Past Event

European banking supervision: the first eighteen months

After its first 18 months, how has the SSM affected the European banking system?

Date: June 14, 2016, 12:30 pm Finance & Financial Regulation Tags & Topics

summary

See below for video and event materials

While the report presented by Dirk Schoenmaker and Nicolas Véron contains very insightful analyses, covering both quantitative and qualitative aspects of the European banking landscape, their focus in the event was on the assessment of European banking supervision.

Their assessment was based on four criteria:

  • First of all, they found European banking supervision to be effective. For example, the organisation through Joint Supervisory Teams provides a clear line of command, and the system proved its ability by effectively managing banking aspects of the 2015 Greek crisis.
  • Secondly, they found banking supervision to be tough. ECB supervision is intrusive and there seems to be less capture by supervised banks, partially explained by the geographical distance to Frankfurt. It has also not shied away from imposing higher capital requirements under SREP. However, this positive conclusion holds mostly for large banks and less so for less significant banks.
  • Moreover, it seems to be broadly fair with no evidence for country-specific patterns, e.g. in SREP scores. However, they also point to the existence of heterogeneity of country-specific domestic systemic buffers, which are still set by national competent authorities.
  • Fourthly, they found efficiency still to be an area for improvement. Finally, despite many positive aspects so far they point out that European banking supervision still has not broken the bank-sovereign vicious loop and allows for geographical ring-fencing.

Comments on the report by Mario Nava, Director at DG FISMA at the European Commission, and Pieter Verheugd, Manager of Public and Government Affairs at ING, largely shared the overall positive analysis of European banking supervision so far. The latter added a perspective from a bank directly affected by European banking supervision and found the idea of Banking Union appealing and argues that specific issues still left to national competent authorities should be removed.

Several questions in the Q&A session were about the supervisory set-up, e.g. the need and scope for legal revision of supervision, the relationship between SSM and non-SSM countries, and ring-fencing.

As for the first, Dirk Schoenmaker argued that there is no big need for legal revision as banking supervision is about execution and the general set-up with the ECB having the final word contributes to the smooth functioning of supervision. Nicolas Véron added that SSM regulation was adopted by unanimity and cannot easily be revised.

On the second question Dirk Schoenmaker responded that it was a minor point due to the fact that there are only very few large non-euro area banks under SSM supervision and colleges with supervisors in other jurisdictions were in place.

Regarding the last point, he said ring-fencing might only be a short-term issue as banks might turn subsidiaries into branches, should geographical ring-fencing continue. Another question concerned supervision of significant institutions (SIs), which European banking supervision focuses on, and its impact on less significant institutions (LSIs). Nicolas Véron argued that supervision of SIs still remains to be one of the big challenges. For example, banks under institutional protection schemes could be considered as SIs on aggregate and should be supervised accordingly.

Event summary by Bennet Berger, Research Assistant

VIDEO RECORDING


Event materials

Presentation by Dirk Schoenmaker and Nicolas Véron

DSC_0497
DSC_0500
DSC_0494
DSC_0501

Schedule

Jun 14, 2016

12.30-13.00

Check-in and lunch

13.00-13.30

Presentation

Dirk Schoenmaker, Senior Fellow

Nicolas Véron, Senior Fellow

13.30-14.30

Panel discussion and audience Q+A

Chair: Guntram B. Wolff, Director

Mario Nava, Director, Financial system surveillance and crisis management, European Commission, DG FISMA

Dirk Schoenmaker, Senior Fellow

Pieter Verheugd, Manager Public & Government Affairs, ING

Nicolas Véron, Senior Fellow

14.30

End

Speakers

Mario Nava pic

Mario Nava

Director, Financial system surveillance and crisis management, European Commission, DG FISMA

Schoenmaker pic

Dirk Schoenmaker

Senior Fellow

Nicolas Véron

Nicolas Véron

Senior Fellow

Pieter Verheugd

Manager Public & Government Affairs, ING

Guntram B. Wolff

Guntram B. Wolff

Director

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevón

Matilda Sevon

matilda.sevon@bruegel.org

Read about event More on this topic

Past Event

Past Event

Global outlook and policy priorities

At this event the Managing Director of the International Monetary Fund, Christine Lagarde, will speak about the global outlook and policy priorities, ahead of the 2017 IMF Spring Meetings

Speakers: Christine Lagarde, Jean-Claude Trichet and Guntram B. Wolff Topic: Global Economics & Governance Location: Brussels Date: April 12, 2017
Read article More on this topic More by this author

Blog Post

Lagarde picture

Building a more resilient and inclusive global economy

Curtain raiser speech ahead of the 2017 IMF Spring Meetings delivered at Bruegel by the Managing Director of the International Monetary Fund.

By: Christine Lagarde Topic: Global Economics & Governance Date: April 12, 2017
Read article More on this topic

Blog Post

Schoenmaker pic
Nicolas Véron

EBA relocation should support a long-term ‘twin peaks’ vision

As the Commission launches a review of European financial supervision, the authors argue that Europe needs to move towards a twin peaks model – dividing supervision of prudential and conduct-of-business issues. But this is a long-term vision, and will require institution building. The immediate priorities are to choose a new home for the EBA and reinforce ESMA.

By: Dirk Schoenmaker and Nicolas Véron Topic: Finance & Financial Regulation Date: April 5, 2017
Read article More on this topic More by this author

Blog Post

Silvia Merler

Italian banks: not quiet on the eastern front

Italian banks are back in the spotlight. After MPS failed to raise enough capital from private investors earlier this year, Banco Popolare di Vicenza (BPVI) and Veneto Banca take centre stage. The story of these two banks epitomises the strategy of delayed reform that has been so characteristic of the Italian banking crisis.

By: Silvia Merler Topic: Finance & Financial Regulation Date: March 31, 2017
Read about event More on this topic

Past Event

Past Event

Artificial intelligence: challenges and opportunities

Rob Atkinson, the founder and president of the Information Technology and Innovation Foundation presented his research work on the impact of artificial intelligence on our lives.

Speakers: Robert Atkinson, Anna Byhovskaya, Merja Kyllönen and Georgios Petropoulos Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 23, 2017
Read about event More on this topic

Past Event

Past Event

Conversations on the future of Europe

On the occasion of the 60th anniversary of the signing of the Treaty of Rome, we held an event of four conversations between Bruegel scholars and European thinkers.

Speakers: Maria Demertzis, Ivan Krastev, Emmanuel Mourlon-Druol, Johanna Nyman, André Sapir, Catherine Schenk, Andre Wilkens and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 22, 2017
Read article Download PDF More on this topic More by this author

Policy Contribution

PC 07 2017 cover

What happened to global banking after the crisis?

The global financial crisis allegedly led to the end of global banking. However, Dirk Schoenmaker finds that reports of the demise of global banking are premature.

By: Dirk Schoenmaker Topic: Finance & Financial Regulation Date: March 14, 2017
Read about event More on this topic

Past Event

Past Event

Intellectual Property and Competition Policy in Europe and Japan

Intellectual property (IP) is a cornerstone for incentivising innovation initiatives. It defines a framework within which firms and individuals can produce creations of intellect.

Speakers: Peter Alexiadis, Reiko Aoki, Michael Koenig, Kai-Uwe Kühn and Georgios Petropoulos Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 14, 2017
Read article More on this topic More by this author

Podcast

Podcast

Banks and borrowers in distress — Europe's NPL crisis

European banks are struggling with high amounts of non-performing loans. We look at the reasons behind this crisis, and how it affects banks, borrowers and the European economy as a whole. Finally, we explore potential solutions.

By: The Sound of Economics Topic: Finance & Financial Regulation Date: March 10, 2017
Read about event More on this topic

Past Event

Past Event

Different perspectives on Nord Stream II

At this event, we bruoght together key-experts that studied the regulatory and economic aspects of Nord Stream II

Speakers: Severin Fischer, Siobhan Hall, Alan Riley, Szymon Polak, Sebastian Sass, Simon Schulte, Borbála Takácsné Tóth and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 21, 2017
Read about event More on this topic

Past Event

Past Event

Financing the Belt and Road Initiative

The Belt and Road initiative, recently embarked on by China, aims to improve cross-border infrastructure in order to reduce transportation costs across a massive geographical area between China and Europe.

Speakers: Alicia García-Herrero, SUN Mingxi, Jianwei Xu, Alessandro Carano and Sue Anne Tay Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 9, 2017
Read article More on this topic

Blog Post

MariaDemertzis1 bw
sd-12177-_0028bea2-web

Bruegel conference discusses strategies to tackle Europe’s NPL crisis

Bad loans and private sector debt distress are widely acknowledged to hold back investment and growth in Europe. It was good, then, to hear ECB Vice-President Vítor Constâncio call for a comprehensive strategy to address the non-performing loans problem at an event hosted by Bruegel last week.

By: Maria Demertzis and Alexander Lehmann Topic: Finance & Financial Regulation Date: February 7, 2017
Load more posts