Blog post

A banking union of 180 or 91%?

The European finance ministers have agreed on a deal for the banking union. According to the deal, the ECB would be directly responsible for banks wit

Publishing date: 14 December 2012
Authors: Guntram B. Wolff

The European finance ministers have agreed on a deal for the banking union. According to the deal, the ECB would be directly responsible for banks with assets exceeding 30bn euro or 20% of GDP, or at least the 3 largest banks of each country member for those nations where fewer than three fulfil the previous criteria. In this chart of the week, we applied the two criteria to the Banker dataset, which includes 754 banks in the euro zone, so 14% of the 5404 banks. In terms of assets, a comparison between the Banker database and ECB aggregate statistics shows a good overall coverage of the banking system.

The graph shows that the threshold allows covering 92% of the total assets of banks in the euro zone and at least 187 banks. For most countries of the euro area, more than 80% of the assets of the banks located in the country will be covered. Notable exceptions are Portugal, Malta, Greece, Slovenia and Slovakia, where only the 3 biggest banks or at most 5 in Greek and Portugal would be under the direct oversight of the ECB according to our database, while in France almost 100% of assets are covered. In terms of the percentage of banks, a relatively low fraction of banks is covered as indicated in the graph.

Going forward, it will be crucial that the actual final implementation of the SSM will provide the ECB with the power to step in for any bank in the euro zone if it deems it necessary. The published compromise seems to point in that direction but is not entirely clear. After all, problems coming from 10% of assets can still be very significant. But overall, it is a big achievement that the ECB will have direct oversight over such a big proportion of assets.

About the authors

Guntram B. Wolff

Guntram Wolff is a Senior fellow at Bruegel. He is also a Professor of Public Policy and Economics at the Willy Brandt School of Public Policy. From 2022-2024, he was the Director and CEO of the German Council on Foreign Relations (DGAP) and from 2013-22 the director of Bruegel. Over his career, he has contributed to research on European political economy, climate policy, geoeconomics, macroeconomics and foreign affairs. His work was published in academic journals such as Nature, Science, Research Policy, Energy Policy, Climate Policy, Journal of European Public Policy, Journal of Banking and Finance. His co-authored book “The macroeconomics of decarbonization” is published in Cambridge University Press.

An experienced public adviser, he has been testifying twice a year since 2013 to the informal European finance ministers’ and central bank governors’ ECOFIN Council meeting on a large variety of topics. He also regularly testifies to the European Parliament, the Bundestag and speaks to corporate boards. In 2020, Business Insider ranked him one of the 28 most influential “power players” in Europe. From 2012-16, he was a member of the French prime minister’s Conseil d’Analyse Economique. In 2018, then IMF managing director Christine Lagarde appointed him to the external advisory group on surveillance to review the Fund’s priorities. In 2021, he was appointed member and co-director to the G20 High level independent panel on pandemic prevention, preparedness and response under the co-chairs Tharman Shanmugaratnam, Lawrence H. Summers and Ngozi Okonjo-Iweala. From 2013-22, he was an advisor to the Mastercard Centre for Inclusive Growth. He is a member of the Bulgarian Council of Economic Analysis, the European Council on Foreign Affairs and advisory board of Elcano.

Guntram joined Bruegel from the European Commission, where he worked on the macroeconomics of the euro area and the reform of euro area governance. Prior to joining the Commission, he worked in the research department at the Bundesbank, which he joined after completing his PhD in economics at the University of Bonn. He also worked as an external adviser to the International Monetary Fund. He is fluent in German, English, and French. His work is regularly published and cited in leading media.