Frontpage News 2014 EU proposal harms ...

EU proposal harms both banks and customers

29 January 2014

​The EU commission’s draft for a new regulation on structural reforms is designed to increase the robustness of the European financial system. The Danish Bankers Association believes that the proposal is a serious and unnecessary action against the banks, which will also be detrimental to customers. Deputy Chief Executive Louise Mogensen says:

”After the crisis, many and far-reaching measures were introduced to ensure financial stability including increased capital and liquidity requirements, tightening of supervision and specific requirements for winding-up banks and there are more to come. We therefore believe that there is taken care of lessons learned from the financial crisis. This new proposal does nothing to enhance the robustness and financial stability, but makes it more expensive to be a bank customer."

"We are very concerned about the Commission's proposal to ban speculation for own resources and demands for separation of trading activities in major banks. These proposals could limit the ability of banks such as to have an effective cash management and a wide business model that just help make banks less vulnerable to crises."
 
"At home and in most European countries, it was the general credit and not the trading activities that got a number of banks to collapse. Trading activities on the contrary, helped to stabilise the banks' earnings at a time when there were heavy losses on the loans."
 
"For bank customers, the proposal - in addition to increased costs – means that some customers will have to have two banks. Requirements for separation of trading activities can also have profound implications for the liquidity of i.a. the Danish mortgage bonds, as the Danish banks play a major role in the mortgage market."
 
"The Danish Bankers Association is not alone with this criticism of the proposal. The other European banking associations are critical of the proposal and the far-reaching negative consequences.’’
 
"In its current form, the proposal seems to be more political rather than professionally reasoned. The proposal would, in our view, increase costs for consumers without providing positive impacts for financial stability. Overall, it is impacting the economy negatively."
 
Link to the proposal:
ProposalAppendix 1-4Appendix 5-14
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