Exclusive: EU to consider financial industry tax to fund watchdogs

Tue Jun 24, 2014 11:10am EDT
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By Huw Jones

LONDON (Reuters) - The European Union's markets, banking and insurance watchdogs could be funded by a levy on the organisations they supervise, in an attempt by the bloc's executive body to save taxpayers' money.

The European Commission has been reviewing the three watchdogs it launched in 2011 to make supervision of banks, markets and insurers more consistent across its 28 member countries after the 2007-09 financial crisis highlighted failings in the way regulations were enforced.

The European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) currently receive 60 percent of their funding from national supervisors and 40 percent from the central EU budget.

"Given EU and national budgetary constraints, the Commission considers that a revision of the existing funding model should therefore be envisaged, ideally abolishing EU and national contributions," a draft European Commission report seen by Reuters said.

Staffing and budgets of the three watchdogs are modest compared with regulators in the larger member states, such as Britain's Financial Conduct Authority whose annual budget is 452 million pounds ($768.8 million). The EBA's budget for 2014 is only 33.6 million euros ($45.7 million).

However, the welter of EU rules approved to tighten supervision after the financial crisis, such as for derivatives, and bank and insurance capital, means the watchdogs will be taking on more responsibilities and will need extra staff and money.

The three watchdogs have about 150-200 staff each and rely heavily on national regulators to help with their workloads.

The Association for Financial Markets in Europe (AFME), a top banking lobby, has called for ESMA in particular to have more resources. ESMA is the main regulator for credit rating agencies and trade repositories in the EU.   Continued...

European Union flags are seen outside the European Commission headquarters in Brussels November 27, 2009. European Commission President Jose Manuel Barroso presented on Friday his new team of EU commissioners.    REUTERS/Yves Herman