Several days ago I attended an exchange of views with the European Parliament’s “rapporteur” on the modification of the EU recovery and resolution framework. Gunnar Hökmark had already been the EP’s draftman on the original text and knows his stuff.
The fully booked out EBF event was promising and had already morphed from a roundtable discussion to a panel discussion with an audience of around 90 people. Indeed the timing was well chosen with Mr Hökmark’s report up for amendments by the end of the month and discussions at the level of the Council in full swing under the new Bulgarian Presidency. Not to mention that the fast tracked part of the bail-in hierarchy had been adopted and published in the Official Journal of the EU at the end of 2017.
Unfortunately the meeting was held under Chatham House rules meaning that participants can’t attribute any comment to a single person or institution / entity. What came out nevertheless was a fascinating debate on issues like calibration, subordination, MREL guidance, the length of the moratorium, liquidity and funding. Interesting from a Luxembourg perspective was a question on MREL for deposit-funded banks. A special treatment for deposit-funded banks seems unlikely. Nevertheless the door is not closed to a discretionary approach by the resolution authorities.
Where do we go from here? The European Parliament is likely to work towards a position before the summer just like the Bulgarian Presidency of the Council that would like a general agreement among Member States as a feather at their achievements hat at the end of June. Negotiations between the co-legislators together with the Commission will in Autumn attempt to agree a common text to be rreached by the end of the year or at the latest in Q1 2019 right in time before the end of the European Parliament legislature. One thing will be sure: the issue will keep ABBL busy the whole year through.
By Antoine Kremer, ABBL & ALFI Head of European Affairs