Reuters: Regulatory News: Austria watchdog wants wide ECB bank supervisor role

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Austria watchdog wants wide ECB bank supervisor role Aug 30th 2012, 13:49 By Georgina Prodhan ALPBACH, Austria | Thu Aug 30, 2012 9:49am EDT ALPBACH, Austria Aug 30 (Reuters) - The European Central Bank should take charge of all euro zone banks, not just those considered lynchpins of the wider banking system, Austria's financial regulator said on Thursday. Helmut Ettl, executive director of Austria's Financial Market Authority, said the ECB needed such a broad remit because in Spain, for example, the country's banking crisis had been triggered by small local savings banks. "To make the distinction that the ECB should only oversee the system-relevant banks is conceptually already a very problematic distinction," he told journalists at a conference in the Alpine resort of Alpbach. "If you just look at the Spanish case there was no single issue of a system-relevant institution but the quantity of Spanish savings banks drove to (created) a systemic problem." European Union leaders agreed in June to set up a single banking supervisor for Europe centred around the ECB, a plan they hope will help break the "vicious" link between the euro zone's debt crisis and struggling banks. Ettl said it was vital that the creation of such an institution be linked to a European resolution regime, which could include the ability to shut down a troubled bank. "It would be dangerous here to pursue only one part and to leave behind others," he said. "We need a strong European institution with appropriate powers of intervention." The central bank would then have the power to intervene directly in any bank if needed while being able to delegate some day-to-day supervisory tasks to national regulators. The European Commission will present a detailed proposal on Sept. 12 for a single banking supervisor for Europe. Details have yet to be agreed about how the ECB will work with local regulators in individual countries and with the existing European Banking Authority, the pan-EU watchdog. Some policymakers say that as the ECB is expected to have powers to inject funds from the bloc's bailout funds directly into banks, it should also be able to shut down banks that cannot be saved. Other policymakers, however, argue that bank resolution powers should be given to a new, standalone authority to avoid potential conflicts of interest at the ECB. Ettl said there must be clear separation at the ECB between its monetary-policy and supervisory functions, and also said the new body should be open for EU countries outside the euro zone to join. EU officials want a banking union in place during 2013 but Ettl said not everything could be up and running by then and urged careful implementation. "We consider a quick and dirty solution to be dangerous." Link this Share this Digg this Email Reprints

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