European Banking Union. The New Regime. Edited by Luis M. Hinojosa-Martmez Jose Maria Beneyto

Transcription

1 European Banking Union The New Regime Edited by Luis M. Hinojosa-Martmez Jose Maria Beneyto Wolters Kluwer Law & Business

2 Editors Contributors Preface v vii xxiii PART I Introduction to the Banking Union 1 CHARTER 1 The Banking Union: A General Perspective Steven L. Schwarcz 3 CHARTER 2 Banking Union: Risks and Challenges Vasso loannidou Introduction Single Supervisory Mechanism Single Resolution Mechanism Single Deposit Insurance Fund Conclusions 17 PART II Single Rulebook 19 CHARTER 3 The EU Single Rulebook: Capital Requirements for Banks and the Maximum Harmonisation Principle Kern Alexander Introduction 21 xvii

3 3.02 Overview Maximum Harmonisation Should the CRD IV Permit Gold Plating? Tier One Capital Corporate Governance and Risk Management The CRD IV, Banking Union and Macro-Prudential Supervision Conclusion 31 CHAPTER 4 The Fight against White-Collar Crime as European Financial Crisis Rescuer: Regulatory Challenges and the Tough on Crime Approach Ester Herlin-Karnell Introduction European Financial Crimes: Context and Background Regulatory Challenges and the EU's Fight against Financial Crime 37 [A] EU Anti-money Laundering Action and Ways to Fix the Crisis The Market Abuse Framework and the Recovery of the Market Unresolved Issues: Data Protection and Fundamental Rights Brief Conclusions 44 PART III Common Supervision of European Banks 45 CHAPTER 5 The Role of the ECB in the Supervision of Credit Institutions Luis M. Hinojosa-Martmez Introduction A General Overview of the System The Selection of the Credit Institutions to Be Supervised by the ECB Decision-Making and the Position of Non-Euro Member States The Separation of Supervisory and Monetary Functions The Relationship between the ECB and the National Authorities Democratic Accountability in the New Supervisory System The Division of Normative Functions between the EBA, the ECB and the Commission Final Remarks 67 CHAPTER 6 Variable Geometry: The Role of the European Banking Authority under Banking Union Thomas F. Huertas Introduction The SSM May Affect the Way the EBA Takes Decisions The EBA Retains Primary Responsibility for the Single Rule Book 71 xviii

4 6.04 The SSM Will Change the Basis for Supervisory Cooperation within the Euro-Area The EBA Will Retain Its Role for EU-Wide Supervisory Issues The EBA's Role in Resolution The SRM and the Role of the SRB in Resolution Conclusion: Simpler in Theory, More Complex in Practice? 75 CHARTER 7 Regulatory Coordination in the Banking Union: The Role of National Authorities Maria J. Nieto Introduction Evolution of the Institutional Setting Framework for Financial Stability in the EU 78 [A] From Implicit to Explicit Coordination among Safety Net Regulators 79 [B] Limitations of Cooperation and the Need for Centralization Is the Banking Union a Fully Centralized Model? 85 [A] Characterization of the Single Supervisory Mechanism 85 [B] The Other Elements of the Banking Union 88 [1] Single Resolution Mechanism 88 [2] The Single Resolution Fund 91 [3]...And the Liquidity Provision to Banks in Crisis Conclusions 94 PART IV Bank Recovery and Resolution Programmes 97 CHARTER 8 The Establishment of a EU-Wide Framework for the Resolution of Banks and Financial Institutions Hannes Huhtaniemi, Mario Nava <& Emiliano Tornese Introduction 99 [A] Bank Resolution and Its Vital Role in Strengthening the EU Single Market 99 [B] The G20 and the Financial Stability Board Key Attributes for Effective Resolution Regimes The Bank Recovery and Resolution Directive 102 [A] Timeline, Process and Outcome of Legislative Deliberations 102 [B] The Key Components: Preparation, Early Intervention, Resolution 103 [C] Bail-in Hierarchy and Scope 104 [D] Loss Absorbing Capacity: Minimum Requirement for Own Funds and Eligible Liabilities (MREL) 105 [E] The Role of Resolution Funds 105 xix

5 [F] The Interaction of Bail-In, Resolution Funds, and State Support in Loss Absorption and Recapitalization 105 [G] Home-Host Cooperation and Arrangements with Third Countries The Single Resolution Mechanism 107 [A] The Logic of Banking Union and the Single Resolution Mechanism 107 [B] Legal Base for a Single Resolution Mechanism 109 [C] Timeline, Process and Outcome of Legislative Deliberations 110 [D] Key Components of the Single Resolution Mechanism 112 [E] Entry into Force/Application of the SRM Regulation Conclusion 116 Annex I: SRM Resolution Process 117 Annex II: Pace of Mutualization during the Transitional Period of 8 Years Assuming 55 Billion of Target Level 118 CHAPTER 9 Direct Recapitalization of Banks and Sovereign Debt: The ESM Direct Recapitalization Instrument and Its Impact on Sovereign Debt Justo Corti Varela Introduction Indirect Recapitalization 123 [A] Ireland: How Expensive a National Recapitalization Can Be 124 [B] Spain: Direct Recapitalization Was Discussed for the First Time 125 [C] Cyprus: The 'Bail-in' Term Was Born 126 [D] Portugal: The Bad Bank Strategy Is Consolidated ESM Direct Recapitalization Instrument 128 [A] ESM Guidelines 129 [B] Basic Eligibility Criteria 129 [1] Member States in Serious Fiscal Difficulties 129 [2] Banks with Systemic Relevance 130 [C] Shared Responsibilities Conditions 130 [1] There Is No Bail-Out without a Previous Bail-In 130 [2] Contribution of Member States 132 [D] Monitoring and Supplementary Conditions 132 [E] ESM's Lending Capacity 133 [F] Retroactive Application Conclusions 134 PART V Deposit Guarantee Schemes 137 xx

6 CHARTER 10 Deposit Insurance: How to Deal with the Missing Biliar of Banking Union Daniel Gros Introduction and Motivation Basic Principles of Reinsurance 148 [A] Compulsory Reinsurance with a Deductible 148 [B] Institutional Issues ISO [C] Premiums and Management 150 [D] Transition Conclusions 151 Annex I: FDIC: Four-Score Years of Deposit Insurance in the US 152 PART VI Complementary Aspects 155 CHARTER 11 New Rules for Credit Rating Agencies in the EU Nathalie Berger, Anke Delava, Philippe Caluwaerts, GalinGentchev & Vygandas Jankunas Introduction Reducing Reliance on External Credit Ratings 159 [A] International Developments 159 [B] The EU Action Plan Regulating CRAs in the EU 163 [A] A Single Supervisor for CRAs in the EU 163 [B] Addressing Conflicts of Interest 164 [C] Increasing Transparency on the Credit Rating Market 166 [1] Credit Ratings, Rating Outlooks and Methodologies 166 [2] General and Periodic Disclosures 166 [3] CEREP and the European Rating Platform 167 [D] Making CRAs Liable 167 [E] Using Ratings Issued in Third Countries Specific Rules for Structured Finance Instruments (SFIs) 170 [A] Specific Disclosure Requirements 171 [B] Dealing with Conflicts of Interest on SFIs 172 [1] Obligation for Two Ratings for SFIs 172 [2] Rotation Transparency on Sovereign Ratings Measures to Increase Competition in the Rating Market Conclusion 177 xxi

7 CHAPTER 12 EU Banking Union and International Financial Law Manuel Lopez-Escudero The International Financial Architecture after the Crisis 180 [A] The Assumption of the Political Governance of the International Financial System by the G [B] The Strengthening of the Financial Stability Board 185 [C] The Exponential Growth of International Financial Soft Law 187 [D] The 'Hardening' of the Financial Soft Law The Influence of International Financial Law on EU Banking Union 193 fa] Capital Requirements for Banks 195 [B] The Banking Supervision and the Single Supervisory Mechanism 200 [C] The Resolution Regimes for Financial Institutions and the Single Resolution Mechanism The EU Participation in the Transnational Regulatory Network on Banking Activities Concluding Remarks 210 CHAPTER 13 The Future of the Banking Union Miguel Otero-lglesias & Federico Steinberg Introduction Theories of Money 216 [A] The Origins of Money 216 [B] The Origins of Money, OCA Theory and the Incompleteness of EMU The Banking Union and Its Discontents 220 [A] The Creation of the Banking Union 220 [B] A Fiscal Union through the Back Door 223 [C] Sovereignty, Legitimacy and Redistribution In Conclusion: EMU Needs to Move Forward to Make the Euro Sustainable 226 Bibliography 229 Index 243 xxii