European Scrutiny Committee Contents


1 Financial services: prudential requirements


(a)

(33052)

13284/11

+ ADDs 1-4

COM(11) 452, Parts 1-3

(b)

(33053)

13285/11

+ ADDs 1-2

COM(11) 453

(c)

(33657)

5876/12


Draft Regulation on prudential requirements for credit institutions and investment firms









Draft Directive on the access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms and amending Directive 2002/87/EC on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate

European Central Bank Opinion: Proposal for a Directive of the European Parliament and of the Council on the access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms and amending Directive 2002/87/EC of the European Parliament and of the Council on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate

CON/2012/5

Legal base(a) Article 114(1) TFEU; co-decision; QMV

(b) Article 53(1) TFEU; co-decision; QMV

(c) —

Deposited in Parliament(c) 1 February 2012
DepartmentHM Treasury
Basis of consideration(a) and (b) Minister's letter of 12 February 2012

(c) EM of 13 February 2012

Previous Committee Report(a) and (b) HC 428-xxxvii (2010-12), chapter 1 (12 October 2011)

(c) None; but see footnote 3

To be discussed in CouncilPossibly 13 March 2012
Committee's assessmentPolitically important
Committee's decisionFor debate in European Committee B

Background

1.1 The Basel Committee on Banking Supervision (commonly referred to simply as the Basel Committee) is a committee of banking supervisory authorities, the aim of which is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide.[1] The Basel Committee frames guidelines and standards in different areas. In June 2011 it published a slightly revised version of its December 2010 "Basel III: A global regulatory framework for more resilient banks and banking systems" (commonly referred to simply as Basel III).[2]

1.2 Directive 2006/48/EC relating to the taking up and pursuit of the business of credit institutions and Directive 2006/49/EC on the capital adequacy of investment firms and credit institutions, together known as the Capital Requirements Directive (CRD), introduced a supervisory framework within the EU, designed to ensure the financial soundness of credit institutions (banks and building societies) and certain investment firms, while reflecting the Basel II rules on capital measurement and capital standards. Subsequently two packages of amendments, known as CRD II and CRD III, were adopted in amending Directives 2009/111/EC and 2010/76/EC.

1.3 In July 2011 the Commission presented this draft Regulation on prudential requirements for credit institutions and investment firms, document (a), and this draft Directive on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, document (b), as a package known as CRD IV. The intention was to replace the Capital Requirements Directive and to partly introduce Basel III into EU law. The Commission explained that the overarching aim of the package was to strengthen the effectiveness of capital regulation in the EU and to contain adverse impacts on depositor protection and pro-cyclicality of the financial system, while maintaining the competitive position of the EU banking industry.

1.4 The Commission suggested that its proposal for a Regulation aimed to address regulatory shortcomings related to:

  • the quality and quantity of capital that banks hold in order to absorb losses effectively as they arise;
  • the management of liquidity risk linked to a reliance on wholesale funding with short term maturity instruments;
  • the treatment of counterparty credit risk arising from derivatives, repurchase agreements (repo) and securities financing activities; and
  • the current divergences between Member States, which prove burdensome for firms operating cross-border, create an uneven playing field and lack legal clarity.

1.5 In relation to its proposal for a Directive, the Commission suggested that it should build on the existing Capital Requirements Directive by introducing four new elements:

  • provisions on sanctions to ensure compliance with EU banking rules to protect users of banking services and to ensure the safety, stability and integrity of banking markets;
  • preventing overreliance on external credit ratings that has lead to financial institutions and institutional investors relying solely or mechanistically on ratings issued by credit rating agencies, while neglecting their own due diligence and internal risk management obligations;
  • effective corporate governance and provisions, a lack of which has been partly to blame for the excessive accumulation of risk; and
  • addressing the pro-cyclicality of lending, which tends to follow the direction of and amplify the economic cycle.

1.6 The Commission's proposals in the draft Regulation concern maximum harmonisation of prudential requirements, the definition of capital, treatment of specific exposures, counterparty credit risk, liquidity, leverage ratio, Basel I floor and commencement. Those in the draft Directive concern powers of the competent authority of the host Member State in relation to branches, parliamentary oversight, sanctions, responsibility of the management body in considering risk issues, corporate governance, a supervisory review and evaluation process, capital buffers and commencement, transposition and repeal.

1.7 When we considered these proposals, in October 2011, we heard of the Government's strong support for Basel III and its belief that the EU should build upon the G20 agreement to fully and faithfully implement it. However we heard also of the Government's view that the Commission's proposals significantly deviate from Basel III in crucial areas and that it believed the proposals would breach the subsidiarity principle. We ourselves said that:

  • clearly the proposals in the draft Regulation and the draft Directive would have significant shortcomings in relation to Basel III;
  • we would wish to recommend the documents for debate when we had a clearer idea of what direction Council consideration of the proposals was taking;
  • so the documents would remain under scrutiny — but, meanwhile, we shared the Government's concern about whether maximum harmonisation of prudential requirements was consistent with the principle of subsidiarity;
  • accordingly we recommended that the House adopt a Reasoned Opinion, as provided for in Protocol 2 of the TFEU;
  • we wished the Government to respond to the concerns we had set out in the proposed Reasoned Opinion, about the proposed internal market legal base of the Regulation and the legality of delegating powers to the Commission in Article 443 of the Regulation;
  • additionally we had concerns about Article 60 of the draft Directive; and
  • whatever the merits of the caveats suggested in relation to parliamentary inquiries, it was completely outwith the powers of the EU to attempt to impose rules on national parliaments in the way suggested — we asked for the Government's comments on this aspect of the proposed Directive.

The House adopted the Reasoned Opinion on 8 November 2011.[3]

The new document

1.8 The European Central Bank (ECB) Opinion, document (c), comments on the Commission legislative proposals for CRD IV, that is, documents (a) and (b). In the Opinion the ECB:

  • welcomes the EU's commitment to implementing international agreements on financial regulation, while taking into consideration, where relevant, specific features of the Union's legal and financial system;
  • supports the timely and effective implementation of the Basel III capital and liquidity standards;
  • notes the leading role taken by the Commission in delivering on the G20 commitment to adopt and fully implement the Basel agreement, which will substantially increase systemic resilience, contribute to the smooth functioning of the financial system and ensure a stable and sustainable framework for the provision of financial services in the EU;
  • does, however, go on to make a number of recommendations that would bring the Commission's proposals for CRD4 more in line with the Basel accord.;
  • strongly supports the development of a single EU rule book in promoting the smooth functioning of the single market and facilitating greater financial integration in the EU — a single set of prudential rules mitigates regulatory arbitrage opportunities and distortions to competition;
  • notes that the involvement of the European Banking Authority (EBA) in the development of draft technical standards would help ensure a flexible regulatory framework that will effectively underpin the single market in financial services; and
  • recommends that it be consulted in due time on any draft EU acts, including draft delegated and implementing acts, falling within its fields of competence.

1.9 On macroprudential supervision and Member State flexibility the ECB:

  • emphasises the importance of giving individual Member States the flexibility to apply more stringent prudential requirements where systemic risks to financial stability arise;
  • says that this is because economic and financial cycles are not completely harmonised across Member States, Member States may face different types of systemic risk and there are significant differences in the structural features of the financial sectors across Member States;
  • notes that the countercyclical capital buffer allows for some adjustments of prudential requirements at national level, as does the proposed extension of the scope of the supervisory review process, but that this is largely a microprudential tool to address risks originating from individual institutions rather than a macro-prudential policy tool aimed at systemic risks;
  • supports the expansion of the framework for the adjustment of risk weights or other criteria to allow Member States to impose stricter prudential requirements for macro-prudential purposes at national level;
  • notes that the scope of this framework should be expanded to cover capital, limits on large exposures, liquidity requirements and the leverage ratio following a notification of the proposed measures to the European Systemic Risk Board (ESRB);
  • notes that the ESRB could play an important role in assessing financial stability concerns and possible unintended spillovers from macroprudential measures undertaken by Member States;
  • concludes, overall, that application of more stringent prudential measures by specific Member States may enhance both financial stability and financial integration in the EU — by mitigating systemic risks and protecting the single market from the build-up of excessive systemic risks in a coordinated way, authorities may effectively contribute to the smooth functioning of the EU financial system and promote the sustainable provision of financial services in the single market in the medium to long term;
  • supports the aim of addressing targeted risk exposures through delegated acts that empower the Commission to impose stricter prudential requirements, where necessary to address changes in the intensity of micro- or macroprudential risks which arise from market developments;
  • recommends that the powers to adopt delegated acts should be extended to prudential requirements on large exposures and disclosure requirements as well; and
  • says, however, that a timeframe of six months or less for the imposition of stricter requirements would be insufficient in many cases and would require a much longer timeframe, for example two years or more, to be effective.

1.10 In relation to own funds the ECB:

  • strongly supports the proposed strengthening of the eligibility criteria for regulatory own funds as well as the further harmonisation of deductions;
  • recommends, in order to bring the Commission's proposals in line with the Basel agreement, that 'capital instruments' should be solely shares in companies as defined under national laws, with the exception of mutuals, cooperative societies and similar institution, and should qualify as Common Equity Tier 1 items only if they meet all the criteria defined in the proposed Regulation;
  • recommends that the Commission, through the adoption of an implementing act, endorse the list of forms of the shares eligible as Common Equity Tier 1 capital established by the EBA in order to give the list a binding effect;
  • says the EBA should also develop draft technical standards and Member States should cooperate with the EBA in ensuring compliance with those conditions on an ongoing basis;
  • shares the view, in the context of Basel III requiring significant investments in insurance undertakings, reinsurance undertakings and insurance holding companies above a certain threshold be deducted, that regulatory own funds within a banking group should only be used to cover losses arising from banking risks to avoid the double counting of capital;
  • notes that eliminating the double use of regulatory own funds at the sectoral level (by deducting significant investments in insurance undertakings) and determining additional own funds requirements at the level of the financial conglomerate (by using one of the three methods as laid down in Annex 1 of Directive 202/87/EC) are not mutually exclusive; and
  • notes, as a consequence, that any alternative to the deduction approach should not result in higher regulatory own funds at the level of the group of institutions and financial institutions as referred to in Article 16 of the draft Regulation, on methods for prudential consolidation.

1.11 On capital buffers the ECB:

  • strongly supports the introduction of the countercyclical capital buffer as part of a macroprudential framework;
  • supports reciprocity requirements, with the option of voluntary reciprocity beyond a buffer of 2.5% of risk weighted capital;
  • thinks that national authorities should have the ability to take into account any financial and economic variables considered relevant to assess the build of up systemic risk in setting the buffer rate; and
  • says, however, that these variables should not be structural in nature.

1.12 In relation to liquidity the ECB:

  • welcomes the commitment in the Commission's proposals to introduce both the Liquidity Coverage Requirement and Net Stable Funding Ratio in line with Basel III requirements;
  • highlights, however, that there are a number of overlaps between the items institutions are required to report as liquid assets (Article 404 of the draft Regulation) and the items subject to supplementary reporting, and therefore recommends adopting a single and transparent list of the items to be reported;
  • suggests that central banks should be involved in determining the extent to which central bank reserves may count towards the stock of liquid assets;
  • highlights the importance of avoiding any possible ambiguity in the implementation of the Net Stable Funding Ratio, so addressing one of the key problems that financial institutions faced in the crisis, which was the urgent funding need that resulted from a high degree of maturity mismatch — many financial institutions relied continuously on the roll-over of short-term liabilities in the wholesale money markets, resulting in funding problems that spilled over to the financial markets; and
  • suggests, therefore, drafting changes to avoid any possible ambiguity in the implementation of this Basel requirement.

1.13 On leverage the ECB welcomes the Commission's commitment to introduce a non-risk based leverage ratio as a binding requirement and suggests clarifying in the draft Regulation that commitment.

1.14 In relation to supervisory reporting the ECB:

  • recommends clarifying in the draft Regulation the proposed common reporting framework, introducing a clear legal basis for financial reporting and further specifying the scope of the draft technical standards to be developed by the EBA;
  • recommends, in particular, the EBA and ESRB should cooperate in defining the scope of financial information necessary for macro-prudential oversight; and
  • suggests introducing quarterly reporting at a minimum and involving the ESRB for the development of the draft implementing technical standards.

1.15 On enhancement of information-sharing arrangements the ECB:

  • recommends reflecting the enhancements agreed by the recent reform of EU financial supervision in the draft Directive and further improving the exchange of information between supervisory authorities and central banks of the European System of Central Banks (ESCB);
  • calls for a review by the Commission, ESRB, EBA and ECB of the effectiveness of these arrangements within two years of them coming into force and them making recommendations for its enhancement; and
  • recommends an in depth assessment by the Commission of the application of the adopted Directive and the adopted Regulation with regard to EU cooperation with third countries.

The Minister's letter

1.16 The Financial Secretary to the Treasury (Mr Mark Hoban) tells us of developments on the draft legislation, saying that:

  • the Council's financial services working group met on several occasions in October and November 2011 to discuss aspects of the Commission's proposals;
  • given the timeframe for negotiations, progress under the Polish Presidency focused on identifying the key issues to be negotiated under the Danish Presidency — this culminated with a presentation from the Presidency to the November 2011 ECOFIN Council on the key issues to be negotiated under the Danish Presidency;
  • following detailed written comments from Member States, the Danish Presidency circulated its first compromise text on 6 January 2012 — since then that text has been discussed in the financial services working group; and
  • under the guidance of the Presidency, the working group focused on provisions relating to the key issues identified by Member States, such as the flexibility for Member States to implement more stringent prudential requirements on a permanent basis or for macroprudential policy, deviations from the Basel III agreement, in particular on the quality and quantity of capital that institutions are required to hold, the introduction of liquidity standards and the leverage ratio and the introduction of provisions concerning the governance arrangements of management bodies and diversity requirements for selecting members of the management body.

1.17 The Minister comments that:

  • of particular concern to Member States, including the UK, remains the limited flexibility to implement more stringent prudential standards on a permanent basis or for macroprudential policy reasons;
  • a number of Member States share the Government's view that flexibly is required to respond in a timely manner to systemic risks as they arise or to mitigate fiscal risk, since Member States remain ultimately responsible for financial stability in their jurisdiction;
  • the Government will therefore continue to work with likeminded Member States to enable the application of macroprudential policy and ensure sufficient flexibility to implement more stringent prudential requirements than the minimum, where justified;
  • on the Commission's interpretation of the Basel III accords, many Member States are generally content with the provisions put forward by the Commission;
  • in fact, there is significant pressure to further weaken the liquidity provisions proposed by the Commission for the observation period, which runs until 2015;
  • many Member States have suggested that this is, in part, due to the fact that the Basel Committee will not finalise the calibration of the Liquidity Coverage Requirement until the end of the year and EU liquidity legislation should not pre-empt the Committee's final decision;
  • furthermore, many Member States have indicated a strong preference to implement the Liquidity Coverage Requirement through a co-decision procedure, rather than through a delegated act, as is set out in the Commission's proposals;
  • the Government will therefore continue to make the case for the full and faithful implementation of the Basel III agreement in the EU;
  • the Government maintains the view that the agreement reached by the Basel Committee is one of the most important aspects of the internationally agreed response to the financial crisis, addressing many of the deficiencies of the financial system;
  • although most Member States welcomed the intentions of the new provisions on corporate governance, Member States were generally of the view that provisions concerning the governance arrangements of management bodies could have significant implications for Member States with limited expertise in the financial sector;
  • in addition, Member States questioned the rationale for including diversity requirements for selecting members of the management body in CRD IV, as the issue of diversity is not limited to the financial sector;
  • the ECB's Opinion, document (c), is closely aligned with the Government's position on CRD 4; and
  • in particular, the ECB highlight the importance of giving individual Member States the flexibility to apply more stringent prudential requirements where systemic risks to financial stability arise and calls for a full implementation of the Basel III requirements for capital, liquidity, leverage and capital buffers.

1.18 Finally the Minister tells us that:

  • the Presidency intends to circulate a second compromise text in mid-February 2012 and to continue negotiations in the financial services working group shortly after, with a view to agreeing a Council position on 13 March 2012 for trialogues with the European Parliament and the Commission; and
  • the Presidency remains committed to finalising an agreement on CRD IV in June 2012.

The Government's view of the new document

1.19 In his Explanatory Memorandum on the ECB Opinion, document (c), the Minister first mentions subsidiarity, saying that:

  • in the context of the Government's concerns about subsidiarity in relation to the Commission proposals, as explained to us previously, the Opinion contains recommendations that would address some of those concerns, in particular that Member States should be able to impose stricter prudential requirements for macro-prudential purposes; but
  • the ECB does support empowering the Commission to adopt delegated acts to impose stricter prudential requirements.

1.20 On the policy background the Minister:

  • reminds us that the Government believes that the Basel III agreement was one of the most important aspects of the internationally agreed response to the financial crisis, with the agreement reached addressing many of the deficiencies of the financial system;
  • says that, to protect financial stability, avoid unnecessary international arbitrage and reinforce market confidence in EU banks, it is vital that the EU builds upon the G20 agreement to fully and faithfully implement the Basel III agreement through the rules on prudential requirements for credit institutions and investment firms;
  • comments that the Commission's proposals significantly deviate, however from the Basel III agreement in crucial areas, thereby weakening the agreement reached by the Basel Committee;
  • says that, in doing so, the proposals risk regulatory arbitrage, diluting the minimum standards agreed internationally for global banks, and increasing the taxpayer's potential exposure to future losses;
  • notes that establishing minimum prudential requirements for credit institutions and investment firms across the EU presents a valuable opportunity to complete the single rulebook on banking requirements;
  • comments, given that the Commission suggests that a maximum harmonised Regulation is necessary to complete the single rule book on banking, that it is possible, however, to have a set of harmonised definitions and minimum requirements throughout the EU, without preventing Member States from implementing stricter requirements;
  • continues that it is also important that Member States remain ultimately responsible for financial stability in their jurisdiction;
  • says that, therefore, the Government is very concerned that maximum harmonised requirements would considerably constrain the ability of Member States to respond flexibly and in a timely manner to systemic risks in their jurisdiction or to mitigate fiscal risk, through requiring higher levels either for the application of system wide macroprudential policy or for higher prudential standards on a permanent basis; and
  • makes clear that the Government welcomes this ECB Opinion, which is closely aligned with its policy in these areas, in calling for a full implementation of the Basel III requirements for capital, liquidity, leverage and capital buffers and emphasising the importance of giving individual Member States the flexibility to apply more stringent prudential requirements where systemic risks to financial stability arise.

1.21 The Minister then turns to more detailed aspects of the ECB Opinion, commenting in terms similar to those he made to us in his earlier Explanatory Memorandum on the draft legislation, documents (a) and (b). He says first, of macroprudential supervision and member state flexibility, that:

  • the Government welcomes the ECB view that, while the single rulebook and common standards are essential for the safe conduct of financial services activities in the EU, this should be complemented with a EU framework, based on the established purpose of the ESRB, to allow countries specific national flexibility to further protect EU economies and taxpayers from financial instability when necessary;
  • since these measures would only apply to a Member States' own institutions, they would allow authorities to take early action at national level without threatening the single market;
  • the ESRB has highlighted that the effectiveness of macroprudential policy depends on national macroprudential frameworks of Member States and has called for safeguards that competent national authorities are equipped with broad discretion to take early action at national level;
  • the ESRB has also reiterated that that giving Member States the flexibility to tighten prudential requirements above those provided for in EU legislation based on local economic conditions was possible without jeopardizing the single market;
  • overall, the ECB concludes that application of more stringent prudential measures by specific Member States may enhance both financial stability and financial integration in the EU, by mitigating systemic risks and protecting the single market from the build-up of excessive systemic risks in a coordinated way, and authorities may effectively contribute to the smooth functioning of the EU financial system and promote the sustainable provision of financial services in the single market in the medium to long term;
  • the ECB does, however, support empowering the Commission to adopt delegated acts to impose stricter prudential requirements;
  • the Government believes the inclusion of Article 443 of the draft Regulation, which would allow the Commission to adopt delegated acts to impose stricter prudential requirements for example in relation to a particular Member State, is inappropriate and goes beyond the objectives of the proposal; and
  • furthermore, this is a significant deviation from the Basel III agreement, in which prudential requirements are only minimum requirements, allowing Member States the possibility to impose higher prudential requirements.

1.22 In relation to own funds the Minister says that:

  • the ECB's position is closely aligned with the UK in respect of the need to ensure that shares should be the sole form of instrument to qualify as Common Equity Tier 1 capital and that the double counting of capital held in insurance undertakings, reinsurance undertakings and insurance holding companies should be prevented;
  • the Basel Committee and the G20 agreed that instruments that count as Common Equity Tier 1 capital for joint stock companies must meet the legal form of ordinary shares and the 14 substantive criteria;
  • the legal form of ordinary shares was chosen because they were the instruments that were proven to be the most loss absorbent and transparent during the financial crisis;
  • yet the Commission's proposals would allow anything that counts as equity under national law standards, in accordance with Article 22 of Directive 86/635/EEC to meet the legal form required of Common Equity Tier 1, as long as they meet the substance of the 14 criteria agreed by the Basel Committee;
  • this approach misses key lessons of the financial crisis and is inconsistent with a single EU rule book on banking, making it possible to have 27 different instruments eligible as Common Equity Tier 1;
  • similarly, the inclusion of Article 46 of the draft Regulation, with respect to deductions for capital held by banking groups in insurance subsidiaries, could provide considerable discounts from what would be the minimum Basel III capital requirements for certain institutions;
  • Basel III calls for investments in these subsidiaries, above an agreed level, to be fully deducted from their own capital;
  • the Commission's proposals would allow alternative treatments to these investments which market analysts suggest could be significantly less prudent and allow a significant capital advantage to bancassurers (banks offering insurance);
  • in particular, this could mean lower capital requirements for certain global systemically important banks;
  • this opt-out goes against the concept of a single rule book on banking with consistent minimum standards — it would create the potential for huge deviations in basic minimum standards for global banks with similar business models;
  • as a compromise, the Basel Committee has agreed that alternative approaches must be proven to be at least as prudent as deduction;[4] and
  • the Government welcomes the ECB's call for a full and faithful implementation of Basel III in this area.

1.23 On liquidity the Minister says that:

  • the Commission's proposals do not contain a legally binding commitment to implement the Net Stable Funding Ratio;
  • the Government therefore welcomes the ECB's comments on the importance of international liquidity standards and shares its view that CRD IV should fully commit to the introduction of both the Liquidity Coverage Requirement and the Net Stable Funding Ratio;
  • banks funding themselves from unstable sources was one of the key contributors to the financial crisis;
  • when short term inter-bank markets closed in autumn 2008 due to financial turmoil, banks that funded themselves disproportionately from these sources were unable to access funding and quickly suffered acute liquidity problems; and
  • this led to a contraction of credit into the real economy and an overreliance on the provision of central bank liquidity.

1.24 In relation to leverage the Minister tells us that:

  • one of the key characteristics of the build up of the financial crisis was the unsustainable build-up of leverage in the financial system, including in the EU;
  • this excessive leverage was enabled by a combination of inaccuracies in the regulatory risk weights attached to the assets held by banks and insufficient investor and supervisory oversight;
  • although there is some commitment in the Commission's draft Regulation to migrate the leverage ratio to a Pillar 1 measure in Recital 68, the recitals by themselves are not legally binding; and
  • the UK Government has therefore argued the need for a firm commitment to migrate to a binding Pillar 1 measure in 2018 and welcomes the ECB's recommendation that there is clarification in the Regulation of the legislator's commitment to introducing this requirement.

1.25 On capital buffers the Minister says that the ECB's position aligns with the Government's on the countercyclical capital buffer, which supports national authorities' flexibility in setting buffer levels in response idiosyncratic systemic risks of a cyclical nature in their jurisdiction.

1.26 Finally, the Minister summarises the Government view, saying that it welcomes this ECB Opinion on CRD IV and in particular its emphasis in the importance of giving individual Member States the flexibility to apply more stringent prudential requirements where systemic risks to financial stability arise and its recommendations in several areas to ensure a full and faithful implementation of Basel III.

Conclusion

1.27 We are grateful to the Minister for the information he gives us, in both his letter and the Explanatory Memorandum, about developments on the CRD IV proposals. As foreshadowed in our earlier report, we now recommend the documents for debate, in European Committee B. This debate should take place before adoption of a Council general approach on the draft legislation, which presently appears planned for 13 March 2012.

1.28 In addition to exploring with the Minister progress on solving the various important issues the Government has highlighted to us, in the debate Members might ask to hear answers to the unanswered points we put to the Government in our previous Report, namely:

  • our concerns, set out in the Reasoned Opinion, about the proposed internal market legal base of the Regulation and the legality of delegating powers to the Commission in Article 443 of the Regulation; and
  • our concerns about Article 60 of the draft Directive, that is the attempt to impose rules on national parliaments in the way suggested.






1   See http://www.bis.org/bcbs/about.htm.  Back

2   See http://www.bis.org/bcbs/basel3.htm. Back

3   See HC Deb, 8 November 2011, cols 196-212. Back

4   http://www.bis.org/publ/bcbs211.htm.  Back


 
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