September 4, 2013 / 3:50 PM / 6 years ago

ECB, Bundesbank clash over who to pull plug on banks

FRANKFURT (Reuters) - The European Central Bank clashed with the European Commission and the Bundesbank on Wednesday over who should have the power to decide a bank is no longer viable under Europe’s planned banking union.

Executive Board Member of the European Central Bank (ECB), Jorg Asmussen speaks during the annual meeting of the German business newspaper Handelsblatt in Frankfurt September 4, 2013. REUTERS/Ralph Orlowski

As a first step towards the closer integration of the euro zone’s banking system, the ECB is set to start supervising the bloc’s banks from next year. A single mechanism to wind down failing banks is in the works.

The EU Commission in July outlined plans to set up an agency to rescue or shut non-viable euro zone banks, to begin work in 2015 if agreed on by EU states, which would eventually be able to impose losses on creditors of a stricken bank.

ECB Executive Board member Joerg Asmussen welcomed parts of the Commission’s proposal on Thursday, but said the ECB should have exclusive powers to decide on the viability of banks, a view that goes against the Bundesbank’s, and the EU’s, position.

“In my view such a decision should be made exclusively and only by the banking supervisor, so in the future the ECB,” Asmussen said in a speech to a banking conference in Frankfurt.

Speaking at the same conference later on, Bundesbank board member Andreas Dombret said that the ECB should merely indicate that a bank was no longer viable, but that the final decision should be taken by the independent European institution.

“I think it is right for the ECB, which will be the bank supervisor, to say there might be a case for restructuring, but I do not think it would be logical that it will then also be the ECB to take care of resolution,” Dombret said in a panel discussion.

“The conflict (of interest) between monetary policy and the resolution tasks would be very, very large and it would also expose the ECB to massive political influence,” he said, stressing that he was simply stating his position without knowledge of Asmussen’s statement.

Both policymakers agreed that a resolution mechanism should be in place as soon as possible to strengthen the ECB’s credibility as new bank supervisor.

If the European Parliament backs a law next week on joint banking supervision, Asmussen said he expected the ECB could begin its new task in the autumn of next year, a timetable that was ambitious but doable.

He expected 1,000 people to work on banking supervision, with the ECB directly supervising 130 banks holding 85 percent of the banking assets in the euro zone.

Reporting by Eva Taylor, writing by Paul Carrel; editing by Patrick Graham

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below