27 September 2013
MEPs have given the green light for the creation of a single supervisory body for EU banks.
The new EU bank supervision system will bring approximately 150 of the EU’s largest banks and will be directly overseen by the European Central Bank (ECB) from September 2014.
The MEPs have particularly focused on strengthening the system's transparency and accountability and have tasked the European Banking Authority to develop supervisory practices, which national bank supervisors should follow.
The system, which will be compulsory for Eurozone members, will be open to all other EU countries. MEPs also pushed for a decision-making model for the system, which would allow non-Eurozone countries to take part as equal partners.
The new oversight system involves the transfer of considerable bank supervisory powers from national to EU level. MEPs and various national parliaments have therefore insisted that such a transfer of powers require proportional democratic control of the new supervisor.
According to the legislation, and the accompanying inter-institutional agreement between the European Parliament (EP) and the ECB, the EP will have far-reaching access to information. Most importantly, this would include receiving a ‘comprehensive and meaningful record [of Supervisory Board meetings] that enables an understanding of the discussions, including an annotated list of decisions’. The Chair of the Supervisory Board will also be required to appear at regular hearings before Parliament.
To enhance accountability Parliament will have the joint power with Council to approve the Chair and Vice-Chair of the supervisory board as well as to request their removal. It will also be able to launch investigations into possible errors by the supervisor. Finally, individual MEPs will be able to question the supervisor in writing and receive a reply rapidly.
Other key areas in which Parliament pushed through changes include a stronger role for national parliaments; better access to documents for the supervisory authority vis-à-vis banks; attractive participation conditions for non-Eurozone countries; strict division of European Central Bank staff between monetary policy and supervision, so as to ensure that the supervisory arm of the ECB is truly accountable; strengthening the European Banking Authority, in relation to the ECB, and also improving its ability to undertake stress tests and obtain information; and establishing a more uniform culture of bank supervision at the same time as upholding the diversity of the EU banking sector.