Changes from report parliamentary committee draft to plenary report

Added4. Points out that cyber resilience is a key element for the competitiveness of the EU banking sector, in particular taking into account the geopolitical situation and the need to preserve financial stability;

Removed5. Notes that the creation of a separate jurisdiction for EU banks with substantial cross-border operations would help to complete the BU;

Added5. Notes that a more integrated BU would help to make the EU banking sector more resilient, improve access to credit and reduce costs; notes that better cross-border integration of banking business would increase the potential for private risk sharing and ensure diversification in the EU banking market; points out that a more integrated BU is not necessarily the same as a more consolidated banking market and that there are benefits for competition in a diversified banking market; stresses that a fully developed BU would allow EU banks to grow and put them in a better position to compete in the international arena;

Added6. Regrets that EU banks’ ability to finance major investments is constrained by lower profitability that is not sufficient to ensure their competitiveness; notes that the profitability gap as compared with other jurisdictions is due to both structural and regulatory factors and calls for a review to streamline the regulatory framework; notes that the specific character of the EU banking system, with its large number of smaller banks, calls for proportionate solutions that take this into account and are tailored to its characteristics, without undermining financial stability; remains mindful of the ‘too big to fail’ risk;

Added7. Calls on the Commission to assess the need to develop targeted frameworks within the BU to enhance access to finance for SMEs and start-ups, recognising their role as the backbone of the EU economy;

Added8. Regrets that EU banks’ cross-border activity is still rather limited, particularly with regard to granting loans; takes the view, therefore, that it is important to complete the BU in order to uphold the free movement of capital in a fully integrated internal market;

Added9. Calls on the EU banks still operating in Russia to exit the Russian market as soon as possible; calls on supervisory institutions to ensure that those banks push ahead with exiting the Russian market swiftly;

Added10. Invites the Commission to further explore whether the creation of a separate jurisdiction for EU banks with substantial cross-border operations could help to complete the BU or whether this would increase banking sector fragmentation;

Added11. Notes that a review of the securitisation framework to strengthen European markets and the introduction of European Secured Notes as a dual-recourse funding instrument for SMEs for long-term financing could be explored, taking due account of financial stability risks;

Added12. Underlines that financial literacy is essential in modern economies, contributing to the resilience of the banking systems across Member States and encouraging cross-border financial activity;

Added13. Underlines that a high level of consumer protection will make the BU more resilient;

Added14. Takes the view that the Commission should focus on aspects that contribute to achieving the goals of digitalisation, modernisation, simplification, streamlining and increased competitiveness; maintains that legal certainty, security, predictability and stability are essential for EU banks to be able to operate under favourable conditions;

Added15. Notes that, in addition to traditional loans, diverse sources of financing can be beneficial for EU growth and EU competitiveness, and recognises the low-risk nature of asset-backed financing solutions;

Added16. Notes the ECB’s progress on the digital euro and the parliamentary dialogue being held with the ECB on the topic; understands existing reservations, such as with regard to its offline functionality, given that offline transactions reduce visibility and impair financial crime prevention; recalls that the digital euro should complement, not replace, cash; considers that the decision on whether or not to introduce a digital euro is ultimately a political decision that has to be taken by the EU’s co-legislators, given the profound potential impact of this decision on a wide range of EU domains, including privacy, consumer protection, financial stability, financial policy and other areas that go beyond the strict remit of monetary policy;

Added17. Regrets the failure of some financial institutions to ensure gender balance, especially in their management bodies; stresses that gender balance on boards and in the workforce brings both societal and economic returns; calls on financial institutions to regularly update their diversity and inclusion policies and help to foster healthy working cultures that prioritise inclusivity; calls on private and public entities to address the lack of diversity and gender balance in the management bodies of financial institutions;

Supervision

Change 8

Changed6.18. Welcomes the adoption by the co-legislators of the new banking package implementing Basel III standards in the EU; notes the current lack of clarity concerning the implementation of the Basel III standards in some other jurisdictions and the potential risk for an international level playing field; stresses that the Commission should evaluate thoroughly whether a delay intargeted implementationchanges iscould necessaryhelp to maintain the international competitiveness of EU banks;banks welcomes,without inweakening thistheir regard,resilience; recalls that the delegated act postponingon the date of application of the own funds requirements for market risk postponed the date of application of the new market risk framework by one year to 1 January 2026; calls on the Commission to assess whether the equivalence decisions taken with the jurisdictions not implementing the Basel III standards need to be reviewed in order to preserve the financial stability of the EU financial sector;

Change 9

Removed7. Notes that the average Common Equity Tier 1 ratio has remained at high levels, at 15.81 %;

Added19. Recalls that the Banking Package contains a high number of mandates to the European Banking Authority; calls on the European Banking Authority to respect these mandates;

Added20. Notes that even within the existing regulatory framework the banking sector has shown its resilience during the market events of recent years, and that the average Common Equity Tier 1 ratio has remained at high levels, at 15.81 %;

21. Notes that the non-performing loans ratio has remained stable at 2.30 % and the liquidity coverage ratio at 159.39 %;

Change 10

Removed9. Notes the lack of progress on the proposal for a directive on credit servicers, credit purchasers and the recovery of collateral, which intends to provide banks, under certain conditions, with a mechanism for accelerating the value recovery from secured loans via extrajudicial enforcement of procedures in order to further develop secondary markets for non-performing loans;

Added22. Notes the varying levels of exposure to non-performing loans and recalls that there are Member States which have exposure levels in the order of 1 % or even lower, while other Member States have exposure levels exceeding 4 %; considers that efforts to reduce European banks’ exposure to this type of loan should continue as good risk management practice;

Removed10. Notes that the current levels of banking sector profitability may provide an opportunity for some Member States to implement additional targeted increases in macroprudential buffers and help to preserve banking sector resilience;

Added23. Highlights the fact that adverse macroeconomic conditions, geopolitical headwinds and the rapid development of deferred payment services may lead to a deterioration in asset quality and affect the level of non-performing loans in the future; highlights, therefore, the importance of prudent risk management and appropriate provisioning;

Removed11. Welcomes the creation of the new Authority for Anti-Money Laundering and Countering the Financing of Terrorism;

Added24. Notes that the current levels of banking sector profitability may provide an opportunity for an increase in macroprudential buffers and help to preserve banking sector resilience; invites the Commission to further explore this option and carefully evaluate how to revise the macroprudential framework, taking into consideration the potential impact on capital requirements and bearing in mind a level playing field with other jurisdictions;

Removed12. Stresses the need to enhance the resilience of non-bank financial intermediaries and establish a level playing field with the banking sector, including by designing specific regulatory and supervisory tools to prevent a liquidity crisis;

Added25. Notes that the banking sector plays a role in supporting the transition to a digitalised and carbon neutral economy, in channelling funds to renewable energy sources and in supporting the achievement of the objectives of the EU Green Deal and the EU Climate Law;

Added26. Notes that the ECB takes account of climate- and nature-related financial risks in its supervisory practices and monitors growing physical and transition risks closely;

Added27. Welcomes the idea of increasing venture capital and unlocking capital to finance fast-growing companies in the EU; notes Commission President Ursula von der Leyen’s commitment to put forward risk-absorbing measures to make it easier for commercial banks, investors and venture capital to finance fast-growing companies; notes that this must be done in a way that does not pose a systemic risk or moral hazard;

Added28. Welcomes the creation of the new Authority for Anti-Money Laundering and Countering the Financing of Terrorism, which will allow more effective ways to combat money laundering and terrorist financing via direct supervision of certain financial entities and better cooperation, a better flow of information between national authorities and better coordination among sanctions enforcement authorities in Members States to help close gaps in the implementation of targeted sanctions;

Added29. Stresses the need to enhance the resilience of non-bank financial intermediaries, including by designing specific regulatory and supervisory tools; points out that such measures must guarantee the security of the financial system and be in the best interests of the customer; welcomes the Commission consultation on macroprudential policies for non-bank financial intermediaries; supports the Eurosystem’s recommendation to introduce system-wide stress tests to identify and quantify risks to the resilience of core markets; invites the Commission to investigate whether there are any gaps in the supervisory toolkit, including in relation to potential liquidity crunches and implications for systemic risk;

Added30. Notes that crypto-assets create new challenges and opportunities for the financial system but also pose risks to it, and that these require attention from the national supervisors, the SSM and the European Systemic Risk Board;

Resolution

Change 11

Changed13.31. WelcomesRecalls that the objectiveposition ofadopted theby proposalParliament in April 2024 on the crisis management and deposit insurance offramework ensuringensures a more consistent approach across all Member States to the application of resolution tools and deposit protection to enhance financial stability, taxpayer protection and depositor confidence; notes that small banks dohave notsome posespecificities anythat risksmay warrant a proportionate approach; stresses that European and national competent authorities should have at their disposal appropriate and sufficient tools to respond effectively to bank failures and safeguard financial stability;stability, and that banks need to operate in an effective regulatory environment that fosters their development;

Change 12

Changed14.32. Highlights the importance of preserving shareholders’ and creditors’ primary responsibility for bearing losses in the event of a bank’s failure,failure; stresses that resorting to using taxpayers’ money must be avoided, which is still a key lesson learned from the global financial crisis; stresses that the bail-in of shareholders and creditors must remain the main source for resolution financing before any recourse is made to industry-funded sources;

Change 13

Changed15.33. Recalls that a sufficient minimum requirement for own funds and eligible liabilities (MREL) is crucial for a credible resolution framework and for ensuring that resolution authorities have sufficient flexibility to effectively apply the resolution strategies needed in a specific crisis situation; warnsunderlines that reductions in this minimum requirement,requirement resultingshould frombe specificsufficient to effectively implement any of the resolution strategies included in a bank’s resolution plan; recalls that the resolution planningframework phase,should couldavoid hamperundue increases in MREL calibration and disproportionate contributions to the resolvabilitySingle ofResolution banks;Fund;

Change 14

Removed16. Highlights that liquidity support in resolution should not be based on any additional public funds; notes that any reliance on taxpayer money for the resolution of banks should be avoided;

Added34. Stresses that if a bank’s eligible liabilities are issued to non-EU investors, the write-down or conversion of these liabilities should be enforceable with full certainty to safeguard the effective application of resolution tools;

Removed17. Welcomes the ‘SRM Vision 2028’ strategic review initiated by the SRB to set its long-term goals, address new challenges and further strengthen collaboration with the national resolution authorities and other stakeholders;

Added35. Notes that any reliance on taxpayer money for the resolution of banks, including for liquidity support, should be avoided, in keeping with the principles of fiscal and social responsibility and market discipline;

Added36. Recalls that banks need to continue to meet their obligations and perform their key functions after the implementation of a resolution decision;

Added37. Recalls the importance of clarifying the role of the ECB as liquidity provider in resolution, paying due attention to appropriate guarantees and the ECB’s mandate;

Added38. Underlines the SRB’s announcement that it will enhance its capabilities for launching enforcement action to remove substantive impediments to resolvability; calls for the publication, at the end of each resolution planning cycle, of an anonymised list of identified impediments to resolvability and the actions adopted to address them;

Added39. Welcomes the ‘SRM Vision 2028’ strategic review initiated by the SRB to set its long-term goals, address new challenges and further strengthen collaboration with the national resolution authorities and other stakeholders; notes, in particular, the SRB’s intention to identify areas where sustainability can be embedded further in its daily operations and core business; highlights the need to ensure efficiency and cost-effectiveness in the implementation of the new strategy;

40. Welcomes the SRB plan to streamline the annual resolution planning cycle to ensure that it is increasingly efficient and has a greater focus on testing banks’ resolvability and the operationalisation of resolution strategies;

41. Welcomes the fact that the Single Resolution Fund has now been built up; calls for the full ratification of the Amending Agreement to the ESM Treaty by all Member States, including the establishment of a common backstop to the Single Resolution Fund;

Change 15

Changed20.42. Highlights the need for additional efforts to ensure full resolvability for all banks falling under the scope of resolution; recalls that achieving resolvability cannot be considered a ‘moving target’ and therefore calls for more standardisation and harmonisation of the resolvability assessment; recalls, nonetheless, the important role played by national resolution authorities in the assessment of resolvability;

Deposit insurance

Change 16

Changed21.43. Underlines the fact that the Commission’s proposal to establish a European deposit insurance scheme was published back in 2015,2015 and that the landscape has changed significantly since then;

Change 17

Removed22. Notes that national deposit guarantee schemes have been introduced successfully and have proved their functionality in a number of cases; underlines the need to take specific national characteristics into account and to preserve the well-functioning systems for smaller banks that are already in place in some Member States;

Added44. Recalls that the position of its Committee on Economic and Monetary Affairs on a European deposit insurance scheme was adopted in April 2024; notes that that position deviates from the Commission’s 2015 proposal and adopts a new approach; is waiting for, and encourages the Council to move forward with, the negotiations on a European deposit insurance scheme;

Removed23. Underlines the necessity to take the specifics of institutional protection schemes into account and preserve their functioning;

Added45. Notes that national deposit guarantee schemes were introduced successfully and have proved their functionality in a number of cases; underlines the need to take specific national characteristics into account and to preserve the well-functioning systems for smaller banks that are already in place in some Member States, such as institutional protection schemes, in a way that ensures a level playing field across the BU;

Removed24. Takes note of the Eurogroup statement of 16 June 2022 on the future of the BU;

Removed25. Recalls that breaking the link between bank and sovereign risk remains a challenge for the BU; emphasises that the risk on banks’ balance sheets can be reduced further through the regulatory treatment of sovereign exposures;

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46. Instructs its President to forward this resolution to the Council, the Commission, the European Central Bank, the Single Resolution Board and the European Banking Authority.