While her fellow Commissioner-designate Valdis Dombrovskis doubled down on the “simplify regulation, boost business competitiveness” discourse in his preliminary answers to MEPs on Tuesday (22 October), those who were expecting a similarly pro-business posturing from Maria Luís Albuquerque can think again.
Since her nomination for the post of Financial Services Commissioner in September, attention, among sector stakeholders, has focused mainly on the Portuguese candidate’s private sector background – most notably, her recent director roles at US investment giant Morgan Stanley and London-based fund manager Arrow Global.
But it was a different perspective that emerged from her answers to MEPs ahead of her 6 November hearings: one more in line with the government role she held ten years ago as minister of finance under the thorny austerity years of Pedro Passos Coelho’s centre-right tenure.
Showcasing an enduring loyalty to the landmark global prudential framework that was set up under the guidance of the Basel Committee on Banking Supervision in the post-crisis era, Albuquerque signalled on Tuesday that, if confirmed commissioner, she will steadfastly pursue the full application of the so-called 'Basel 3 Endgame’.
The framework, addressing some key outstanding elements of the international banking capital requirement legislation, such as how banks calculate how much capital they need to set aside for their trading books’ exposures, was originally supposed to come into force in January 2025. However, it has been delayed by a minimum of one year after staunch industry opposition in the US prompted the EU to also postpone it and the UK to mull a watered-down version of the rules.
Albuquerque, however, was adamant Europe should take the high road.
“Let me be very clear: we must implement the rules, not roll back,” she told MEPs on Tuesday.
“We must also be mindful of […] the possible consequences of delays and divergences in the implementation of standards by other important jurisdictions. If confirmed as Commissioner, I will encourage our international partners to implement the agreed Basel reforms as soon as possible to ensure a level playing field,” she said.
She also emphasised that “the EU’s policy line is to apply the [Basel reforms] to all EU 4500 banks, and not just to the large internationally active ones, as is the case in other jurisdictions.”
Notably, her strong posturing on the banking framework came as an omen of yet stronger admonition from the head of the Basel Committee himself, Erik Thedéen, just 24 hours later.
Late on Wednesday, Thedéen chastised international regulators and bank managers for endangering financial stability to yield to the rhetoric of “unlocking” business growth.
“As the cycle turns, policymakers, supervisors and risk managers at banks sometimes become complacent and give in to pressures to dilute regulatory safeguards,” he said.
“It may be tempting for some to argue that regulations should be watered down and that supervision should be less intrusive, in order to promote lending to specific sectors or to ‘unlock’ economic growth,” he said – but warned that, while “lobbying for deviations at a national level can perhaps provide short-term (private) gains, [it] will ultimately endanger,” the global backdrop for bank business.
“Global bank prudential standards are a public good. We are collectively all better off in a world with global standards than in an autarkic one,” he said.
In a clear reprimand to the financial industries of those jurisdictions that are considering delaying or easing the rules, he warned, “shaving off a few basis points of capital will not unlock a wave of new lending, but it will weaken your resilience.”
In Europe, consumer-protection NGO Finance Watch also sounded the alarm bells on the negative implications of the new business-competitiveness discourse – warning “against the flawed narrative that regulations designed to protect society from the risks taken by banks undermine European competitiveness” in a statement on Thursday (25 October).
The association chastised the European Parliament for “letting the clock run out on its three-month scrutiny period” of the Commission’s proposal, in June this year, to postpone the application of a key element of the Basel 3 framework – the so-called Fundamental Review of the Trading Book (FRTB) – to 2026.
“By not even debating the possibility to reject one of the elements necessary to finalise the transposition (…) of the Basel framework 15 years after the financial crisis, the Econ Committee has once again demonstrated its porosity to the flawed narrative of the banking lobby,” said Thierry Philipponnat, Finance Watch’s chief economist.
“As much of a rear-guard battle as it may be, it must be repeated that there is no relationship whatsoever between the competitiveness of the European economy and the implementation of rules aiming at protecting society from the risks taken by banks in their trading activities,” the economist went on.
“Financial stability is a condition of competitiveness, not an impediment,” he said.
Albuquerque’s far-reaching ambitions
Albuquerque, for her part, extended her policy ambitions to other areas of the EU financial sector rulebook – most notably, to the missing bits of the so-called third pillar of the bloc’s Banking Union: the Crisis Management and Deposit Insurance (CMDI) legislation, and the interlinked measure for setting up an EU-wide Deposit Insurance Scheme (EDIS).
The former is an update of current provisions in the EU bail-in framework that seeks to fill the gap with bank insolvency and liquidation rules – which at present remain highly fragmented among the 27 member states, and separate from resolution rules.
Coupled together, CMDI and EDIS would mean getting member states to agree on how and at what stage industry-funded deposit guarantee funds can be tapped into – which has prompted some stark resistance from across member states worried shortcomings in one country’s banking sector would weigh on spending from their own domestic sectors.
“Deposit protection needs to be robust so that businesses and entrepreneurs can develop their projects and grow our economy,” Albuquerque said. “As discussions on EDIS have been stalling for almost a decade, we should also be open to different options to find consensus.”
“Willingness from all sides here is crucial,” she said, adding she intends to “work towards a solution that both the European Parliament and the Council can support, and the Parliament can be of great help here.”
Similarly, the Portuguese nominee said she would seek to start negotiations on CMDI and “invest [her] efforts to find compromises between the positions” of the Parliament and the Council “as soon as possible.”
Another key area of focus, she said, will be on the potential systemic risks of the so-called “shadow banking” sector, where she pledged to push for coordinated action within the G20 and G7 fora to “avoid regulatory arbitrage.”
She also said she would continue to assess the adequacy of existing macroprudential policies as well as “options for improved supervision of liquidity risks in money markets funds.”
Moreover, she would look to “shed light on areas that have been largely untouched by previous legislative action, including non-bank financial institutions (NBFI) that are currently outside the EU regulatory perimeter, therefore providing more clarity on whether further action is needed.”
Economic News Roundup
The European Union must “urgently” undertake a range of ambitious measures to integrate its capital markets and banking sector in order to avoid lagging behind the US and China, according to the first draft of the Council’s highly anticipated “Competitiveness Deal”. The document, sent to member states by the General Secretariat of the Council on Thursday (24 October) and seen by Euractiv, calls on policymakers to harmonise countries’ insolvency laws, “relaunch” Europe’s securitisation market and “improve the convergence and efficiency of the supervision” of EU capital markets. Read more.
The European Parliament failed to agree on its opinion on how the European Union’s 2025 budget should be spent due to a disagreement among mainstream groups about amendments from far-right parties on Wednesday (23 October). The parliament’s legal position on the budget – which only deals with the pots of money allocated to the EU’s various departments and programmes – did pass. But its customary non-binding resolution on how the money should be used by those different EU organs failed because of rapidly shifting majorities. Read more.
The German Supply Chain Due Diligence Law „will be gone” by the end of this year, Chancellor Olaf Scholz told employers’ associations at their annual summit on Tuesday (22 October), citing his government’s efforts to replace the law with a EU directive with a narrower scope. Speaking at an event organised by the German employers’ association BDA in Berlin, Scholz said that the government is adopting a legislative measure on each point included in its July growth initiative “almost every week.” Read more.
Italian commissioner-designate Raffaele Fitto has sidestepped references to his political party while outlining his commitment to introducing conditionalities in the distribution of cohesion funds if confirmed as the Commission’s next vice-president for cohesion and reforms. Answering questions from MEPs ahead of his hearing with them on 12 November, Fitto sought to dispel lingering doubts about his nomination on Tuesday (22 October), reaffirming his commitment to European values and describing himself as a „firm supporter of the European project.” Read more.
Simplifying EU budgetary rules and business regulations is crucial for Europe to meet its investment needs and remain competitive with the US and China, Latvia’s commissioner-designate Valdis Dombrovskis told MEPs ahead of his hearing on 7 November. In written comments to MEPs published late on Tuesday (22 October), Dombrovskis, who has been tasked with a “double role” on „economy and productivity” and „implementation and simplification” over the next mandate, repeatedly stressed the importance of cutting “red tape” to boost private investment. Read more.
Polish commissioner-designate Piotr Serafin endorsed an ongoing Brussels push to overhaul the EU budget to introduce conditionality on national structural reforms for the disbursement of funds, similar to the bloc’s post-pandemic Recovery and Resilience Facility (RRF). Ahead of his hearing to MEPs on 7 November to become Commissioner for budget, anti-fraud and public administration, in his preliminary statements on Tuesday (22 October) Serafin went straight to the core of their pre-planned questions on a potential overhaul of the EU long-term budget. Read more.
Teresa Ribera has expressed strong support for the European Commission’s decision to impose tariffs on China-made electric vehicles (EVs), marking a significant shift from the Spanish-nominated commissioner’s previous messaging. In her answers to MEPs’ questions – published on the Commission’s website late on Tuesday (22 October) – and ahead of her hearing with them on 12 November, Ribera said the EU executive’s proposed duties of up to 35.3% on China-made EVs “was grounded on solid facts and evidence and was carried out in line with WTO rules”. Read more.
Maroš Šefčovič has struck a cautious note on the EU’s future trade relationship with the US, highlighting the importance of the transatlantic relationship while also warning that Brussels will defend its own economic interests if necessary. In his written answers to MEPs, published late on Tuesday (22 October) ahead of his hearing with them on 4 November, Slovakia’s commissioner-designate emphasised the high priority of safeguarding amicable relations between the two blocs but also to post „an assertive defence of our interests.” Read more
The chief economist of the International Monetary Fund (IMF) has warned that an ongoing surge of electric vehicles (EVs) from China, coupled with decreased demand for internal combustion engines, is dividing Europe into countries that benefit from it and those that do not. Pierre-Olivier Gourinchas said that the European Union is facing an “EV shock” caused by an “improvement in productivity” of Chinese EV manufacturers and abating demand for petrol and diesel cars. In economic terms, this would see Europe divided into two groups of differently affected countries. “The overall impact [on GDP growth] would be close to zero, but the impact across different countries could be very different,” he said. Read more.
[Edited by Rajnish Singh]
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