Austrian bank regulators would like the new eastern members of the European Union to join the bloc’s single bank supervisor plan because the region’s financial industry is dominated by western European lenders.
The European Commission’s plan to put euro-area banks under a single watchdog should be opened to countries which are not part of the euro currency, said Helmut Ettl, co-head of the Finanzmarktaufsicht regulator, and Austrian central bank Governor Ewald Nowotny at a conference in Vienna today.
“It should be a project that is open,” Ettl said. “It shouldn’t be limited to the euro group,” he said, adding that he’d like to be able to “invite the central and eastern European countries to join the project.”
Austrian banks, including UniCredit SpA (UCG)’s Bank Austria, Erste Group Bank AG (EBS) and Raiffeisen Bank International AG (RBI), which are supervised by the FMA, or Finanzmarktaufsicht, and the Austrian central bank, are the biggest lenders in the former communist part of Europe. Foreign banks also including Italy’s Intesa Sanpaolo SpA (ISP) and France’s Societe Generale SA (GLE) own three quarters of the banking assets in the region.
The EU unveiled proposals for euro-area bank oversight this week that require unprecedented cooperation between the European Central Bank and national regulators. Under the plans, the ECB should expand its role as financial-system guardian by becoming the top-level supervisor of every lender in the 17-nation currency bloc.
EU Financial Services Commissioner Michel Barnier said yesterday that the banking union proposals are designed so that non-euro countries can join if they wish, declining to say which nations may consider such a move. Poland, Hungary, the Czech and Slovak Republics, Slovenia, Estonia, Lithuania, Latvia, Bulgaria and Romania are the former communist countries that joined the EU in 2004 and 2007. Slovenia, Slovakia and Estonia also use the euro.
Nowotny said that it was in the countries own interest to take part in the plan, unlike Great Britain, which opposes it. “I think this is a sensible proposal, in the interest of the countries themselves,” he told reporters. “They have such close links to the rest of Europe that uniformity is beneficial. It’s different from Great Britain, for instance.”
Austrian banks’ lending in eastern Europe has irked investors fretting about possible state bailouts that could put the country’s budget at risk. The Alpine country implemented new rules this year that require banks to raise locally the funding for new lending in eastern Europe, and boost capital levels.
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