Banking Union and Access to Credit to SMEs


The SSM: the entry into force of the Single Supervisory Mechanism (SSM), in few weeks, is the first step towards the setup of a Banking Union.

The SSM: the entry into force of the Single Supervisory Mechanism (SSM), in few weeks, is the first step towards the setup of a Banking Union.

 It is crucial, since will impede unjustified domestic ring fencing practices and reduce coordination problems in relation to the application of prudential requirements. UniCredit welcomes this crucial step and proposes some further improvements: i) a review of the governance and voting modalities of EBA so as to facilitate its role as mediator between countries participating in the SSM and those that do not; ii) the definition by the ECB of parameters and guidelines with a view to make sure the exercise of macroprudential powers by national authorities is not used to secure national interests.

UniCredit strongly supports the quick establishment (by May 2014, the end of the current Parliamentary term) of a Single Resolution Mechanism (SRM), complementing the SSM and consisting of a truly independent European Authority and a privately financed Fund. With reference to the latter, duplication of resolution funds (at national and European level) needs to be avoided.The SRM will work on the basis of the rules set by the Banking Recovery and Resolution Directive (BRRD), which introduces harmonized measures for early prevention, recovery and resolution within the European Union. The BRRD shall also put an end to bailing out troubled banks with taxpayer’s money. The new approach is that a troubled bank that is failing will be resolved by requiring shareholders and creditors to bear the losses. We are optimistic that the current negotiations between the European Parliament and the Council will lead to a final agreement by the end of this year. In order to provide creditors with legal certainty we believe that the rules must be harmonized to a large extent, provide for a clear decision making mechanism on home-host issues and limit the possibility for national flexibility when national authorities have to decide which liabilities shall be excluded from bail in.

The credibility of a resolution mechanism requires that losses in excess are covered by a public fiscal backstop. In particular, the establishment of a backstop would also allow the recapitalization of banks should the need to do so result from the next ECB asset quality review and EBA stress test exercises next year. UniCredit supports the quick establishments of the ESM as a full fiscal back stop before the asset quality review and stress tests. This will contribute to: break the vicious circle between banks and sovereigns; improve banks funding located in peripheral countries, based on economic risk/reward criteria, independently from geographic location which will also result in more efficient lending conditions for the real economy.

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