CRD IV: Divisive subjects postponed
By Manon Malhère | Thursday 14 June 2012
Predictably, the three-way talks on the reform of prudential rules for banks, or CRD IV-CRR
(1), failed to lead to any real advances on the controversial subjects. Meeting in Strasbourg, on 13-14 June, the representatives of the European Parliament, Council and Commission dealt mainly with the less problematic aspects of the draft directive (CRD IV). The systemic buffers, the powers of the European Banking Authority and bankers’ remuneration are still unresolved.
The parties are expected to tackle the draft regulation (CRR) shortly and the talks are likely to be even tougher with leverage and liquidity ratios on the agenda.
On systemic buffers, the Council transmitted a draft compromise to the EP and the Commission aimed at reconciling the amendments proposed by the two institutions.
The Council favours a systemic risk buffer that authorises the 27 to tighten the capital requirements imposed on financial institutions. This would be an additional ratio of at most 3% of risk-weighted assets and would apply to all bank exposure without Commission oversight. It could rise to 5% under certain conditions. The EP proposes more binding capital requirements for systemically important financial institutions (SIFIs), with an additional ratio of 3% that could go as high as 10%. These ratios would apply to all exposure.
The compromise tabled by the Council is believed to provide for: an additional mandatory ratio of between 1% and 3.5% of risk-weighted assets, which would apply to all exposure of “global systemic institutions,” a source told
Europolitics. The question that already comes up is what criteria will be used to define such institutions.
The Council is also understood to have proposed a merger of the two amendments. In simple terms, the higher ratio would probably apply to SIFIs (and not the sum of the two), which would be tantamount to not making any differentiation.
Yet the EP is unanimous in its view that these are two problems that must be addressed differently, the shadow rapporteur for the Greens-EFA group, Philippe Lamberts (Belgium), told
Europolitics. Parliament has no intention of doing a giveaway deal on the additional requirements it proposes to place on SIFIs. The idea is apparently instead to combine the two buffers.
The parties also failed to agree on the powers of the European Banking Authority (EBA). Overall, the EP wishes to strengthen them and the Council to restrict them. The discussions are said to have concerned Article 64 of the draft directive.
The proposal limiting bonuses to the amount of bankers’ fixed pay, championed by MEPs, is also problematic.(1) The Commission presented a regulation and directive in July 2011 to implement Basel III