Download SUPERVISION in the EU - European Commission

Introduction to EU Banking
Directives
Laszlo Butt
DG Internal Market and Financial Services
Banking & Financial Conglomerates Unit
1
Banking Directives
•
•
•
•
•
Capital Requirements Directive (CRD)
Deposit Guarantee Scheme (DGS)
Financial Conglomerates Directive
(FCD)
Winding up Directive (WuD)
Bank account and Branch Account
Directive
2
Capital Requirements Directive
(CRD)
• 2006/48/EC
– Banking Codified Directive
– licensing and supervision of CREDIT INSTITUTIONS
– capital requirements for credit and operational risk
• 2006/49/EC
– Capital Adequacy Directive
– capital requirements for INVESTMENT FIRMS
– capital requirements for market risk
3
Basel II – Three Pillars
Market Discipline
Supervisory Review
Regulatory Minimum Capital
4
Pillar 1 – Risks and the “continuum
of approaches”
Regulatory Minimum Capital
Operational Risk
Basic Indicator Approach
Standardised Approach
Advanced Measurement Appr.
Market Risk
Standardised Approach
Internal Models
Credit Risk
Standardised Approach
Internal Ratings Based Approach
Securitisations
• Requirements
apply to banks of
different size and
complexity
• more sophisticated
approaches come
with moderate
capital incentives
5
What more:
•
•
•
•
•
Licensing
Passporting
Third countries
Large exposures
Supervision and disclosure by competent
authorities
6
Recent changes to the CRD
Latest
amendments
October 2008 CRD II
 1st set of amendments to the CRD (securitisation, large exposures,
supervisory amendments, hybrids, liquidity risk) adopted by the COM
May 2009
 Adoption of the 1st set of amendments to the CRD by the European
Parliament and the Council
Further amendments
July 2009 CRD III
 2nd set of amendments to the CRD (trading book, re-securitisation and
remuneration) adopted by the COM
2010 CRD IV
 3rd set of amendments to the CRD (supplementary measures, dynamic
capital provisioning and options and discretions) to be adopted by the
COM
January 2011
 1st set of amendments to the CRD have to be implemented
Not to scale
7
Deposit Guarantee Scheme
(DGS, 94/19/EC)
Twin objectives:
• Protection of Depositors’ wealth
• Maintenance of confidence in the EU
banking system through protection of
stability – avoiding a run on the banks
8
DGS – Key provisions
• Member States have to ensure one or
more officially recognised DGS
• All deposit-taking credit institutions must
join DGS
– No exception
– Only alternative: equivalent institutional
protection scheme (mutual guarantee
scheme) recognized under national law
9
DGS – Key provisions
• Credit institutions must make available
information about DGS arrangements to
(potential) depositors
NEW Rules:
• Minimum coverage level set at €50,000
• Obligation on DGS to pay claims within
4-6 weeks from triggering event
10
DGS - Cross Border Aspects
• Home country DGS pays for depositors at
EU branches
• Art. 4 par. 2 and Annex II Dir. 94/19/EC
– Branch may join host state scheme, if higher
level and/or wider scope of cover than home
state scheme
– Host state scheme grants supplementary
cover only
– Arrangement necessary between home and
host DGS
11
Recent upgrade of the Deposit
Guarantee Scheme (DGS)
• Directive 2009/14/EC was adopted on 11
March 2009 and amended Directive
94/19/EC:
– raised coverage level from € 20,000 to € 50,000 and
€ 100,000 by end 2010
– abandoned 10% co-insurance
– reduced payout delay from 3-9 months to 4-6 weeks
• The Commission obliged to prepare a
review report (and, if necessary, legislative
proposals) by end-2009
12
Review of the DGS
Issues under examination:

•
•
•
•
•
•
Coverage level (EUR 100.000?) and scope
(eligibility criteria?)
Payout Delay (1 week?) and Modalities (set off?)
Financing of DGS (ex-ante with a maximum
level?)
Depositor information (template?)
Cross border cooperation (Role of host DGS?)
Mandate (pay-out box or European FDIC?)
Structure (Pan EU DGS?)
13
Financial Conglomerates
Directive (2002/87/EC )
• CCC: contagion, complexity, concentration
• Supplementary supervision on
consolidated level, monitoring riskconcentration, intra group transfers, capital
• Coordinator for cross sector & cross
border cooperation
14
Reorganisation and winding-up
of credit institutions (Directive
2001/24)
Objectives are to ensure
• universality in the winding up and reorganisation
of credit institutions with branches in other
countries
• mutual recognition of measures and proceedings
• cooperation of authorities
NOT aims at
• harmonising national insolvency legislation
15
WuD - Key provisions
Key provisions
• Home country principle in applicable law and
competence of authorities
• Communication
requirement
between
authorities involved
• Notification of all, including cross border
creditors
• Equal rights and treatment for creditors
regardless of the country of origin (pari passu)
16
Bank Account Directive
(86/635/EEC)
• The objective of this Directive is to
harmonise the format and contents of the
annual accounts of all financial institutions
within the EU.
17
Branch account
(89/117/EEC)
• The Directive removes the need for
branches of foreign banks and other
financial institutions having their head
office in another Member State or in a
non-member country to publish separate
annual accounts.
18
Recent proposal to upgrade the
supervisory architecture
• Macro-supervision: no single body in Europe responsible
for
systemic
risk
monitoring
(macro-prudential
supervision)
• Micro-supervision:
– No means of overcoming divergences in colleges of supervisors;
– Diverging technical standards between Member States (no
harmonised rulebook);
– No co-ordination of crisis interventions.
• Insufficient heeding of risk warnings
19
Two pillars of new supervisory
structure
• European Systemic Risk
Council (ESRC); and
• European System of Financial
Supervisors (ESFS).
20
Thank you for your attention
[email protected]
http://ec.europa.eu/internal_market/bank/
index_en.htm
21