s Finanzgruppe Deutscher Sparkassen- und Giroverband

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1 s Finanzgruppe Deutscher Sparkassen- und Giroverband Comments of Dr. Karl-Peter Schackmann-Fallis, Executive Member of the Board, DSGV (German Savings Banks Association) and Vice Chair of Inter-Institutional Monitoring Group (IIMG) on Public Consultation Paper on Amendments to Commission Decisions establishing CESR, CEBS and CEIOPS Deutscher Sparkassen- Berlin: Büro Bonn: Büro Brüssel: und Giroverband Charlottenstraße 47 Simrockstraße 4 Avenue des Nerviens 9-31, Box Berlin Bonn B-1040 Bruxelles Telefon Telefon Telefon Telefax Telefax Telefax

2 Seite 2 1. Mediation Do you agree with that voluntary and/or obligatory mediation can be a useful tool to enhance the effectiveness of supervision? In principle mediation is a sensible instrument to enhance the effectiveness of supervision. Originally mediation is a non-binding procedure, in which a mediator can be involved on a voluntary basis - therefore mediation in supervision should also act on a voluntary basis. Only by that voluntary character a positive acceptance regarding the parties involved can be achieved. Do you agree that this task should be conferred to the Committees of Supervisors in the Decision establishing them? Yes, I agree. The mediation mechanism should be incorporated in the Commission Decisions. In doing so the wording should be kept fairly general. The Decisions should contain high level principles rather than detailed rules. 2. Consultative role Do you agree that the Committees of Supervisors should have an explicit consultative role with respect to certain decisions to be taken by supervisory authorities? From my point of view an obligatory consultative role could be a useful tool with regard to specific and clearly limited decisions. However, it has to be taken into account that such a decision should be taken by the EU legislator and therefore ought to be incorporated in the respective Directives as far as specific cases are concerned. The wording as to the Level 3 Committee s consultative role should be kept rather general. 3. Information exchange Do you agree with the proposed role of the three Committees of Supervisors with regard to information exchange? In principle I agree with the proposed role of the three Committees of Supervisors regarding information exchange as a wide information exchange is generally necessary and is already used in some areas. While supporting an enhancement of information exchange it has to be kept in mind, that it must be in line with any sort of confidentiality rules of supervisory authorities. Therefore the wording regarding information exchange of the Level 3 committees should be kept fairly general.

3 Seite 3 4. Delegation of tasks and responsibilities Do you agree that the Committees of Supervisors should as a priority have a role to foster delegation of tasks between national supervisors? Do you consider that delegation of responsibilities should also be regarded as a priority? If so, what could be the role of the Committees of Supervisors in this respect? The reasonableness of regulating delegation of responsibilities and tasks has already been discussed broadly. The outcome of that discussion was, that delegation is only reasonable in certain areas, such as the approval of risk management systems of cross-boarder banks by the Consolidated Supervisor (Art. 129 (2) CRD). Further more, the planned delegation of tasks within the Colleges of Supervisors can be mentioned (see Proposal for CRD-Changes). Any delegation going beyond the regulated areas may not tangle or even limit the existing responsibilities of the national supervisors. Moreover, a further delegation of responsibilities is still restricted by the missing legal foundation. A mandatory regulation to foster the delegation of tasks and responsibilities would not lead to any added-value. The delegation of responsibilities should therefore not be regarded as a priority from my point of view. 5. Streamlining reporting requirements Do you agree with the proposed role of the three Committees of Supervisors with regard to streamlining of reporting requirements? In principle the administrative burden for institutions could be reduced by streamlining reporting requirements. However, the topic may not be handled on an isolated basis, as it has to be seen in close conjunction with the convergence of supervisory regulation and practice. First the full implementation of COREP should be awaited and analysed to what extent it has already led to facilitations. The attendance or monitoring of possible further alignments of reporting requirements is a basic task of the Level 3 Committees and therefore should be incorporated in the Decisions.

4 Seite 4 6. Colleges of Supervisors Do you agree with the proposed role of the three Committees of Supervisors with regard to colleges or similar arrangements? Colleges as recently proposed by the EU Commission - are an adequate instrument for enhancing the convergence of supervisory practice. The colleges can and must help to improve the planning and coordination of supervisory activities (avoiding duplication of work; planning action on the basis of a jointly agreed group risk profile; coordination of supervisory activities to avoid capacity constraints and excessive concerted demands on a bank). Notwithstanding the high degree of harmonisation already achieved in banking supervision law, colleges can, moreover, help to promote much-needed consistency in supervisory practices and supervisory understanding within a banking group. It is a fundamental tasks of the Level 3 Committees to develop guidelines regarding the formal functioning, to adjust them when necessary and to monitor the consistent work of the different colleges. This should be incorporated in the Level 3 Decisions. The explicit wording should be flexible enough to leave room for future adjustments. 7. Development of a common supervisory culture Do you agree with the proposed role of the three Committees of Supervisors to develop a common European culture? If yes, what are the most important tools to meet this objective? A generally accepted understanding of supervision respectively a common supervisory culture are most important aims. In this regard joint training (and education) programmes and the exchange of staff between supervisory authorities are useful elements. An incorporation in the Level 3 Decisions would be adequate.

5 Seite 5 8. Cross-sectoral cooperation Do you agree with the need to provide a general framework for joint 3L3 work in the Commission Decisions establishing the Committees of Supervisors? Do you agree with the approach suggested for the supervision of financial conglomerates? A general framework for supervisory cooperation seems to be useful, also in order to foster the development of a common supervisory culture. This framework describes the general basis of joint work and should be flexible enough to leave room for future adjustments. Though the wording regarding cooperation should be on a general basis and not be too detailed. I also agree with the approach suggested for the supervision of financial conglomerates. The work of the interim working group of financial conglomerates (IWFC) has so far proved to be useful. Because of the increasing importance of financial conglomerates its work should be continued for example in a stable working group equipped with adequate responsibilities as proposed in the consultation paper. 9. Qualified Majority Voting Do you consider that the Committee of Supervisors should be requested in the Decisions to take decisions by qualified majority with a comply or explain procedure? The implementation of Qualified Majority Voting in the Level 3 Committees still has to be considered as critical in our eyes. Especially the overall aim of supervisory convergence will not be enhanced by this approach. QMV decisions are not legally binding and making the voting legally binding is not possible because of the (justifiable) sovereignty of the Member States. Furthermore, the disciplinary effect that the comply or explain-approach provokes in a consensual decisions process would be thwarted by QMV. The argumentation reveals that QMV would rather weaken than strengthen the decision taking process respectively the acceptance and thus implementation of certain decisions. This opinion is also supported by the IIMG report of October The IIMG stated that decisions on supervisory convergence should be taken by consensus and their implementation should be ensured by a strong comply or explain mechanism. Only for a limited number of task which are of highly technical nature and where a delegation is given to the Committees in Level 1 or 2 legislation QMV should be permitted.

6 Seite Annual Work-Programmes of the Committees of Supervisors Do you consider that the request to the Committees of Supervisors to submit their annual workprogrammes to the ECOFIN Council, the European Parliament and the Commission should be included in the Decisions? Yes. Submitting their annual work-programmes to the ECOFIN Council, the European Parliament and the Commission allows these institutions to comment on the programmes. By that means a consensus on future work perspective can be achieved and thus politically support the work of the Committees of Supervisors. 11. Financial Stability Do you agree with the proposed role of the three Committees of Supervisors? As the recent turmoil in the financial sector shows, an early detection of risks is of great importance for a stable financial system. With the Financial Stability Forum (FSF) a Committee has already been established which is responsible for that topic. The establishment of further Committees respectively authorizing other Committees with this responsibility would be counterproductive. However, in the Decisions it could be incorporated, that the Level 3 Committees support the work of the FSF on a continuous basis.