking union

Spain is among the countries still recovering from the financial crisis. While misjudged investments were part of the cause, these past mistakes could offer lessons for the European banking union.

Speakers: Miguel Otero-Iglesias and Federico Steinberg Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More on this topic

Opinion

fratzscher-03
Reint_Gropp_m
p2-Kotz
jan-pieter-krahnen
odendahl-june14-1409577172
Beatrice Weder di Mauro
Guntram B. Wolff

Mere criticism of the ECB is no solution

What would happen if the ECB failed to respond to the excessively low inflation and the weak economy? And what economic policy would be suitable under the current circumstances, if not monetary policy?

By: Marcel Fratzscher, Reint Gropp, Hans-Helmut Kotz, Jan Krahnen, Christian Odendahl, Beatrice Weder di Mauro and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: April 10, 2016
Read about event More on this topic

Past Event

Past Event

Stability of EMU and prospects for fiscal union

How can Europe make progress with EMU and move towards a Fiscal Union?

Speakers: Fernando Fernandez, Pia Hüttl, José Leandro, Javier Méndez Llera, Fernando Navarrete and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 9, 2016
Read article More on this topic More by this author

Blog Post

Nicolas Véron

Market turbulence highlights bumpy transition to Europe’s new bank policy regime

Concerns about Europe’s banks contributed to turmoil in global financial markets in February, but Europe’s new banking sector policy regime should gradually help reduce uncertainty.

By: Nicolas Véron Topic: Finance & Financial Regulation Date: March 8, 2016
Read article Download PDF

Policy Contribution

The United States dominates global investment banking: does it matter for Europe?

The United States dominates global investment banking: does it matter for Europe?

Europe’s banks are in retreat from playing a global investment banking role, and this trend is likely to continue in the future. What will be the consequences and what should be the policy response?

By: Charles Goodhart and Dirk Schoenmaker Topic: Finance & Financial Regulation, Global Economics & Governance Date: March 7, 2016
Read article More on this topic

Opinion

Pia Hüttl
Schoenmaker pic

Why euro-zone ‘outs’ should join banking union

Joining the banking union could provide a stable arrangement for managing financial stability for the UK and other non-Euro countries.

By: Pia Hüttl and Dirk Schoenmaker Topic: European Macroeconomics & Governance Date: February 11, 2016
Read article More on this topic

Blog Post

Pia Hüttl
Schoenmaker pic

European banking union: should the 'outs' join in?

To address coordination failures between national institutions regulating banks, we need supranational policies. Banking union encourages further integration of banks across borders, deepening the single market, and could also benefit countries outside the euro which have a high degree of cross-border banking.

By: Pia Hüttl and Dirk Schoenmaker Topic: European Macroeconomics & Governance Date: February 4, 2016
Read article Download PDF More on this topic

Policy Contribution

Should the ‘outs’ join the European banking union?

Should the ‘outs’ join the European banking union?

This paper analyses the banking linkages between the nine ‘outs’ and 19 ‘ins’ of the banking union. It finds that the out countries could profit from joining banking union, because it would provide a stable arrangement for managing financial stability.

By: Pia Hüttl and Dirk Schoenmaker Topic: European Macroeconomics & Governance Date: February 4, 2016
Read article More by this author

Parliamentary Testimony

gwDutch Senate

Comments on the Five Presidents' Report

Presentation on the Five Presidents’ Report delivered at the Dutch Senate's Standing Committee for European Affairs, Finance and Economic Affairs on 8 December 2015.

By: Guntram B. Wolff Topic: Dutch Senate, Parliamentary Testimonies Date: December 9, 2015
Read article More on this topic More by this author

Opinion

Guntram B. Wolff

Europäische Einlagensicherung: Deutschland würde profitieren

Wer ernsthaft die Bankenunion will, kommt um die EU-weite Sicherung der Sparguthaben nicht herum. Es braucht Obergrenzen, wie viele Staatsanleihen Banken halten sollen.

By: Guntram B. Wolff Topic: Finance & Financial Regulation Date: November 25, 2015
Read about event More on this topic

Past Event

Past Event

Economic governance of the EU: Quo Vadis?

This event will address topics of central interest in current EU policy debates: fiscal and competitiveness coordination, financial union and the divergent needs of member states inside and outside the euro area.

Speakers: Maria Abascal, Anna Ascani, John Berrigan, Michiel Bijlsma, Anne Bucher, Zsolt Darvas, Luc Denayer, Andreas Georgiou, Christopher Hartwell, Georg Ringe, André Sapir, Mikko Spolander, Wilfried Steinheuer, Massimo Suardi, Nicolas Véron, David Vines, António Vitorino and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 3, 2015
Load more posts