The banking union, and its institutions under the first and second pillars, have therefore been operational for much less than a decade. Yet they have already left their mark.
Welcome to our first joint conference of the Single Resolution Board
and the European Central Bank. This event marks the tenth anniversary of
the banking union, as proposed at the June 2012 European Council.
However, the Single Supervisory Mechanism was not legally in force
until two and a half years later. And it was almost four years before
the Single Resolution Board was legally operational.
The banking
union, and its institutions under the first and second pillars, have
therefore been operational for much less than a decade. Yet they have
already left their mark. Just take for example the considerable
reduction in non-performing loan ratios of significant euro area banks:
from eight percent in 2014, to around two percent in 2021. And look at
the supervisory response to the biggest yearly drop in economic activity
since the Second World War – provoked by the pandemic – which allowed
banks to keep credit lines open to companies and households.
Empirical evidence strongly suggests that measures such as granting capital headroom to banks and recommending they do not distribute dividends
were effective in supporting lending and economic output during the
pandemic. In tandem with monetary and fiscal policy support, these
measures allowed European banks to emerge from the pandemic in strong
shape. They were also ready to withstand a new shock that –
unfortunately – did not take too long to materialise. For the first
time, a symmetric shock was met with comprehensive policy actions at EU
level.
And during its first years the SRB established itself as a
pan-European resolution authority. This was reflected not only in terms
of banks’ preparedness, through resolution planning and minimum
requirement for own funds and eligible liabilities (MREL), but also
swift interventions in the few cases of banks declared failing or likely
to fail.
The unified European response to the challenges of recent years would have been unthinkable without the banking union.
In
this context, cooperation between the SSM and the SRB was integral to
our efforts throughout those years. Take our joint handling of recent
crisis cases, such as Sberbank. Given the limited time available to
respond to fast-moving crisis situations, effective cooperation is vital
for the successful, orderly wind-down of a bank. And this concerns not
only the quick exchange of information, but also consultation and
cooperation between the two authorities, as provided for in the
legislation.
However, this is only the outcome of a coordination
process that starts much earlier, as set out in our interinstitutional
Memorandum of Understanding.
To make sure both institutions are on the same page when push comes to
shove, the ECB is consulted on the resolution plans that the SRB
prepares, while the SRB provides feedback on the recovery plans of
significant institutions. And our information exchange is not limited to
crisis management. We also share insights on key system-wide
vulnerabilities, such as in the Extended Contact Group monitoring
developments following the Russian invasion of Ukraine, as well as
exchanging bank-specific information on matters such as MREL.
So,
we have come a long way. But we have certainly not yet reached our final
destination. The banking union remains incomplete in several respects.
For large banks, we have a uniform and effective crisis management
framework in place, but the same cannot be said for small and
medium-sized banks. Prudential regulatory barriers to a truly single
European banking market remain. And the third pillar of the banking
union, a common deposit insurance scheme, is still missing....
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