25 May 2018

Main results - Economic and Financial Affairs Council

The Council agreed its stance on proposals to reduce risk in the banking industry, strengthening rules on capital requirements and on bank recovery and resolution.

Banking: Council agreement on measures to reduce risk

Implementing reforms agreed at international level, the proposals are aimed at ensuring that any outstanding challenges to financial stability are correctly addressed.

Based on the progress achieved on risk reduction, ministers reiterated their commitment to progress on all components, including on risk sharing, cited in the Council's 'roadmap' on banking union. Decisions to advance on the backstop to the EU's single resolution fund will be taken in June 2018.

“The agreement on the banking package today will enable us to make progress on other elements of the banking union”, said Vladislav Goranov, minister for finance of Bulgaria, which currently holds the Council presidency.

“Today’s agreement will send a positive signal to the market. We hope therefore that the European Parliament will be able shortly to start negotiations, allowing us to agree these proposals and enact them as soon as possible”, he said.

The Council adopted rules aimed at boosting transparency to prevent aggressive cross-border tax planning.

Corporate tax avoidance: Transparency rules adopted for tax intermediaries

The directive targets intermediaries such as tax advisors, accountants and lawyers that design and/or promote tax planning schemes. It will require them to report schemes that are potentially aggressive.

"The new rules are a key part of our strategy to combat corporate tax avoidance ", Mr Goranov said. “With greater transparency, risks will be detected at an earlier stage and measures taken to close down loopholes before revenue is lost."

Ministers also agreed to remove the Bahamas and Saint Kitts and Nevis from the EU's list of non-cooperative jurisdictions, in the light of commitments made at a high political level to remedy EU concerns.

Taxation: 2 jurisdictions removed from EU list of non-cooperative jurisdictions

Remarks by Vice-President Dombrovskis at the ECOFIN press conference

[...]This package is a key deliverable for risk reduction in our banking sector. It aims to complete the post-crisis regulatory agenda, address the outstanding issues for financial stability, and introduce internationally agreed standards in EU legislation. When implemented, it will help to make the European banking sector more resilient towards possible shocks.

Let me remind you of some concrete decisions and proposals contained in this package:

We are introducing a binding leverage ratio of 3% for all banks, and a higher ratio for global systemically important banks.

We are asking banks to build up bail-inable buffers, so in case there are problems with banks it is the banks' creditors, not taxpayers, who are first in line to cover the losses. This includes an agreement on so-called total loss absorbing capacity (TLAC), with which the largest banks will have to comply. And actually we are going beyond the international minimum by setting out that they have to have a TLAC of at least 8% of their balance sheet.

To ensure that banks hold sufficient liquid assets to withstand periods of market turbulence, we introduce a net stable funding ratio.

And we are also ready to follow up the work on the Fundamental Review of the Trading Book (FRTB), starting with a reporting requirement, when the work in the Basel Committee will be completed.

I would also highlight that this package also includes the principle of proportionality, with certain alleviations for smaller banks to reduce their reporting requirements and the related administrative burden. [...]

Full remarks

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