Bloomberg News

Bank Single Market Starting to Fragment, EU Regulator Says

March 27, 2012

The single market for investment banking is starting to fragment across the European Union, the region’s top regulator warned today.

Andrea Enria, chairman of the European Banking Authority, said there are “signs, unfortunately” that banks’ shedding of assets is making them less active in other EU nations, he said at an event in Brussels today.

The cost of international business increasing is “definitely a threat at the moment,” Gernot Mittendorfer, chief risk officer at Erste Group Bank AG, said in an interview. “The European idea is basically about single market, integration, freedom of capital.”

Officials from Austria’s central bank and financial regulators imposed tougher rules last year on loans to Eastern European countries, restricting their banks to lending no more than 110 percent of local deposits and funding raised by subsidiaries.

The EBA, set up last year to harmonize banking rules across the European Union, has meanwhile told banks to raise 114.7 billion euros ($153 billion) in fresh capital by the end of June as part of measures introduced to respond to the euro area’s sovereign-debt crisis. The EBA has said it won’t count so-called deleveraging as part of the capital-raising measures.

To contact the reporter on this story: Ben Moshinsky in London at bmoshinsky@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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