The European Banking Federation (FBE) yesterday welcomed the vote by the European Parliament to adopt the Capital Requirements Directive (CRD). The Directive implements the Basel II capital adequacy accord in the European Union.
Guido Ravoet, Secretary General of the FBE, commented yesterday that the vote came as a relief to the banking industry, given the lengthy negotiations of recent weeks. “The FBE is very pleased that the vote on the CRD went ahead in the European Parliament today and would like to congratulate all those involved in the negotiations,” he said. “We would encourage ECOFIN to accept the package adopted by the Parliament so that industry can move ahead with the implementation process. It is essential that European banks have certainty over the requirements in the CRD and the Parliament has delivered that certainty today. Now it is time to focus on consistent interpretation and implementation across the EU.”
On the final shape of the Directive itself, Ravoet added that it contained elements with which his members were “not entirely happy,” on the whole the Federatrion felt that the final package “provides a strong basis from which to move forward. We continue to hold the view that a window of opportunity was missed in the CRD to put a more streamlined supervisory framework in place. Momentum must be maintained in the coming years to ensure that we move towards consolidated supervision in Europe. This will require close cooperation and dialogue between European industry and supervisors. We are confident that the right environment for consolidated supervision will be in place in time for the review of the relevant parts of the CRD in five years time.”
The FBE pointed out that adoption of the CRD was only the end of the beginning. It welcomed the work of the Committee of European Banking Supervisors (CEBS) which has produced 10 consultation papers on implementation of the CRD. However, the FBE expressed concern that there were still serious problems to be overcome in the implementation process with both industry and supervisors at a loss over how certain requirements in the Directive would work in practice.
The FBE referred in particular to Pillar 2 (the Supervisory Review Process) under which supervisors assess whether banks’ internal systems and processes are appropriate. It also had some reservations about low default portfolios where it feels much dialogue is still needed.