On Banking Union - annual report 2023

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on Banking Union – annual report 2023

(2023/2078(INI))

– having regard to its resolution of 11 July 2023 entitled ‘Banking Union – annual report 2022’,

– having regard to the Commission’s follow-up to Parliament’s resolution of 11 July 2023 entitled ‘Banking Union – annual report 2022’,

– having regard to the 2022 Annual Report by the European Central Bank (ECB) on supervisory activities of 21 March 2023,

– having regard to the 2022 Annual Report by the Single Resolution Board (SRB) of 30 June 2023,

– having regard to the Commission’s proposal of 24 November 2015 for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 806/2014 in order to establish a European Deposit Insurance Scheme (COM(2015)0586),

– having regard to the Commission’s proposal of 14 March 2018 for a Directive of the European Parliament and of the Council on credit servicers, credit purchasers and the recovery of collateral (AECE) (COM(2018)135),

– having regard to the Council’s press release of 7 December 2022 entitled ‘Anti-money laundering: Council agrees its position on a strengthened rulebook’,

– having regard to the Council’s press release of 27 June 2023 entitled ‘Banking sector: Provisional agreement reached on the implementation of Basel III reforms’,

– having regard to the Commission’s proposal of 18 April 2023 for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 806/2014 as regards early intervention measures, conditions for resolution and funding of resolution action (COM(2023)226),

– having regard to the Commission’s proposal of 18 April 2023 for a Directive of the European Parliament and of the Council amending Directive 2014/59/EU as regards early intervention measures, conditions for resolution and financing of resolution action (COM(2023)227),

– having regard to the Commission’s proposal of 18 April 2023 for a Directive of the European Parliament and of the Council amending Directive 2014/49/EU as regards the scope of deposit protection, use of deposit guarantee schemes funds, cross-border cooperation, and transparency (COM(2023)228),

– having regard to the Five Presidents’ Report of 22 June 2015 entitled ‘Completing Europe’s Economic and Monetary Union’,

– having regard to the Eurogroup statement of 16 June 2022 on the future of the Banking Union,

– having regard to the Commission’s communication of 16 December 2020 on tackling non-performing loans in the aftermath of the COVID-19 pandemic (COM(2020)0822),

– having regard to the outcome of the 2023 EU-wide transparency exercise of the European Banking Authority (EBA), published on 28 July 2023,

– having regard to the ECB document of May 2023 entitled ‘Financial Stability Review’,

– having regard to the report of the European Court of Auditors of 12 May 2023 entitled ‘Special report 12/2023: EU supervision of banks’ credit risk – The ECB stepped up its efforts but more is needed to increase assurance that credit risk is properly managed and covered’,

– having regard to the statements by Andrea Enria, Chair of the Supervisory Board of the ECB, at the hearings of Parliament’s Committee on Economic and Monetary Affairs on 21 March 2023 and on 28 June 2023,

– having regard to the statements at the public hearing of the Committee on Economic and Monetary Affairs with the candidate proposed for the Chair of the Supervisory Board of the ECB on 20 September 2023,

– having regard to the statements of Dominique Laboureix, Chair of the SRB, at the hearings of Parliament’s Committee on Economic and Monetary Affairs on 1 March 2023 and on 18 July 2023,

– having regard to the SRB Bi-annual reporting note to Eurogroup of 15 May 2023,

– having regard to the joint statement by the ECB Banking Supervision, the EBA and the SRB of 20 March 2023 on the announcement on 19 March 2023 by Swiss authorities,

– having regard to the Memorandum of Understanding dated 27 June 2023 establishing a framework for financial services regulatory cooperation between the European Union and the United Kingdom of Great Britain and Northern Ireland,

– having regard to the declaration of 7 December 2022 signed by the Chair of Parliament’s Committee on Economic and Monetary Affairs and agreed on by the coordinators for six Parliament political groups (European People’s Party, Progressive Alliance of Socialists and Democrats, Renew Europe, Greens/European Free Alliance, European Conservatives and Reformists and The Left) on the European deposit insurance scheme,

– having regard to its resolution of 14 March 2019 on gender balance in EU economic and monetary affairs nominations,

– having regard to Rule 54 of its Rules of Procedure,

– having regard to the report of the Committee on Economic and Monetary Affairs (A9-0000/2023),

A. whereas the Banking Union (BU), which currently encompasses the Single Supervisory Mechanism and the Single Resolution Mechanism, needs to be supplemented by the creation of a European deposit insurance scheme (EDIS);

B. whereas a completed BU would improve the competitiveness and stability of the banking sector and consumer choice and facilitate access to financing;

C. whereas EU banks have withstood the impact of Russian aggression; whereas they are key for implementing sanctions against Russia; whereas further coordination is needed to avoid circumvention of sanctions;

D. whereas, following calls from Parliament, the Commission proposed a reform of the crisis management and deposit insurance (CMDI) framework;

E. whereas fragmentation and the lack of cross-border consolidation of the EU banking sector is affecting its global competitiveness; whereas the profitability gap between EU and US banks has widened;

F. whereas a strong banking sector is key for delivering economic growth, financing small and medium-sized enterprises (SMEs) and start-ups and the transition to a green and digital economy;

G. whereas the non-performing loan (NPL) ratio slightly decreased in the first quarter of 2023 despite the pandemic and the Russian aggression against Ukraine;

H. whereas EU legislators negotiated rules to implement Basel III standards in a way that preserves banks’ competitiveness and takes into account the specificities of the EU banking sector;

I. whereas risks stemming from interest rate hikes have been properly addressed;

General considerations

1. Condemns the Russian aggression against Ukraine and its impact on the Ukrainian people, on the EU and elsewhere; calls on banks to continue reducing their exposure to energy intensive corporates;

2. Recalls that the banking sector plays a key role in the implementation of sanctions and in monitoring compliance; calls on the Commission to create a database at EU level to foster coordination among banks, close loopholes in Member States’ implementation of sanctions and assess how EU banks implement sanctions;

3. Calls on institutions to assist the remaining EU banks operating in Russia in preparing an orderly exit from the Russian market;

4. Asks the Commission to retain the completion of the BU and the Capital Markets Union as key priorities for its next mandate; highlights that both projects offer households and SMEs access to broader funding, increase financial stability, reduce the impact of economic downturns, fund the transition to a green and digital economy and unlock the EU’s growth potential;

5. Warns that recent increases in the profitability of EU banks are not enough to ensure their competitiveness; highlights that fragmentation limits banks’ ability to undertake strategic investments;

6. Calls for consolidation in the EU to be promoted by removing regulatory impediments to cross-border mergers; highlights that consolidation would increase the profitability of the EU banking sector and financial stability;

7. Highlights that the banking sector should be key in delivering the transition to a digitalised and carbon neutral economy and in channelling funds to renewable energies;

8. Regrets the lack of gender balance in the ECB Governing Council, its Supervisory Board and the SRB Board; calls on them to ensure that future appointments close the gap;

Supervision

9. Notes that the Common Equity Tier 1 ratio increased in the first quarter of 2023, but regrets that the liquidity coverage ratio fell;

10. Notes that the NPL ratio decreased further; calls for the adoption of the proposal for a AECE Directive to develop NPL secondary markets;

11. Highlights that the limited impact of the recent failure of midsized US banks proves the resilience of the EU banking sector; underlines that EU supervisors efficiently addressed risks arising from changes in the interest rate landscape; calls on supervisors to continue assessing exposures to further interest rate hikes;

12. Welcomes the results of the 2023 EU-wide stress test and the fact that EU banks could withstand an economic downturn; notes that the exposure of banks to interest rate risk depends on their asset structure and business model;

13. Calls for further harmonisation of the EU regulatory framework, promoting convergence between national authorities and using the supervisory dialogue to assess the evolution of threats to the banking sector;

14. Welcomes the agreement reached at interinstitutional level to implement Basel III standards in the EU; highlights that the framework will not increase prudential requirements for banks or damage their competitiveness; notes that the implementation of the Basel standards to crypto-assets is still pending;

15. Notes that the non-bank financial intermediary sector is continuing to grow; regrets that different rules for these activities may entail significant risks; calls for an appropriate regulatory approach to shadow banking, for the promotion of fair competition with banks and for the risks stemming from banks’ exposure to these activities to be addressed;

16. Highlights the importance of combining further integration with credible safeguards addressing the home-host issue;

Resolution

17. Welcomes the SRB’s approaches to deepening resolution assessments by developing quality control measures for resolution plans and assessing whether these plans can be implemented at short notice;

18. Welcomes the new SRB Chair’s decision to undertake a comprehensive strategic review and deliver a new action plan;

19. Underlines the importance of protecting creditor hierarchy in banking resolution; welcomes the joint ECB banking supervision, SRB and EBA statement regarding the full use of common equity instruments before Additional Tier 1 capital is written down;

20. Welcomes the proposal to reform the CMDI framework following calls by Parliament; calls for the scope of resolution to be expanded, clarification of public interest assessments and for the scope of State aid to be limited;

21. Highlights the role of the SRB and industry-funded safety nets in protecting taxpayers from paying for bailouts; calls for the introduction of a backstop consisting of a credit line from the European Stability Mechanism;

Deposit insurance

22. Regrets the lack of progress following the calls by MEPs in their statement of 7 December 2022 for negotiations on EDIS to be resumed;

23. Welcomes the Commission’s efforts to clarify the scope of depositor protection and increase convergence through a reform of 2014/49/EU on deposit guarantee schemes; warns that the CMDI review cannot be considered a replacement for EDIS;

24. Underlines the need for risk-based contributions to EDIS; calls for institutional protection schemes to be taken into account; calls for an assessment of bank asset quality; recommends starting with the pooling of liquidity and a gradual build-up of funds;

25. Notes that effective risk reduction is key for EDIS; highlights that the CMDI review provides co-legislators with an opportunity to resume negotiations on EDIS;

°

° °

26. Instructs its President to forward this resolution to the Council, the Commission, the European Central Bank, the Single Resolution Board and the European Banking Authority.