Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Finance when he expects the new EU rules on banking supervision to be implemented; if the new bank supervision system is in place in 2013, if he will factor the impact of such a development into Budget 2013; and if he will make a statement on the matter. [52312/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Support for the establishment of Banking Union was given at the highest political level at the Summit of Heads of State & Government of the Euro Area. The principle of breaking the link between the sovereigns and banks has been agreed by Heads of State and Government. In September the Commission presented legislative proposals for a single supervisory mechanism conferring powers on the ECB for the supervision of all banks in the euro area, with a mechanism for non-euro countries to join on a voluntary basis. The European Council discussed the SSM at its October meeting in the context of a report from President Van Rompuy on work being carried out on the Future of Economic and Monetary Union. The timetable set in the October Council conclusions envisages agreement being reached on "the legislative framework" for SSM by end of the year. The imperative is to move ahead urgently to implement all of the important decisions taken on 29 June. I am working with ministers from the other Member States at the Ecofin Council to bring about the SSM. My officials are engaged in technical negotiations on the SSM proposal, the implementation of which is a perquisite for the ESM to make direct recapitalisations in banks. The Deputy is aware that the June Summit of the Heads of State and Government of the Euro area stated that when the SSM is in "place for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly." It went on to state that "The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme."

The timeframe set by the October Council is for the SSM to be fully operational during 2013. It is important that there is no rolling back on commitments made by the Heads of State and Government. In that context I note that the President of the ECB Mario Draghi indicated at the Council that it would take 6-12 months to get the supervisor up and running. This is realistic and the final text should clearly confirm this timeframe for the full implementation of the regulation, with the ECB assuming supervision of the most significant institutions by 1 July 2013 and the remaining credit institutions in Member States by 1 January 2014 at the latest. My officials are working on intensive negotiations at a high level to reach agreement on the SSM proposal within the deadline set by the October Council. I share the view of the President of the European Council Van Rompuy that Europe must not loose the sense of urgency in taking action to stabilize the euro.

It is anticipated that the single supervisory mechanism will be funded through industry fees and as such there should not be any budgetary impact. The establishment of the single supervisory mechanism is a crucial and significant first step to completing the banking union. The banking union will also require further work to develop a common system for deposit guarantees and an integrated crisis management framework, while negotiations on the bank capital requirements (CRD IV) should also be concluded as called for by the Heads of State and Government at the October European Council.