Make banks safer, not greener

"Capital is the lifeblood of the European economy. We must be very careful that we don’t cut off European companies from the lifeline of bank financing", said Markus Ferber MEP, EPP Group Spokesman on Economic Affairs.

Today, the European Commission published proposals for an overhaul of the European Union’s rules on capital requirements for banks, known as Basel III. The Commission’s proposals aim to introduce international standards negotiated by the Basel Committee for Banking Supervision into European law. One key measure would be to ask banks to put aside more capital to cover their risks.

"I say it loud and clear: even if the intention is good, the compromise struck in the Basel Committee is not a good fit for the European economy. Therefore, it is crucial to adapt it. As we slowly emerge from a very tough pandemic, we cannot accept that the Basel III package puts the competitiveness of European banks and small and medium-sized enterprises at risk", said Ferber.

He also warned against mixing risk-based rules for banks with new ecological or sustainability requirements. "Prudential regulation is not the right place to fight over sustainability issues. The Commission’s attempt to introduce sustainability considerations into banking regulation puts us on a dangerous path. Once risk assessments take a backseat, there is a severe risk that we will slide towards the next crisis. We need to make banks safer, not greener", explained Ferber.

On top of new capital rules, the Commission also proposes to further regulate branches of third country banking institutions.

"The Commission taking a tougher stance towards branches of third-country banks is a step in the right direction. We cannot accept that third-country banks operate in the Single Market via undercapitalised letterbox companies. A harmonised regime is important to defend our competitiveness and protect investors", concluded Ferber.