No more chain banking crises, never more costly bailouts of credit institutions at the expense of the States and therefore on the skin of taxpayers. This is, in simple words, the meaning of the new European standards published these days in the Official Journal of the EU. Rules that will enter into force on January XNUMX next year and will significantly strengthen the prudential requirements that banks are obliged to comply with in order to protect company capital and assets together with the savings and investments of their customers.
At the origin of the new rules that will apply from January 2014 is the observation of some vulnerabilities in the banking sector that emerged during the crisis. Such as insufficient levels of capital, both in terms of quantity and quality, leading to unprecedented support from national authorities.
The rules set stronger prudential requirements for banks, urging them to acquire sufficient liquidity and capital buffers also to face the possibility of other crises. The new framework will make European banks more solid, explains the EU Commission, and will strengthen their ability to adequately manage the risks associated with their business and absorb losses.
The legislative "package", already approved by the European Parliament and the European Council, includes a regulation (this is how a European law is defined which becomes directly part of the legislation of the member states) and a directive (which will subsequently have to be transformed into national law in each EU country). The two provisions, together, transfer the standards set by Basel 3 into European legislation and strengthen them.
More specifically, the regulation (amending the previous EU regulation no. 648/2012) specifies the prudential requirements that must be respected by credit institutions and investment firms. The directive (which amends directive 2002/87/EC and repeals directives 2006/48/EC and 2006/49/EC) instead contains the rules to which those same subjects must comply in the exercise of their activity and in the definition and management of the prudential supervision criteria. Rules, the latter, which can also be modified, but not distorted, during the transposition into national legislation.
The regulation, complying with the request of the European Council made after the explosion of the global economic and financial crisis, brings together for the first time in a single text all the rules which contribute to making the activity of credit institutions always safe and transparent.
The new European rules, they underline in Brussels, respect the balance and ambitions of Basel 3 but are not a simple copy and paste into the European legislation of the guidelines defined there. And they will eliminate a large number of national and discretionary options relating to banking prudential requirements and will allow Member States to apply more stringent ones only if they are justified by particular national situations motivated by reasons of financial stability or originating from a specific risk situation for a particular bank.
The Council and the European Parliament, in their capacity as co-legislators, in drafting the text have kept in mind the objective that every country can, and indeed must, implement by 2018 the minimum international banking standards on the adequacy of a bank's capital. That is, those criteria that have been defined by the Committee for Banking Supervision, a body which is based precisely in Basel at the Bank for International Settlements. And within which the major countries of the world are represented (including Italy) as well as, as observers, also the European Commission, the European Banking Authority and the ECB.
Within the Committee, the European Commission has contributed to the definition of the new standards according to a perspective that has kept in mind the specificities of the major European banks and has contributed to directing the appropriateness of the measures adopted in relation to the context in which they will have to be applied.
Among the measures contained in the EU directive, there is one that has now entered the knowledge base of the man in the street: that concerning the remuneration of bank top management. This measure establishes that starting next January 100, the amount of the variable bonuses cannot exceed 200% of the fixed remuneration. And only in exceptional cases and in compliance with certain conditions will it be able to reach the unassailable threshold of XNUMX%.
The directive also prescribes that in the management of corporate governance the level of risk surveillance must be strengthened through more careful management of the control function by the internal monitoring bodies.
In the board of directors, the supervision of risks, the directive then suggests, must also be ensured through a composition that guarantees a broad spectrum of views and assessments, and therefore prevents the formation of a single group of opinions.
Furthermore, the level of transparency with regard to banking activity in the strict sense and investment funds in different countries and legal systems will also have to be increased, above all with the aim of regaining citizens' trust in the financial sector, in particular for that concerning profits, taxes and subsidies.
