BRUSSELS, 20 January 2017 – It was a year of change in 2016. Perhaps most notably was the U.S. election and Brexit. The effects were felt in the banking area, along with the impact from the digital wave and a flood of EU and global banking legislation. With so much influx, there remain some constants, such as the burdensome low interest rate policy.
More than ever, there is clear need for proportionality within better regulation, for subsidiarity, for calling an end to the low interest rate policy and for a fair outcome on the Basel reform. We continued to share with you the savings and retail banking story, which is that when locally focused banks thrive, local communities and boost job-creating SMEs – Europe's real economic engine – do too.
> Meetings strike chord with policymakers
Policymakers have listened. Meetings with Commissioner Oettinger, ECB / Single Supervisory Mechanism (SSM), stakeholders such as Mr. Constancio and Ms. Nouy and Ms. Lautenschläger proved fruitful. Our meeting with the cabinet of Vice President Dombrovskis, ECON Committee members as well as board members of the Single Resolution Board also brought further awareness of the need for our banking model to thrive. Together with our sister organisation WSBI, we are better linked up into the G20 process, and its business equivalent, the B20. We took part in B20 working groups under the Chinese presidency and even more activities are set for 2017 in Germany.
> Basel IV and risk-weighted assets
The Basel framework advanced, slowly but surely. Focus was placed most notably around risk-weighted assets as the push for revisiting the risk weights gained traction. The IRB and standardised approaches await final screening as well as the different risk categories – such as credit and operational. A pragmatic approach needs to be taken to reconcile resilience with boosting jobs and growth.
> Capital Markets Union: Staying focused on SMEs
Capital Markets Union legislation flowed in 2016, with legislative proposals on securitisation and prospectus.
Banks are the main provider of financing to SMEs. In this postcrisis period, banks' retail business models focus on less-risky, traditional banking. SMEs remain best served by banks. There remains a need, however, for fast growing companies to consider other sources of financing partnered by banks, as a ESBG-UEAPME workshop organised in May concluded.
> Supervision and Resolution; European Deposit Insurance Scheme (EDIS)
On the supervisory front, the SSM assumed increasing oversight of banking institutions and became one of the main interlocutors for banks in Europe. To address the change, the ESBG established links both at working and high levels to enter into a dialogue. A ESBG-SSM dialogue with local voices was convened in July along with a meeting with DG MS III in October. It is clear that debate will continue in 2017 with the SSM as well as MREL calibration and a potential EDIS – the European Deposit Insurance Scheme.
> Change at European Commission, but fight for proportionality marches on
In the wake of Brexit, we witnessed a major change as Jonathan Hill was replaced as financial services commissioner. Vice-President Valdis Dombrovskis' approach looks promising, as he announced that proportionality should be applied to EU legislation. Relatedly, the push for better regulation continues to gather steam. The Task Force on Proportionality, where ESBG has been an active member, is a valuable forum that has entered into the policy dialogue as part of the Commission's CRR Review. We hope the recently launched ESBG policy toolbox can help further raise awareness of proportionality and its benefits.
> New technologies and retail financial services
The green paper on retail financial services, which ESBG responded to, is foreseen to be transformed into an action plan in the first quarter of 2017. The Digital Single Market for retail financial services will likely take into account high-tech banking and the new, deeper relationship forged between banks and clients. A list of member-designed actions and ideas were shared with policymakers in 2016. In addition, Anti-Money Laundering rules should allow face-to-face identification to be replaced by distance identification. Big data also had a role to play, with the General Data Protection Regulation adopted.
> MiFID II, PRIIPs: Distribution of financial products
Information is the main link between banks and clients. Conveyed around financial products, information – in print, electronic form or in person – has been subject to legislative texts, notably MiFID 2 in its part on distribution to clients as well as the related PRIIPs. There is a need to respect the inducements model in MiFID 2 and for a delay in PRIIPs.
> Telling our story better: new brochures
Two new booklets came out in November to help share the savings and retail banking story. The first, ESBG Policy Perspectives 2016-2017, contains six policy-focused stories on the big issues facing the industry. The second brochure, called Banking. Serving. Thriving., is data rich, showing the social value of savings and retail banks – how they boost the real economy while giving back to the communities they serve. The brochures stress the "3Rs" – retail, regional, and responsible – and paint a clearer picture of our members' business models.