MEPs back tighter bank rules
Banks required to cap bankers’ bonuses, increase capital buffers; Parliament endorses stricter budgetary surveillance of eurozone members.
The European Parliament’s economic affairs committee has endorsed draft rules to require European banks to increase their reserves of capital, to cap bankers’ bonuses and to step up the European Commission’s surveillance of the budgets of eurozone member states.
In a marathon voting session this evening (14 May), MEPs voted on several pieces of draft legislation that are supposed to bolster the EU’s response to the financial crisis.
MEPs backed the right of national governments to impose stricter capital and liquidity requirements than the minimum set down in the so-called Basel III agreement, a core demand of the British government. The EU’s finance ministers are expected tomorrow (15 May) to agree how to implement the Basel standards across the member states.
Vicky Ford, a British Conservative MEP, said that, on balance, the proposals as adopted by MEPs today “work for Europe and the UK”.
Othmar Karas, a centre-right Austrian MEP who drafted the Parliament’s report on the proposed capital requirements directive, said that the result had strengthened the Parliament’s negotiating position ahead of talks with the member states scheduled to start on 23 May.
The committee also approved capping the size of a bonus that a bank can pay to the level of the employee’s annual salary.
MEPs adopted tighter rules on budgetary discipline of eurozone countries, known as the ‘two-pack’ because they are two extra rules that are being added to the earlier ‘six-pack’. The two-pack would put into law that eurozone countries have to submit their draft budgets to the Commission, which would have the authority to demand revisions. The Commission would also have the authority to propose to the Council of Ministers that a troubled eurozone economy should seek financial assistance.
However, MEPs want the rules to be more flexible and want the Commission’s extra powers to be conditional.
In an amendment called for by the Liberal group to the Commission’s proposals, MEPs urged the launch of a ‘redemption fund’ with common liability for excess debt,
The vote had been postponed repeatedly because political groups could not bridge their differences.
Negotiations on the two-pack between MEPs, the Commission and the member states are expected to drag on into the autumn, although officially the EU still aims to have the new rules agreed by the summer.
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