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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

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.

 

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About the authors

  • Guntram B. Wolff

    Guntram Wolff is the Director of Bruegel. Over his career, he has contributed to research on European political economy and governance, fiscal, monetary and financial policy, climate change and geoeconomics. Under his leadership, Bruegel has been regularly ranked among the top global think tanks and has grown in influence and impact with a team of now almost 40 recognized scholars and around 65 total staff. Bruegel is also recognized for its outstanding transparency.

    A recognized thought leader and academic, he regularly testifies at the European Finance Ministers' ECOFIN meeting, the European Parliament, the German Parliament (Bundestag) and the French Parliament (Assemblée Nationale). 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 to the G20 high level independent panel on pandemic prevention, preparedness and response. He is also a professor (part-time) at the Solvay Brussels School of Université Libre de Bruxelles, where he teaches economics of European integration.

    He 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 was coordinating the research team on fiscal policy at Deutsche Bundesbank. He also worked as an external adviser to the International Monetary Fund.

    He holds a PhD in economics from the University of Bonn and studied in Bonn, Toulouse, Pittsburgh and Passau. He taught economics at the University of Pittsburgh and at Université libre de Bruxelles. He has published numerous papers in leading academic journals. His columns and policy work are published and cited in leading international media and policy outlets. Guntram is fluent in German, English, French and has good notions of Bulgarian and Spanish.

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