16 Banking Union
| (a)
(34217)
13682/12
COM(12) 512
(b)
(34218)
13683/12
COM(12) 511
(c)
(34558)
17787/12
—
|
Draft Regulation amending Regulation (EC) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards its interaction with Council Regulation (EU) No. .../... conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions
Draft Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions
European Central Bank Opinion on a Draft Council Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions and a draft Regulation amending Regulation (EC) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority) (CON/2012/96)
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| Legal base | (a) Article 114 TFEU; co-decision; QMV
(b) Article 127(6) TFEU; consultation; unanimity
(c) —
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| Department | HM Treasury
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| Basis of consideration | Minister's letter of 6 February 2013
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| Previous Committee Reports | (a) and (b) HC 86-xxix (2012-13), chapter 17 (23 January 2013); HC 86-xiv (2012-13), chapter 1 (17 October 2012)
(c) HC 86-xxix (2012-13), chapter 17 (23 January 2013)
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| Discussion in Council | Not applicable
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| Committee's assessment | Politically important
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| Committee's decision | (a) and (b) Cleared after debate on the Floor of the House[51]
(c) Cleared (decision reported on 23 January 2013)
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Background
16.1 In recent years various measures have been discussed,
and some introduced, to strengthen economic governance in the
eurozone and in the wider EU. Much of this activity has been concerned
with countering the present eurozone difficulties. Measures advocated
have included a "banking union". In this context in
September 2012 the Commission proposed the first stage of a Banking
Union, involving two draft Regulations. One, document (b), would
confer specific tasks on the European Central Bank (ECB) concerning
policies relating to the prudential supervision of credit institutions
— a Single Supervisory Mechanism (SSM). The other, document
(a), would amend consequentially the Regulation establishing the
European Banking Authority (EBA). These documents were cleared
from scrutiny following debate on the Floor of the House in November
2012.[52]
16.2 Before the debate took place it came to
light that the Council Legal Service had concerns about the legality
of elements of the proposal, some of which were raised in the
debate. The concerns centred on the following issues:
i) In establishing the SSM, the Council had to
respect the legal framework for decision-making within the ECB
set by primary law, the Treaties. This framework did not allow
the ECB's Governing Council to delegate decision-making functions
on banking supervision to a subsidiary body, such as the SSM.
There was nothing in the legal base of the SSM proposal, Article
127(6) TFEU, which would permit secondary law, this draft Regulation,
amending the rules laid down in primary law.
ii) Non-eurozone Member States were not entitled
to participate in the ECB's decision-making, so they could have
no formal decision-making role in the SSM as conceived. A suggested
compromise was to take the decision-making powers away from the
SSM so that all participating Member States could be represented
within it.
iii) In terms of the ECB's dispute resolution
powers, there was no justification in treating the ECB differently
from banking authorities in non-eurozone Member States by exempting
it from those powers. To do so would be a clear breach of the
principle of non-discrimination.
The Minister's letter
16.3 The Financial Secretary to the Treasury
(Greg Clark) writes in response to the Committee's Report of 23
January in which it asked him to address how the concerns of the
Council Legal Service had been met.
16.4 The Minister confirms that the arrangements
are now "legally sound":
"First, for completeness, I can confirm that
Article 127(6) of the Treaty on the Functioning of the European
Union (TFEU) is the correct legal base for the proposed ECB Regulation,
as it expressly contemplates the conferral of specific tasks on
the ECB concerning policies relating to the prudential supervision
of credit institutions. The proposed EBA Amending Regulation has
Article 114 TFEU as its Treaty base, which is appropriate given
that the original EBA Regulation was also brought forward under
Article 114 TFEU.
"Second, the Council approach is consistent
with ECB governance provisions in the Treaties and the Statute
of the European System of Central Banks and of the European Central
Bank (ESCB Statute). The TFEU and ESCB Statute establish that
the ECB's Governing Council can only include Euro Area Member
States and must have ultimate decision-making responsibilities
for the performance of the ECB's tasks, including financial supervision.
Under Article 19 of the proposed ECB Regulation, the ECB will
be required to establish a Supervisory Board responsible for the
planning and execution of the ECB's supervisory tasks and non-Euro
Area Member States will be fully represented on the Board. However,
the ECB's Governing Council will be the ultimate decision-making
body.
"Third, the ECB will be required to apply Union
law, including binding technical standards and Directives transposed
into the national laws of individual participating Member States.
"Finally, the tasks and powers of the European
Banking Authority will apply in the same way to the ECB in its
capacity as a supervisory authority as they apply to national
competent authorities. For example, should the ECB be party to
binding mediation by the EBA under Article 19 of the EBA Regulation,
decisions of the EBA will be binding on the ECB. This arrangement
secures equality in the treatment of the ECB and other competent
authorities."
Conclusion
16.5 On document (a) we note the powers of
the EBA will apply to national competent authorities and the ECB
alike so removing the discrimination in the earlier draft.
16.6 On document (b) we note how the proposals
have been modified to meet the concerns which the Council's Legal
Service had raised. In short, the creation of a Supervisory Board
means that all Member States will be represented within it and
leaves the role of the ECB's Governing Council formally unchanged
by secondary legislation. In our view, however, there is nonetheless
the risk that the new Supervisory Board could in practice become
the de facto decision-maker on supervisory matters —
circumventing the need for EU Treaty change to authorise another
ECB decision-making body besides the Governing Council.
16.7 We thank the Minister for his letter
and are now content to draw a line under this correspondence.
51 HC Debs, 6 November 2012, cols. 805-833. Back
52
Ibid. Back
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