Commission withdraws proposal on Banking Structural Reform (BSR)
It is the right decision from Commission to withdraw the proposal on Banking Structural Reform (BSR). As a rapporteur, I welcome the decision. I achieved a majority with me against the core of the original proposal, says European Parliaments rapporteur on BSR after Commission announced that the proposal would be withdrawn.
It was my firm belief that splitting up universal banks by separating retail from trade, investment and market making, would create instability and hinder investments and a more dynamic banking sector. Europe needs a strong banking sector based on a strong legislation giving room for banks different business models.
The original proposal wouldn’t have strengthened the European banking sector, but rather made it less resilient in times of crisis. As ECB noted after the crisis of 2008, universal banks with more legs than one was more stable and less exposed for the instability on the markets.
Since the European Parliament adopted my report on the banking recovery and resolution directive (BRRD), combined with new legislations regarding capital requirements and trade, the financial landscape has changed. It is now up to supervisors and resolution authorities to see to that banks are stable, securing that banks are fulfilling the criteria’s and have plans for resolutions that safeguarding tax payers and the financial stability.
In the legislative work with reviewing BRRD in order to include international agreements regarding a high level of Total Loss Absorbing Capacity (TLAC) we are taking further steps for stability without violating banks capacity to finance investments and growth. Now we have achieved legal certainty and stable preconditions for European banks in order to serve the European economy and be globally competitive, says Hökmark.