The forced recapitalisation plan for European financial institutions the European Commission (EC) is working on is a matter of concern for the European savings and retail banks that are member of European Savings Banks Group (ESBG). Indeed, it is for now totally unclear how such a forced recapitalisation would be funded and how this plan would fit into already existing recapitalisation plans on national level.
“A forced recapitalisation would mean that many of our members would lose their management rights for their own institutions,” said Chris De Noose, ESBG managing director. “ESBG calls for a full respect of management rights, especially for those institutions that comply with all current requirements and have always proved to be stable, sound and reliable. Focusing now on solvency ratios of financial institutions diverts the attention of the real problem that needs to be tackled without further delay: the soundness and solvency of the sovereign states themselves.”
ESBG firmly believes that the recapitalisation plans should be restricted to global systematically important financial institutions (SIFIs). “Retail banks and savings banks have already borne the brunt of the costs of the crisis and should not take any further blame for the malpractices of other banking businesses,” said De Noose.
ESBG would like to stress also that forced recapitalisation plans could result in greater market uncertainty. It would be far more adequate to wait until the transposition of Basel III through the CRD4 directive has been fully implemented.
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