Bloomberg News

EBA May Face Voting Changes to Preserve Balance at EU Regulator

September 07, 2012

The European Banking Authority may face structural changes to prevent the U.K. and other non-euro area nations from losing influence at the financial regulator as a result of the currency bloc’s planned banking union.

The proposed changes include setting up an independent panel to assess whether national regulators are correctly applying European Union law and making the panel’s decisions binding unless they are rejected by a majority of regulators, according to a document obtained by Bloomberg News. The EU has said that it will present the banking union plans Sept. 12.

At least three national regulators from non-euro area countries would have to support any move to strike down one of the panels’ decisions, according to the document. The European Central Bank would coordinate euro-area positions at the EBA on some matters, it said.

Euro-area leaders in June decided to create a common bank supervisor and beef up the ECB’s oversight role to pave the way for direct bank bailouts from the single-currency area’s firewall funds. The U.K. has warned that the plan shouldn’t lead to the euro area dominating the EBA, which drafts financial rules that apply across the 27-nation EU.

Debt Crisis

The euro region’s debt crisis, now in its third year, has forced Ireland, Greece, Portugal and Cyprus to seek broad-based aid, while the Spanish government was granted as much as 100 billion euros ($128 billion) to recapitalize its beleaguered banking system.

A spokeswoman for the EBA in London declined to comment. Stefaan De Rynck, a spokesman for Michel Barnier, the EU financial services chief, declined to comment on the document.

He said that the European Commission was seeking “a balanced representation of all 27 EU member states at the EBA and to preserve the integrity of the EU’s single market.”

Under current rules, the independent EBA has the power to rule on disputes between banking regulators that concern interpretations of EU law through a process known as binding mediation. The ECB would generally be expected to comply with EBA decisions in the same way as national regulators, according to the document.

The EBA has also conducted stress tests to determine the health of the EU banks.

To contact the reporters on this story: Jim Brunsden in Brussels at jbrunsden@bloomberg.net;

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


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