FRANKFURT (Reuters) – The Bundesbank’s top bank supervisor Michael Theurer backed simplifying Europe’s capital requirements for lenders on Thursday, while stressing this did not mean lowering them.
After nearly two decades of extensive rule-making in the wake of the global financial crisis, European central bankers are now looking to ease the supervisory burden on banks, in part in response to looming deregulation in the United States.
Theurer recognised that capital requirements in the European Union, with their “multi-layered, overlapping framework” that rests partly on EU rules and the ECB’s own discretion, were too complicated.
“We are therefore committed, within the European Union and the Eurosystem, to simplifying the current capital framework,” Theurer told a conference organised by the German central bank. “I hope that we will succeed in this with our European partners. However, it would be premature to say exactly where this will lead.”
He underscored, however, that this “must not lead… to a reduction in capital and liquidity levels”, saying this would weaken banks’ resilience.
The ECB has launched a task force, chaired by Vice President Luis de Guindos and including the Bundesbank’s President Joachim Nagel, that will look for ways of simplifying banking rules in Europe.
Theurer, a former member of parliament for the liberal Free Democrats who now represents the Bundesbank on the ECB’s Supervisory Board, said changes could be made to rules governing banks’ trading books.
In particular, he said there was consensus within the ECB’s Single Supervisory Mechanism (SSM) that the approval processes and review for banks’ trading book should be made “as efficient as possible”.
“And for smaller institutions we want to keep implementation and operating costs as low as possible – that is why we plan to adjust the SSM’s processes proportionally,” he added.
(Reporting By Francesco Canepa; Editing by Tomasz Janowski and Emelia Sithole-Matarise)
