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September 04, 2012 at 06:08 AM
The European Commission (EC) has plans to give the European Central Bank (ECB) authority to supervise all eurozone banks, but the German government wants no part of it, saying that only the largest banks should be subject to ECB oversight. Bankers themselves are weighing in on the dispute, with some on the side of the government and others saying that exceptions will allow more banks to demand special treatment.
Reuters reported Monday that Finance Minister Wolfgang Schaeuble of Germany expressed his opposition to the EC plan, which was to be published in detail by the EC on Sept. 12. The proposal, advanced by EU Commissioner Michel Barnie, would transfer major authority over the region’s banks to the ECB.
National banking supervisors will still retain some responsibilities under Barnier’s plan, including consumer protection. However, other responsibilities would move to the ECB in advance of a closer fiscal union. The plan must be approved by eurozone countries before it can become law.
In challenging the plan, Schaeuble criticized the timetable for the switchover, and said in the report, “The ECB has itself said it does not have the potential to supervise the European Union’s 6,000 banks in the foreseeable future. I have doubts that this [banking supervision] can come so fast.”
He also said that such supervisory transfer should only occur with “systemically relevant” banks, adding, “With the bigger, systemically relevant banks … there is a chance that direct supervision by the ECB could be realized in a foreseeable period of time.” However, he did not give specifics on which banks he thought should be covered by the plan. The German government is reluctant to hand over any control of its state-owned Landesbanks to the ECB.
On Tuesday, however, German bankers weighed in at a banking conference in Frankfurt. Juergen Fitschen, co-head of Deutsche Bank, said in the report that supervision by the ECB would only be effective if it had oversight of a broad range of banks and not just the largest in Europe. His views echo those of the EC.
