Bank overseers are reaching Europe's borders

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DBank supervisors of European institutions rub against the national borders and responsibilities of national authorities. A good example of this is Elke König, who heads the European bank resolution authority SRB, but before that was president of the German financial regulator Bafin. At a conference in Frankfurt, she expressed concern on Tuesday that national supervision was still prevalent in banking supervision. They hope for a solution in the question of the so-called Ringfencings. By this, supervisors understand the restrictions on equity and liquidity allocation within a banking group.

Markus Frühauf

National supervisors, in particular Bafin, attach importance to the fact that the subsidiaries of foreign banks are independently provided with enough funds that national supervision in a state of imbalance, even without transfers from the group company, has access to sufficient funds. King does not expect a quick agreement here. The bank supervisors of the European Central Bank (ECB) criticize the restrictions because they are an obstacle to cross-border mergers. As an example, it is often referred to the Unicredit. The major Italian bank has significantly less equity compared to its German unit Hypo-Vereinsbank.

King took up another topic in Frankfurt that has little supporters in Germany: the creation of a joint European deposit guarantee scheme. King hopes that political discussion will continue. It hopes that joint deposit insurance will strengthen the banking union and increase the resilience of the banking system.

In Germany, however, it is repeatedly emphasized that previously the risks in the bank balance sheets would have to be reduced. This is aimed in particular at the legacy of non-performing loans and the high levels of domestic government bonds in the balance sheets of Italian banks. König acknowledged that of course there had to be talk of further reducing the risks in the banking system in this context. However, she is convinced that banks and supervisors are now better prepared for future crises.

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