Association of German Banks welcomes de Larosière report and calls for further action on EU supervision

25 February 2009 - “The German private banks welcome the call for closer cooperation between EU supervisors and for stronger links between macroeconomic analysis and financial market regulation,” said Manfred Weber, Chief Executive of the Association of German Banks, on the occasion of today's release of the report by a working group headed by Jacques de Larosière. “But this should not be the end of the story. We would have liked to see the high-level group advocate a transfer of competences between supervisors when it comes to supervising banks operating across the EU.” This would do much to improve supervision at group level and ease the burden on companies, in the association's view.

Proposals along these lines had been advanced by the European Commission in October 2008 in the context of revising the Capital Requirements Directive (CRD) but had met with stiff resistance in the EU Council. “As a result, the gap regrettably remains as wide as ever between a fragmented supervisory structure and politically desired and economically sensible European financial market integration,” stressed Weber.

The banking association takes a positive view of the call by the Larosière Group for closer coordination between macroeconomic analysis and the supervision of individual financial institutions. “A study of macroeconomic developments would have made it possible to recognise the danger to the stability of the financial system at an earlier stage. If supervisory strategies for systemically relevant firms and groups of firms can be derived from such analysis in a timely manner, it will be possible to reduce the risks to banks and the overall system significantly and sooner,” Weber continued. He believed that the creation of the European Systemic Risk Council proposed by the Group could prove helpful. Nevertheless, the most important point was to coordinate work by the ECB, national central banks and supervisory authorities much more closely. Furthermore, it would make good sense against this backdrop to give the Deutsche Bundesbank an explicit mandate – like that already assigned to the ECB – to maintain financial market stability.