European citizens and businesses will benefit from the Commission's plans to accelerate the completion of all parts of the Banking Union
Completing the Banking Union
As indicated by President Juncker in his State of the Union address on 13 September 2017, the Banking Union must be completed if it is to deliver its full potential as part of a strong Economic and Monetary Union and complementary to the Capital Markets Union. The Letter of Intent that followed President Juncker’s State of the Union Address calls for the completion of all aspects of the Banking Union by 2018.
Building on the significant progress already achieved, the Commission set out today an ambitious yet realistic path to ensure agreement on all the outstanding elements of the Banking Union, with risk reduction and risk sharing measures going hand in hand. This comes ahead of the December Euro Summit where completion of the Banking Union will be part of discussions on further deepening the Economic and Monetary Union.
After the financial crisis, the EU institutions agreed to establish a Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM) for banks. While these two pillars are already in place and fully operational, the agreed common backstop to the SRM and a common system for deposit protection have not yet been established. In parallel, there needs to be further progress on risk reduction. The Commission put forward a proposal for a European Deposit Insurance Scheme (EDIS) in November 2015 and a banking package with further risk reduction measures in November 2016.
EDIS is essential for the completion of the Banking Union as it would provide stronger and more uniform insurance cover for all retail depositors in the Banking Union, regardless of their geographical location. However, negotiations on these proposals are still ongoing and they have not yet been adopted by the European Parliament and the Council. The Commission has set out some suggestions to facilitate progress.
On the risk reduction side, the Commission now urges the European Parliament and the Member States to quickly move forward with the comprehensive risk-reduction package of 2016. While recognising the current trend of declining levels of non-performing loans, the Commission also suggested new measures to reduce non-performing loans and to help banks diversify their investments in sovereign bonds.
Finally, the Commission also mapped out rapid steps towards a last resort common fiscal backstop, committed to by Member States already in 2013, ensuring the solidity of the system and making sure that the Single Resolution Fund has sufficient resources even in case of several simultaneous major bank resolutions.
State aid case
The Commission today also approved, under EU State aid rules, the Portuguese restructuring plan and support for the sale of Novo Banco. The measures will allow the new private owner to launch its ambitious restructuring plan aimed at ensuring the long-term viability of the bank, while limiting distortions to competition. The sale of Novo Banco, concerned by today's decision, completes the 2014 resolution of Banco Espírito Santo.
Developments in Spain
The College briefly discussed the situation in Spain and reiterated its earlier call for the full respect of the Spanish Constitutional order.
11 October 2017