A report published today by the
"The financial crisis sent shockwaves throughout the EU's banking sector, resulting in the economic and sovereign debt crisis, and the EU acted to stabilise it", stated Mr Milan Martin Cvikl, the ECA Member responsible for the report, "However, the
In response to the financial and economic crisis, emergency action was taken in a bid to restore confidence in financial institutions, followed later by regulatory and supervisory reforms. The Court reviewed this focussing on the period 2011 to early 2013. It found that the Commission and the
The EU auditors put forward a set of recommendations aimed to increase the effectiveness of the colleges of supervisors, reliability of bank stress tests and to ensure a successful banking union and effective banking supervision.
Notes to the editors:
This special report (No 5/2014) entitled "European banking supervision taking shape - EBA and its changing context" assessed whether the Commission and the
The ECA found that the Commission and EBA reacted to the financial crisis with a broad regulatory agenda. The Commission has in general been timely when drafting banking sector legislation. However, the strict deadlines stemming from global agreements in G20 and the Basel Committee, and the delays in political negotiations, have reduced the time available for external stakeholders to provide input through public consultation. Furthermore, it has resulted in short deadlines for EBA to draft technical standards and EBA has not been able to comment on the mandates and timeliness in the legislative process in a systematic fashion. Although many legislative proposals have been made in recent years (and others are currently in preparation) there has been no cross-sectoral assessment of the impact of the whole package of proposals
EBA has contributed to improving the cross-border supervision of banks as a facilitator and coordinator of the work of national supervisory authorities (NSAs). However, its role in banking supervision tasks has been limited in many areas. The day-to-day supervision of banks remains in the remit of the NSAs, and EBA does not carry out direct supervision of financial institutions. Supervisory convergence through the colleges of supervisors is limited, and these colleges spent too much time discussing procedures rather than focusing on risks.
EBA lacks the authority to make or enforce decisions on supervisory convergence and to resolve disputes between NSAs. Although EBA has made significant efforts to resolve disputes between NSAs, it has limited legal powers in mediation. EBA had the role of facilitating and coordinating the 2011 stress test, but it had neither the staff nor the necessary mandate to ensure the reliability of the stress test exercise. In addition, the stress test was conducted without financial 'back stop' measures at EU level. Although the 2011 stress test was helpful in initiating the recapitalisation of a large number of banks, it has also revealed the limitations of such exercises when not combined with an assessment of asset portfolio quality.
From autumn 2014, the
Among the set of recommendations, the ECA considers that successful EU-wide banking supervision requires a clear division of roles and accountability between EBA, the ECB and the NSAs, both those in and those outside the SSM. To avoid the risk of overlapping tasks and unclear responsibilities in some areas between the ECB, NSAs and EBA, the EU auditors recommend that roles and responsibilities be further clarified in legislation or memoranda of understanding. The ECA also recommends that procedures be set up to ensure close and frequent cooperation and information exchange between the different bodies and that particular attention should be paid to the period of transition before the SSM is fully established.
A short video interview with the ECA Member responsible for the report is available at: https://www.youtube.com/user/EUAuditorsECA
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