Banking in the European Union

Latest business news and information covering the EU's banking sector.

EC proposals to strengthen financial supervision in Europe - briefing — 23 September 2009, 12:38 CET

The European Commission has adopted a package of draft legislation to significantly strengthen the supervision of the financial sector in Europe. The aim of these enhanced cooperative arrangements is to sustainably reinforce financial stability throughout the EU; to ensure that the same basic technical rules are applied and enforced consistently; to identify risks in the system at an early stage; and to be able to act together far more effectively in emergency situations and in resolving disagreements among supervisors. The legislation will create a new European Systemic Risk Board (ESRB) to detect risks to the financial system as a whole with a critical function to issue early risk warnings to be rapidly acted on. It will also set up a European System of Financial Supervisors (ESFS), composed of national supervisors and three new European Supervisory Authorities for the banking, securities and insurance and occupational pensions sectors.

Retail Financial Services Report - Bank fees, pre-contractual information, advice and switching — 22 September 2009, 18:15 CET

Retail Financial Services Report - Bank fees, pre-contractual information, advice and switching - SEC(2009) 1251 final - The Consumer Markets Scoreboard is the main market monitoring instrument for the consumer policy area. After the publication of the first Consumer Markets Scoreboard early in 2008, which identified retail financial services as a sector in need of monitoring, the Commission selected three areas where consumers are faced with a significant number of problems. A new Commission Staff Working Document analyses the various retail financial services issues which were singled out for examination: pre-contractual information and the related issue of advice, the level and transparency of bank fees and bank account switching.

Commission Report on bank fee charges - briefing — 22 September 2009, 18:17 CET

There are widespread problems with the way banks inform and advise their customers according to a European Commission report on retail financial service published today. Specific problems include information which in many cases is difficult to understand, opaque bank fees, problems with advice and low levels of switching. The report describes the price structures of current accounts as "very opaque making it almost impossible for consumers to know how much they are paying and to compare different offers." For 66% of banks surveyed, bank fees were so unclear that experts compiling the report needed additional explanatory contacts with the bank to find the real costs of an account. Austria, France, Italy and Spain score poorly on transparency and are among the most expensive countries for banking accounts. The EU market is fragmented depriving consumers of the advantage of an EU Internal Market. Only 9% of EU consumers switched current accounts for the two years 2007-2008.

Review of national aid schemes introduced during the financial crisis — 10 August 2009, 19:14 CET

The European Commission's Directorate-General for Competition has issued a review of the aid schemes introduced by EU Member States and approved by the Commission during the financial crisis. In the review, the DG for Competition addresses the effectiveness of the schemes implemented to date and analyses issues raised by Member States in this context. The review furthermore consolidates the requirements common to all approved guarantee and recapitalisation schemes, in order to provide additional transparency on the general standard for all such schemes. Finally, the review gives an overview per Member State of the public resources involved as a percentage of GDP.

EC guidelines on restructuring aid to banks - briefing — 23 July 2009, 17:56 CET

The European Commission has agreed a Communication explaining its approach to assessing restructuring aid given by Member States to banks. The approach is based on three fundamental principles: i) aided banks must be made viable in the long term without further state support, ii) aided banks and their owners must carry a fair burden of the restructuring costs and iii) measures must be taken to limit distortions of competition in the Single Market. The guidelines, which are in force until 31 December 2010, explain in particular how the Commission intends to apply these principles in the context of the current systemic financial crisis, with a view to contributing to the return to viability of the European banking sector.

Regulatory Capital — 14 July 2009, 00:59 CET

European Commission website covering Regulatory Capital and the Capital Requirements Directive (CRD)

Further amendments to the Capital Requirements Directive - briefing — 16 July 2009, 23:45 CET

The European Commission has adopted a proposal to further amend the Capital Requirements Directive. The proposed amendments address capital requirements for the trading book and re-securitisations, disclosure of securitisation exposures, and remuneration policies. They form part of the Commission's response to the financial crisis by strengthening the regulatory framework in those areas, which were relevant to the causes of the crisis.

Useful information — 13 July 2009, 14:18 CET

Useful links and practical information on banking and credit institutions in the EU

Banking: Key EU directives — 13 July 2009, 14:20 CET

Key banking legislation in force in the European Union

Banking policy in the EU — 13 July 2009, 14:19 CET

Achieving an integrated market for banks and financial conglomerates is a core component of European policy in financial services sector.

Treatment of Toxic Assets in the European Community Banking Sector - briefing — 26 February 2009, 18:01 CET

The European Commission has provided guidance on the treatment of asset relief measures by EU Member States. Impaired assets correspond to categories of assets on which banks are likely to incur losses (e.g. US sub-prime mortgage backed securities). The Commission considers that a common European approach is presently needed to deal with the treatment of impaired assets, to make sure that foreseeable losses are disclosed and properly handled and banks can use their capital to resume their normal function of lending to the economy instead of fearing they would need this capital to cushion against possible losses. The Commission's Communication outlines various methods to deal with impaired assets, notably through asset purchase (including bad bank scenarios) or asset insurance schemes. It explains the budgetary and regulatory implications of asset relief measures and presents details concerning the application of the State aid rules to such measures. In particular, the guidance provides methodologies concerning the valuation of the impaired assets, the necessary remuneration of the State for the asset relief and the procedural steps that will be followed as well as the criteria that will be used to evaluate the State aid given to the banks as a result.

EC guidance for the treatment of toxic assets in the EU banking sector — 26 February 2009, 00:09 CET

The European Commission has provided guidance on the treatment of asset relief measures by EU Member States. Impaired or 'toxic' assets correspond to categories of assets on which banks are likely to incur losses (e.g. US sub-prime mortgage backed securities). The Commission considers that a common European approach is presently needed to deal with the treatment of impaired assets, to make sure that foreseeable losses are disclosed and properly handled and banks can use their capital to resume their normal function of lending to the economy instead of fearing they would need this capital to cushion against possible losses. The Commission's Communication outlines various methods to deal with impaired assets, notably through asset purchase (including bad bank scenarios) or asset insurance schemes. It explains the budgetary and regulatory implications of asset relief measures and presents details concerning the application of the State aid rules to such measures. In particular, the guidance provides methodologies concerning the valuation of the impaired assets, the necessary remuneration of the State for the asset relief and the procedural steps that will be followed as well as the criteria that will be used to evaluate the State aid given to the banks as a result.

Bank account switching — 08 December 2008, 20:14 CET

In its staff working document on the initiatives in the area of retail financial services, accompanying the Communication A single market for 21st century Europe, COM(2007)724 final, the European Commission invited the EU banking industry to develop a switching service to be offered by banks of all Member States to consumers who wish to switch their bank account from one bank to another at national level. In response to this invitation, the European Banking Industry Committee (EBIC) has adopted its Common Principles for Bank Account Switching.

Revision of EU rules on Deposit Guarantee Schemes - briefing — 16 October 2008, 01:34 CET

The European Commission has put forward a revision of EU rules on deposit guarantee schemes that puts into action the commitments made by EU Finance Ministers on 7 October. The new rules are designed to improve depositor protection and to maintain the confidence of depositors in the financial safety net. Under the new rules, the minimum level of coverage for deposits will be increased within one year from €20,000 to €100,000, and initially to €50,000 in the intervening period. Individual Member States can choose to add to these minimum levels. In addition, the payout period in the event of bank failure will be reduced from three months to three days. The proposal now passes to the European Parliament and the Council of Ministers for consideration.

Commission guidance on state aid for banks in crisis - briefing — 13 October 2008, 20:32 CET

The European Commission has published guidance on how EU Member States can best support financial institutions in the current financial crisis whilst respecting EU state aid rules and so avoiding excessive distortions of competition. The guidance is based in particular on EC Treaty rules allowing for aid to remedy a serious disturbance in the economy of a Member State (Article 87.3.b of the EC Treaty). The guidance will help Member States to put in place coordinated concrete measures to restore confidence in financial markets in accordance with the 12th October Eurogroup declaration. EU state aid rules require that measures taken do not give rise to disproportionate distortions of competition, for example by discriminating against financial institutions based in other Member States and/or allowing beneficiary banks to unfairly attract new additional business solely as a result of the government support. Other requirements include that measures must be limited in time and foresee adequate contributions from the private sector. The Commission will aim to approve schemes that comply with this guidance very quickly (within 24 hours, if possible).

EU finance ministers (Ecofin): Europe's immediate responses to financial turmoil — 08 October 2008, 00:01 CET

The Council of European Union Finance Ministers (ECOFIN) today adopted conclusions on the immediate responses to take to the financial crisis, along with four statements on the following subjects: financial stability and financial supervision, a coordinated EU response to the economic slowdown, executive pay, and the fight against tax fraud.

Capital Requirements Directive - briefing — 02 October 2008, 22:38 CET

The European Commission has put forward a revision of EU rules on capital requirements for banks that is designed to reinforce the stability of the financial system, reduce risk exposure and improve supervision of banks that operate in more than one EU country. Under the new rules, banks will be restricted in lending beyond a certain limit to any one party, while national supervisory authorities will have a better overview of the activities of cross-border banking groups. The proposal, which amends the existing Capital Requirements Directives, reflects extensive consultation with international partners, Member States and industry. It now passes to the European Parliament and the Council of Ministers for consideration.

Financial inclusion - guide — 29 May 2008, 00:52 CET

The study “Financial Services Provision and Prevention of Financial Exclusion”, prepared for the European Commission, aims at identifying and analysing the most effective policy measures to prevent financial exclusion of people facing poverty or social exclusion.

Commission investigation into UK restructuring aid package for Northern Rock - guide — 02 April 2008, 11:18 CET

The European Commission on 2 April 2008 launched an in-depth investigation under the EC Treaty’s rules on state aid into the UK authorities' package of measures to support the restructuring of Northern Rock, the UK mortgage bank. The Commission received the notification of these measures on 17th March 2008. The opening of an in-depth investigation gives interested parties the possibility to comment on the proposed measures but it does not prejudge the outcome.

The SWIFT case and the American Terrorist Finance Tracking Program — 28 June 2007, 16:27 CET

After the 11th September 2001 terrorist attacks, the United States Department of the Treasury ("U.S. Treasury") developed the "Terrorist Finance Tracking Program" ("TFTP"). The TFTP is based on United States statutory mandates and Executive Orders authorising the U.S. Treasury to use appropriate measures to identify, track and pursue those who provide financial support for terrorist activity.