Transcript Diapositiva 1 - European Parliament

PRESENTATION TO THE COMMITTEE ON ECONOMIC AND
MONETARY AFFAIRS OF THE EUROPEAN PARLIAMENT
CARMINE LAMANDA
SENIOR EXECUTIVE VICE-PRESIDENT, UNICREDIT GROUP
Brussels, 16th March 2010
SUPERVISORY STANDARDS IN THE EUROPEAN SYSTEM
 NEITHER MEMBER STATES NOR BANKING GROUPS WILL SUBSIDISE
SUPERVISORY FAILURE.
 SUPERVISORY STANDARDS IN ALL MEMBER STATES AND AT EU LEVEL
MUST BE GUARANTEED AS A PRE-CONDITION TO ANY AGREEMENT ON
CRISIS MANAGEMENT.
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CONTENTS
 EUROPEAN BANKING GROUPS
 OVERSIGHT OF EUROPEAN BANKING GROUPS
 DEFINING A CRISIS AND THE PUBLIC POLICY RATIONALE
 THE PRIMARY TOOL FOR CRISIS MANAGEMENT
 EMERGENCY MEDIUM-TERM FUNDING
 A EUROPEAN RECOVERY AND RESOLUTION FUND
 AN ORDERLY RESOLUTION
 CONCLUSION
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EUROPEAN BANKING GROUPS
 EUROPEAN BANKING GROUPS ARE POSITIVE FOR FINANCIAL
INTEGRATION, ECONOMIC GROWTH AND SHELTERED THE CEE REGION
DURING THE CRISIS.
 A EUROPEAN BANKING FRAMEWORK IS COMPLEX BUT:
 NOT A REASON TO DESTROY THE BENEFITS OF EUROPEAN BANKS
 NEITHER A REASON TO ROLL BACK THE SINGLE MARKET AND
REVERT TO RING-FENCING AND NATIONAL BARRIERS.
NOTE: For more on European banking groups providing CEE stability see the EBRD Transition Report 2009
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OVERSIGHT OF EUROPEAN BANKING GROUPS
 THE EUROPEAN COMMISSION HAS MADE A POSITIVE PROPOSAL FOR A
EUROPEAN SYSTEM OF FINANCIAL SUPERVISION.
 IF THE EUROPEAN PARLIAMENT BELIEVES A MORE AMBITIOUS
PROPOSAL IS POSSIBLE, IT SHOULD BE COURAGEOUS IN ITS VISION.
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DEFINING A CRISIS AND THE PUBLIC POLICY RATIONALE
 THE DEFINITION OF A CRISIS IS: WHEN THE MARKET HAS LOST
CONFIDENCE IN A SOLVENT BANKING GROUP.
 ALL AUTHORITIES – THE EUROPEAN BANKING AUTHORITITY AND THE
HOST AND HOME AUTHORITIES TOGETHER - NEED THE POWER TO
APPOINT A SPECIAL ADMINISTRATOR TO TAKE CONTROL OF THE
PARENT COMPANY’S POWERS AND RESOURCES AND DIRECTLY
MANAGE THE CRISIS.
 THE RATIONALE FOR CRISIS MANAGEMENT IS BASED ON THE PUBLIC
INTEREST OBJECTIVES:
 Maintaining financial stability
 Ensuring public confidence in the banking system
 Minimising the impact of a crisis on the real economy
 Avoiding the use of taxpayer money
 THIS GUIDES THE TRADE-OFF BETWEEN: STABILITY, COMPETITION AND
STAKEHOLDER RIGHTS.
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THE PRIMARY TOOL FOR CRISIS MANAGEMENT
 THE PARENT COMPANY IS THE PRIMARY TOOL TO ACCESS AND
MANAGE A CRISIS:
 POWERS
 INFORMATION
 KNOWLEDGE
 DATA
 THE PARENT COMPANY UNDERSTANDS BEST THE GROUP’S BUSINESS
MODEL AND SYSTEMICALLY IMPORTANT BUSINESS ACTIVITIES.
 A SPECIAL ADMINISTRATOR, USING THE PARENT COMPANY, CAN BE
SUFFICIENT TO REASSURE THE MARKET.
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EMERGENCY MEDIUM-TERM FUNDING
 MARKET CONFIDENCE MAY ALSO REQUIRE ADDITIONAL TIME AND
TOOLS FOR AUTHORITIES.
 DURING THE LAST CRISIS, BANKING GROUPS HAD SUFFICIENT ASSETS
AS COLLATERAL FOR THEIR MEDIUM-TERM FUNDING.
 CENTRAL BANKS COULD ONLY PROVIDE SHORT-TERM LIQUIDITY.
EXCESS LIQUIDITY IN THE MARKET DID NOT SUCCEED IN RE-STARTING
FUNDING TO THE BANKS.
 EXTRAORDINARY GOVERNMENT INTERVENTION RAISED FINANCE ON
THE MARKETS AND PROVIDED GROUP-SPECIFIC SUPPORT.
 DAMAGE TO THE PUBLIC FINANCES, THE TAXPAYER BURDEN STILL NOT
KNOWN, BANKING GROUPS’ REPUTATIONS SUFFERED.
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A EUROPEAN RECOVERY AND RESOLUTION FUND (1/2)
 A TOOL IS NEEDED:
 TO PROVIDE EMERGENCY MEDIUM-TERM FUNDING
 TO PREVENT THE FIRE-SALE OF ASSETS
 A EUROPEAN RECOVERY AND RESOLUTION FUND BASED ON A
PRIVATELY FUNDED EQUITY BASE AND PUBLIC GUARANTEES TO ISSUE
DEBT ON THE INTERNATIONAL MARKETS.
 FUNCTIONING OF THE FUND:
 Provides: finance and covered loans, guarantees and recapitalisation.
Collateral can be accepted.
 All assistance should be provided at market rates. If a more favourable
rate is necessary, measures to prevent shareholders from benefitting
from the intervention can be taken.
 A first loss in the Fund is covered by the equity from the banks.
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A EUROPEAN RECOVERY AND RESOLUTION FUND (2/2)
 THE EUROPEAN RECOVERY AND RESOLUTION FUND PROPOSAL IS
SIMILAR TO THE SPANISH BANK RESTRUCTURING FUND AND FRENCH
SOCIÉTÉ DE FINANCEMENT DE L'ECONOMIE FRANÇAISE.
 A EUROPEAN FUND IMPLIES RISK-SHARING BETWEEN MEMBER STATES
AND ALSO BANKS. A PRE-REQUISITE IS THAT MEMBER STATES CAN
TRUST THAT SUPERVISORY STANDARDS WILL BE HIGH IN ALL PARTS OF
THE EUROPEAN SYSTEM OF FINANCIAL SUPERVISION.
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AN ORDERLY RESOLUTION (1/3)
 AN ORDERLY RESOLUTION AND PARTIAL BAIL-OUT CORRECTS MORAL
HAZARD.
 A PARTIAL BAIL-OUT:
 PRESERVES SYSTEMICALLY IMPORTANT FUNCTIONS
 DISCIPLINES UNSECURED STAKEHOLDERS.
 IN THE USUAL COMPANY INSOLVENCY PROCESS STAKEHOLDERS HAVE
TIME TO REACH AGREEMENT. AGREEMENT CAN INCLUDE PUBLIC
SUPPORT.
 WITH ENOUGH TIME A PARTIAL BAIL-OUT IS EASIER TO REACH.
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AN ORDERLY RESOLUTION (2/3)
 THE BANK INSOLVENCY PROCEDURE IS DIFFERENT FROM THE USUAL
COMPANY INSOLVENCY PROCESS:
 BANKS’ LIABILITIES ARE SHORT-TERM AND HIGHLY LIQUID
 BANKS’ ACTIVITIES ARE ESSENTIAL TO THE ECONOMY
 THE NUMBER OF BANK CREDITORS MAKES COORDINATION
DIFFICULT.
 BANK INSOLVENCIES REQUIRE SPEED BUT REACHING A CREDITOR
INSOLVENCY AGREEMENT IS SLOW.
 THE RESULT IS EITHER:
 A BANK GOES INTO LIQUIDATION
 OR THE BANK IS TOTALLY BAILED OUT.
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AN ORDERLY RESOLUTION (3/3)
 BANK INSOLVENCY AGREEMENTS COULD BE SPEEDED UP USING A
LEGAL TOOL:
 Different creditor claims are automatically repaid up to a threshold
based on the risk level of liabilities.
 Unsophisticated, non-institutional investors (e.g. families and SMEs)
are automatically guaranteed full coverage.
 After a temporary moratorium, during which creditors can reach
agreement, the remaining liquidated assets can be distributed.
 ANOTHER APPROACH IS TO COORDINATE CREDITORS TO REACH A
RAPID INSOLVENCY AGREEMENT, FOR EXAMPLE THROUGH A
COLLECTIVE ACTION CLAUSE.
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CONCLUSION
 EUROPEAN BANKING GROUPS ARE PART OF THE EU’S SUCCESS STORY.
BANKING GROUPS IN THE SINGLE MARKET SHOULD NOT BE
CONSIDERD “CROSS-BORDER”.
 EUROPEAN SUPERVISION AND CRISIS MANAGEMENT REQUIRES
EQUIVALENT STANDARDS, POWERS, TOOLS AND PROPER
COORDINATION.
 A SPECIAL ADMINISTRATOR CAN RESTORE MARKET CONFIDENCE. A
NEW TOOL FOR EMERGENCY MEDIUM-TERM FUNDING IS NEEDED.
 AN ORDERLY RESOLUTION NEEDS TO BE POSSIBLE. RECOGNISING WHY
BANK INSOLVENCIES DIFFER FROM USUAL COMPANY INSOLVENCY
PROCEDURES CAN HELP TO REACH THIS GOAL.
 THE EUROPEAN INSTITUTIONS AND THE PRIVATE SECTOR CAN PUT IN
PLACE A GLOBAL BENCHMARK IN BANKING REGULATION, SUPERVISION
AND CRISIS MANAGEMENT.
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