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EU Better Regulation tailwinds felt, ESBG board concludes

EU Better Regulation tailwinds felt, ESBG board concludes

Momentum is building towards EU Better Regulation policy aims.

​​BRUSSELS, 4 December 2015 – Momentum is building towards EU Better Regulation policy aims, according to leaders of the European Savings and Retail Banking Group (ESBG) meeting held this week in Brussels.

At their twice-annual meeting, the ESBG board pointed out that the current reviews of prudential regulation in the pipeline, most notably the CRR/CRD IV package, should result in fixes which are in the end beneficial to customers of ESBG members – Europe's savings and retail banks. Reviews include the impact on bank lending and remuneration as well as a call for evidence launched to point out knock-on effects potentially dealing a blow to banks, which would require EU Level 1 legislative text rewrites.

Better Regulation-led reviews give a telling example of how EU policymakers have gained awareness to the need for proportionate rules in-line with what banks face on the ground. Close to customer, savings and retail banks nourish growth and help create jobs through financing a large chunk of SMEs in EU countries.

ESBG President Isidro Fainé commented: "The reviews are especially important for member banks as they face even more regulation and a low-interest rate environment. We continue to seek a framework that fosters a push to innovate and provide customers with breakthrough services."

Risk-weighted assets: the "New Frontier"

According to ESBG Managing Director Chris De Noose, the new frontier for banking regulation is Risk-Weighted Assets currently under scrutiny at Basel Committee level. To be put in place within the European Union, the RWA push aims to redesign the credit risk standardised approach, the credit risk treatments for sovereign exposures, and the consideration of introducing a "capital floor" based on the standardised approach, areas where ESBG and other bank industry watchers are keeping a close eye. On the prudential front, Net Stable Funding Ratio and the Leverage Ratio await final decisions, much of which depends on reports made available shortly by the European Banking Authority. The ESBG will consider the options offered, in particular based on the business models' characteristics. They have repeatedly warned of unintended negative consequences, however, which could tighten lending flow to growth-minded small- and medium-sized businesses.

EU Capital Markets Union and Retail Financial Services policy

ESBG calls for bank lending and capital markets funding to be seen as complementary under the Capital Markets Union – the EU's push to free-up more access to business funding. Well-fitted measures would help they note, such as putting in place a simple, transparent and standardised securitisation framework as well as an alleviated Prospectus regime. Having given its input in response to the Capital Markets Union green paper earlier this year, several concrete initiatives have surfaced as an outgrowth. Recent legislative proposals tabled cover securitisation, the Prospectus Directive review, and the consultations on covered bonds, venture capital and social entrepreneurship.

The European Commission policy's growing attention to retail financial services will be another important initiative, ESBG leaders confirmed.  ESBG sees the paper likely to pinpoint and list hurdles that impede a more joined-up single retail banking market while addressing real-world examples. ESBG will give its voice to the debate stemming from the upcoming Retail Banking Green Paper expected by year's end.  

Fainé concluded: "Digitalisation will be closely watched as it will trigger banks to rethink and reshape client relationships in order to offer a better service adapted to the needs of their clients."

>> Learn more about the ESBG Board

>> Learn more about ESBG policy positions


Leverage ratio; SME finance; Credits; European Institutions; European Supervisory Authorities (EBA-ESMA); Regulation; Proportionality; Supervision; Capital Markets; Capital Markets Union; Capital Requirements Directive and Regulation