Question.- It seems that the process of European integration has made a big jump thanks to several pragmatic solutions. Do you share such conclusion regarding the banking union?
Answer.- Yes, I think we made considerable progress four or five years ago. The approach has been very clear and pragmatic in order to reach realistic conclusions in the short term, but with a long-term perspective. From my point of view, the political will to strengthen the institutional architecture of the economic and monetary union has been really strong.
Q.- How necessary is the European Banking Authority (EBA) and what is expected from it?
A.- One of the challenges in the process of European integration is combining all the projects that only affect the Eurozone (such as the banking union) and those affecting the 28 Member States. Both regulation and coordination are necessary to protect the internal market while advancing in the economic and monetary union. The EBA must keep playing an important role in the coordination of the financial supervision within both areas.
Q.- The Commission for Internal Market has just proposed a sort of “European Volcker rule” for financial institutions.
A.- Some weeks ago we proposed a Regulation for the structural separation of the banks, which would be applied to the 30 largest institutions in Europe. The goal is to separate the risks and to finish the implied public guarantee of the institutions in possession of deposits. According to the proposal, the trading on own account is forbidden, so the supervisor must review the portfolio in order to see whether the risks are excessive or if they put the sustainability at risk.
Q.- But that would clash with the idea that banks should assume the company’s capital instead of refinance the credit.
A.- The separation proposal specifically refers to the trading on own account business and to the trading, investment or securitization activities. It is not about making things more difficult.
Q.- Lord Turner said some months ago that the more the banking business is regulated, the more the shadow banking grows. This clashes with the attempt to make things more transparent.
A.- The regularization of derivatives is now being implemented and we will gradually see a process of standardization and centralization of the regulated clearing houses. The aim is precisely making things more transparent. A different thing is the risk that part of the activity may go to other less regulated institutions, such as hedge funds or property investment funds. We try to avoid this by means of horizontal measures that affect this sort of operators. However, our jurisdiction ends in Europe so we can’t guarantee that there won’t appear other black spots in other parts of the world. That’s why we are investing a lot so as to develop a global regulation to be applied in all countries.
Q.- There are concerns about the price cap, terms and conditions regulation for bank cards.
A.- There is currently a project under negotiation, the new Payment Services Directive, and a Regulation to adjust the multilateral interchange fees. Banks pay these fees between themselves for several different operations that are unknown for the consumer. There is a similar regulation for Visa and MasterCard in competition cases. The difference is that the new Regulation will be extended to the whole sector so as to finish off those systems that work in a non-transparent way. Because consumers don’t pay the system when using the card, but they pay it indirectly when they buy. It is obvious that the sector doesn’t want any cut, but we don’t think it is correct. We believe it must be regulated.
Q.- European Commissioner for Internal Market Michael Barnier said two years ago that the Spanish cajas were not in worse conditions than the German ones. However, it seems that we have gone from a principle of subsidiarity to a common system in which Germany marks the steps to follow.
A.- I don’t have detailed information, but I think it wouldn’t be appropriate to express an opinion about the situation of the financial situation of a particular bank or country. It wouldn’t be appropriate either to extend the problems of certain saving banks to the whole Cajas sector, where there are some financial institutions that have been able to weather the crisis. I can confirm, though, that Germany understands that the link between banks and Estates cannot be maintained, and it has also accepted the principle of supervision unity. The key issue is how to articulate the system so as to efficiently cover the 6,000 banks in the Eurozone, because it isn’t realistic that Frankfurt supervises all of them. There must be a strong control over the 130 systemic institutions and an effective mechanism that guarantees the supervision of the remaining banks.