Blog Post

Banking union for non-EA countries

In a recent blog entry we estimated the total assets and number of banks in the euro area underdirect ECB supervision according to the agreed criteria of the Single Supervisory Mechanism. We now extend the research to all EU countries. In this blog, we start with the statistics before discussing the more complicated home-host issues and how they are treated in the new compromise legislative text.

By: and Date: January 15, 2013 Topic: Macroeconomic policy

In a recent blog entry we estimated the total assets and number of banks in the euro area underdirect ECB supervision according to the agreed criteria of the Single Supervisory Mechanism. We now extend the research to all EU countries. In this blog, we start with the statistics before discussing the more complicated home-host issues and how they are treated in the new compromise legislative text.

The graph is showing all EU countries that are not in the euro area and is based on the non-comprehensive but quite extensive database of The Banker. It applies the conditions regarding absolute and relative size:

i. The total value of its assets exceeds 30 billion euro; or,
ii. The ratio of its total assets over the GDP of the participating Member State of establishment exceeds 20%, unless the total value of its assets is below 5 billion euro; or,
iii. It is among the three most significant credit institutions in the participating Member state,unless justified by particular circumstances.

The share of total assets of banks covered would be very heterogeneous: going from over 95% of total assets with just 23% of total number of banks in countries with important financial centres like UK and Sweden, to an average coverage of 49% of total assets and 13% of total number of banks in Easter European member states.

In seven of the 10 non-EA state members of the EU (Bulgaria, Czech Republic, Hungary, Latvia,Lithuania, Poland and Romania), only the top 3 banks could be under direct supervision of the ECB if they would decide to join the SSM; as only 3 or less banks of their national financial systems surpass thresholds of absolute (more than €30 billion) or relative (above 1/5 of its host country GDP) size in total assets in a consolidated basis.

However, it is important to highlight that at the moment not everything is yet defined:paragraph 11a of the proposal conferring specific tasks on the ECB over the SSM states that the ECB and the national competent authorities of non-participating Member States should reach an understanding describing how they will cooperate with one another and clarifying“the consultation relating to decisions of the ECB having effect on subsidiaries or branches established in the non-participating Member State whose parent undertaking is established in a participating Member State”.


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