ABBL

The European Parliament considers that the legislative act to be adopted should aim to regulate as follows:

1.  Create a European crisis-management framework with a common minimum set of rules and ultimately a common resolution and insolvency law, applicable to all banking institutions operating in the Union and with the following objectives:
       –    to promote the stability of the financial system;
       –    to limit or prevent financial contagion;
       –    to limit the public cost of interventions;
       –    to optimise the position of depositors and guarantee their equal treatment across the Union;
       –    to preserve the provision of core banking services;
       –    to avoid moral hazard, charge costs to industry and shareholders and internalise negative externalities created by financial markets and institutions;
       –    to ensure equal treatment of each class of creditors in the Union including the fair treatment of all subsidiaries and branches of the same cross-border institution in all Member States;
       –    to ensure respect for the rights of employees;
       –    to strengthen the internal market for financial services and its competitiveness.

2.  Progressively converge existing national resolution and insolvency laws and supervisory powers and, within a reasonable calendar, establishing an effective single EU regime.

3.  Once the process related to harmonisation of insolvency and supervision provisions is completed at the end of a transition period establishing a single EU resolution authority as a separated body or as a unit within the EBA.

4.  In order to improve cooperation and transparency, carry out peer reviews of supervisors on a regular basis under the leadership of the EBA building on prior self-assessment.

5.  Where the need for a resolution or the winding-up of a cross-border institution arises, carry out an in-depth investigation (via independent experts appointed by the EBA) in order to highlight the causes and responsibilities involved. Ensure that Parliament is informed of the results of those investigations.

6.  Attribute to the relevant supervisor the responsibility for crisis management (including powers of early intervention) and the approval of each bank's contingency plan, as follows:
       –    for cross-border systemic banks: the EBA, in close cooperation with the college of national supervisors and the cross-border stability groups (as defined in the Memorandum of Understanding of 1 June 2008);
       –    for all other cross-border non-systemic banks: the consolidated supervisor within the college (under its agreed governance), under the coordination of the EBA and in consultation with the cross-border stability groups;
       –    for local banks: the local supervisor.

7.  Design a common set of rules for crisis management including common methodologies, definitions and terminology, and a set of relevant criteria for stress test for cross-border banks.

8.  Ensure that resolution plans become a mandatory regulatory requirement; the resolution plans should include an in-depth self-assessment of the institution and details of a fair distribution of assets and capital, with appropriate clawback of transfers from subsidiaries and branches to other units, and identification of cleavage planes that allow separation of stand-alone modules, especially those providing vital infrastructure such as payment services. The requirement for the content of those plans should be proportionate to the bank's size, activities and geographical spread. Ensure that those resolution plans are regularly updated.

9.  Design, before December 2011, a European supervisory rating for banks (Risk Dashboard) based on a common set of quantitative and qualitative indicators. The Risk Dashboard indicators should be evaluated according to the nature, scale and complexity of the institution in question while preserving confidentiality. The Risk Dashboard should comprise at least:
       –    capital;
       –    leverage;
       –    liquidity;
       –    mismatch of maturity, interest rate and currency;
       –    liquidity of assets;
       –    large exposures and risk concentrations;
       –    expected losses;
       –    sensitivity to market prices, interest and exchange rates;
       –    access to funding;
       –    outcomes of stress tests;
       –    effectiveness of internal controls;
       –    quality of management and corporate governance;
       –    complexity and opacity;
       –    risk outlook;
       –    compliance with law or regulatory requirements.

10.  Empower supervisors to intervene on the basis of thresholds of the supervisory rating, in full accordance with the principle of proportionality, and provide for reasonable remedy periods for the institutions to address the weaknesses by themselves.

11.  Provide supervisors with appropriate legal tools for intervention by amending the relevant sectoral legislation or by introducing new sectoral legislation to:
       –    require adjustments of capital (above the minimum regulatory requirements) or liquidity and changes in the business mix and internal process;
       –    recommend or impose changes of management;
       –    impose dividend retention and restrictions in order to consolidate capital requirements; limit the terms of banking licences;
       –    allow supervisors to trigger separation of stand-alone modules, whether failing or successful, from the institution to ensure core functions can continue to operate;
       –    impose a total or partial sale;
       –    transfer assets and liabilities to other institutions with the objective to ensure continuity of systemically important operations;
       –    create a bridge bank or good bank/bad bank;
       –    require swaps of debt into equity, or other convertible capital, depending on the nature of the institution, with appropriate haircuts;
       –    take temporary public control;
       –    impose a temporary suspension (moratorium) of certain types of claims against the bank;
       –    control the process of intra-group asset transfers;
       –    appoint a special administrator at group level;
       –    regulate winding-up;
       –    allow the EBA to authorise the intervention of the EU financial stability fund including for the provision of emergency medium-term funding, capital injections and guarantees;
       –    impose administrative and reparation measures for those institutions using the Fund.

12.  All the tools referred to in point 11 shall be applied in full compliance with the EU competition rules and ensuring equal treatment of creditors and depositors across the Member States.

 

The European Parliament considers that the legislative act to be adopted should aim to regulate the following:

1.  An EU Financial Stability Fund (Fund) shall be created, under the responsibility of the EBA, to finance interventions (rehabilitation or orderly winding-up) aimed at preserving the system's stability and limiting contagion from failing banks. The Commission shall present to Parliament, by April 2011, a proposal with details of the Fund's charter, structure, governance, size, operating model as well as a precise calendar for implementation (in accordance with points 2 and 3 below).

2.  The Fund shall be:
       –    pan-European;
       –    funded ex-ante by the cross-border systemic banks on risk-based, countercyclical criteria and taking into account the systemic risk posed by an individual bank. Banks contributing to the Fund shall not be obliged to contribute to similar stability funds or resolution units in their own countries;
       –    separate and independent from deposit-guarantee schemes;
       –    adequately sized to support temporary interventions (such as loans, asset purchases and capital injections) and cover costs of resolution or insolvency procedures;
       –    gradually built, recognising the present economic environment;
           designed in a way that does not create moral hazard: the Fund shall not be used to bail out bank shareholders or to reward the management for its own failure;

3.  The Commission shall also address:
       –    investment guidelines for the Fund's assets (risk, liquidity, alignment with EU targets);
       –    selection criteria for the Fund's asset manager (internal or via a private or public third party such as the European Investment Bank);
       –    the possibility of contributions qualifying for calculation of regulatory capital ratios;
       –    administrative measures (penalties or compensation schemes) for those cross-border systemic banks which make use of the Fund;
       –    conditions for eventual expansion of the scope of the Fund to include all cross-border banks beyond cross-border systemic banks;
       –    scope (and appropriateness) of the creation of a network of national funds to cater for all institutions that do not participate in the Fund. An EU framework should then be established to regulate the existing and future national funds which will comply with a uniform and binding set of common rules.