DSGV welcomes proportionality in Banking Package

Helmut Schleweis, President of the German Savings Banks Association (DSGV), has described the endorsement of a large part of the Banking Package by the EU finance ministers as a “positive development for small and medium-sized credit institutions”. For the first time, the Banking Package contains specific concepts aimed at achieving more proportionality and easing the administrative burden on small, less complex institutions. Rules that have been developed for large and internationally operating banks will no longer be applied one-to-one to small and medium-sized institutions in future. This will strengthen the principle of proportionality.

“More appropriate rules in line with the size of credit institutions make a valuable contribution toward maintaining efficient banking markets. Savings Banks and co-operative banks will also benefit from the proposals. This defines an important principle for future regulation”, said Schleweis. Three years ago, Savings Banks and co-operative banks had initiated the debate about appropriate regulation by proposing the “Small and Simple Banking Box”. Schleweis: “We would like to thank all the players at EU level and in Germany who have supported this initiative.”

The EU legislators have agreed to a threshold of EUR 5 billion for the balance sheet total. Roughly 85 percent of Savings Banks are likely to benefit from this new definition of “small, non-complex” institutions. They can expect manageable disclosure obligations and reduced reporting requirements, in line with the lower risk associated with their business model.

At their meeting, the EU finance ministers also took stock of the progress made with regard to reducing risk in the balance sheets of banks. The DSGV would warn against taking hasty steps to collectivise banking risks in Europe because the volume of non-performing loans continues to be high and NPL ratios vary widely from country to country. Schleweis: “As in the past, risk must not be separated from liability in the future.”