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17 June 2016

Council Conclusions on a roadmap to complete the Banking Union

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The Council agreed on a 'roadmap' for further work to complete the EU's banking union, focusing in three main areas: a European deposit insurance scheme (EDIS); a common backstop to the single resolution fund; and bank regulations with a view to reducing risks.



7.         UNDERLINES the importance of the work being carried out by several institutions at Banking Union, EU28 and international level, in particular work by the Commission to:

a)             propose amendments to the legislative framework in view of implementing the Total Loss Absorbing Capacity (TLAC) standard and reviewing the minimum requirement for own funds and eligible liabilities (MREL). The Council will seek to ensure consistent rules and adequate amounts for the bail-inable buffers that contribute to an efficient and orderly resolution process in line with BRRD for all credit institutions for which bail-in would be the validated resolution strategy.

b)             put forward a proposal on a common approach to the bank creditor hierarchy, to enhance legal certainty in case of resolution.

c)             propose amendments to the CRR/CRDIV as part of an overall review exercise, which would result in:

i.   harmonisation or further specification of options and national discretions (ONDs) granted to MS, which could also contribute to the objective of reducing financial fragmentation;

ii.  implementing and finalising remaining Basel reforms including the introduction of a leverage ratio, possibly set higher than 3% for systemic banks, and the introduction of a net stable funding ratio;

d)            propose a legislative proposal for minimum harmonisation in the field of insolvency law in the context of the Capital Markets Union (CMU), which may also support efforts to reduce future levels of non-performing loans;

e)             conduct further work on examining whether and how harmonizing the rules and application of moratorium tools can contribute to the stabilisation by the relevant authorities of an institution in the period before, and possibly after, an intervention.

8.         In this context, UNDERLINES the following key steps:

a)             On the Commission´s banking proposals set out under paragraph 7, the Council invites the Commission to put forward the proposals as soon as possible and by no later than the end of 2016. On that basis, the Council will start technical work immediately in view of a swift implementation. The Council underlines the importance of considering European specificities when implementing global regulatory standards, including Basel standards, in the EU;

b)             On the common backstop for the Single Resolution Fund, the Council takes note of the intention of Member States to start work in September 2016 if and when all participating Member States have fully transposed the BRRD. In this context, the Council will also take stock of the establishment of the bridge financing arrangements, noting that participating Member States are committed to sign the Loan Facility Agreement by that time. They reaffirm the need to have the common backstop fully operational at the latest by the end of the transition period.  When the work is completed, it may be decided, in line with the risk reduction measures mentioned in paragraph (a), that the backstop may become operational ahead of the end of the transition period;[1]

c)             On the regulatory treatment of sovereign exposures, the Council agrees to await the outcomes of the Basel Committee. Following the work of the Basel Committee the Council will consider possible next steps in the European context;

d)            On a European Deposit Insurance Scheme (EDIS), the Council will continue constructive work at technical level. Negotiations at political level will start as soon as sufficient further progress has been made on the measures on risk reduction, as mentioned above. In this context, the Council takes note of the intention of Member States to have recourse to an IGA when political negotiations on EDIS start;

e)             The Council will assess annually the progress made on the above mentioned measures towards completing the Banking Union. [...]

Full conclusions

© European Council

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