EBA欧洲银行-Andrea-Enria-Speech-at-the-3rd-IIF-Banking-Union-Conference-02-November-2016_13页_612kb

3rd Annual IIF European Banking Union Conference Summary

Core Content

The 3rd Annual IIF European Banking Union Conference, held in Frankfurt on 2nd November 2016, focused on regulatory reforms and financial integration in the EU. Andrea Enria, Chairperson of the European Banking Authority (EBA), discussed the progress made since the financial crisis and outlined the challenges remaining in restoring a well-functioning Single Market.

Main Views

Financial Integration and Crisis Impact

• Financial integration has been a key driver of EU economic development and the Single Market.
• However, it was severely impacted by the financial and sovereign debt crises, leading to market fragmentation.
• The crisis led to national responsibility for bank bailouts, which created a vicious circle between banks and their sovereigns, causing market freezes and weakening cross-border lending.

Policy Responses and Recovery

• Regulatory reforms supported by the G20 strengthened international prudential standards and introduced common crisis management criteria.
• Balance sheet repair and capital increases (e.g., CET1 capital ratios rose from ~9% in 2011 to ~13.5% in 2016) helped restore trust in the EU banking sector.
• Unconventional monetary policies, such as the Outright Monetary Transactions (OMT) and the Asset Purchase Program (APP), played a crucial role in reintegration and stabilizing government bond spreads.
• The Banking Union initiative, including the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM), laid the groundwork for supranational supervision.

Financial Integration Progress

• While financial integration has recovered, the pace has been moderate and uneven.
• Cross-border lending remains low, and capital flows across borders are still fragmented.
• Interbank lending rates have dropped significantly due to increased liquidity, and retail interest rates have become less dispersed.

Key Information

Regulatory Harmonization

• The Single Rulebook is a crucial step toward a common regulatory framework for EU banks.
• However, supervisory practices remain diverse and inconsistent across Member States, which hinders cross-border banking.
• The EBA Guidelines on Pillar 2 and SREP have improved consistency, but challenges remain in institution-specific capital requirements and automatic restrictions on distributable amounts.

Challenges in Financial Integration

• Divergences in supervisory approaches have created uncertainty, affecting capital planning and investment decisions.
• The market for AT1 instruments nearly halted in 2016 due to these divergences.
• Ring-fencing measures have further restricted cross-border activities.

Global Standards and Basel Reforms

• Global standards (e.g., Basel III) are essential for supporting safe and sound cross-border banking.
• The Basel Committee is reviewing risk-weighted asset (RWA) calculations to address excessive variability in outcomes.
• The EBA advocates for risk-sensitive internal models, reliable operational risk frameworks, and avoiding unjustified capital increases.

Conclusion

• Despite progress, financial integration remains fragile.
• Institutional solutions and cooperation between home and host authorities are needed to restore trust and encourage cross-border banking.
• The EBA is committed to advancing regulatory harmonization, supervisory convergence, and international cooperation to achieve a level playing field and resilient financial system.

Areas for Further Action

• Clarify supervisory approaches to ensure consistent application of rules across the EU.
• Continue convergence in resolution planning and supervisory practices.
• Ensure global standards are fair, risk-based, and supportive of cross-border activities.
• Address divergences in capital requirements and supervisory interpretations to prevent market distortions and inefficient capital allocation.