Schackmann-Fallis: EU implementation of Basel IV must take European economic structures into account

Dr. Karl-Peter Schackmann-Fallis, Managing Director of the DSGV, describes the draft report on the so-called banking package as a missed opportunity.  The draft report has been presented today by MEP Jonás Fernández, S&D, who is the rapporteur on the subject in the European Parliament. The EU Commission had presented its ideas on how to adopt the Basel Framework for Banking Supervision – Basel IV – into European law in the so-called banking package on October 27, 2021. The proposals are now in the legislative process in the EU Parliament and the Council of Member States.

"Europe's strength is that the banking structure follows the economic structure. This also includes banking regulation that takes these concerns into account appropriately. We would like the EU Parliament to use its opportunity to change proposals of the Commission in this direction," said Schackmann-Fallis.

Rapporteur Jonás Fernández has already hinted that he wants to link the EU Commission's proposal that cross-border banking groups must meet capital and liquidity requirements not at the level of national subsidiaries, but at group level to a communitarisation of deposit insurance in Europe: "That would be a toxic cocktail that must not be mixed in this way," warns Schackmann-Fallis, Managing Director of the DSGV.

The EU Parliament must advocate more proportionality in banking regulation in its final positioning. In addition, it is important to prevent higher capital requirements, for example in the area of strategic investments and real estate financing, so that networks in particular can continue to operate successfully and serve their customers.

"In the current situation with ecological transformation and global uncertainty, the ability to lend must not be unnecessarily restricted, especially for regionally active institutions," says Schackmann-Fallis. Small and medium-sized institutions in Europe must also be relieved even more of their administrative obligations, especially in the area of reporting and disclosure.

In addition, the amendments to the procedure for assessing the suitability of management body members contradict important principles of local self-government. "The democratic selection process for board members in savings banks must not be affected by the EU proposals," demands Schackmann-Fallis. "At this point, however, I see support both from the leading Federal Ministry of Finance and from key players in the EU Parliament."

Europe must confidently use the potential that Basel itself grants in order to maintain the stabilising diversity of institutions of different sizes, business models and legal forms.