Sufficient staffing is important because the ECB will need to participate in bank audits with its own employees to exercise its authority, Kurt Pribil, co-head of the Finanzmarktaufsicht regulator, told reporters late yesterday in Vienna. Otherwise, it may not be able to achieve its goal of harmonized bank regulation in the 17-member euro area, he said.
“What’s very, very important is that the ECB will have full jurisdiction,” said Pribil, who heads the FMA with Helmut Ettl. The ECB needs to hire “relatively quickly some 700 to 1,000 staff, who would need to have the authority on the ground. If the ECB had to rely only on local regulators’ staff, an important element of the strengthening would be lost.”
Banks with more than 30 billion euros ($39 billion) in assets may face direct oversight by the ECB, according to a document obtained by Bloomberg News yesterday. While national regulators may carry out day-to-day supervision of “less significant” banks, the ECB could step in “at any time, on its own initiative,” according to the document prepared by Cyprus, which holds the rotating European Union presidency.
Austrian regulators also support designing the single supervisory mechanism as an “open project,” which can easily be joined by EU members not using the euro, Pribil said. Austrian banks are the biggest lenders in the former communist part of Europe, where only Slovakia, Slovenia and Estonia adopted the single currency so far.
“Austrian banks have many subsidiaries in central and eastern Europe, and not all of them have the euro,” Pribil said. “We want them to be part of it, hence we want this banking union to be like a magnet that attracts the non-euro members rather than repels them.”
The EU’s finance ministers will meet tomorrow in an attempt to broker compromises on setting up the bank supervision at the Frankfurt-based ECB that would be mandatory for the 17 euro-area nations and optional for other EU states. ECB oversight is required before banks can directly tap the currency area’s firewall fund, a step that EU leaders have said is key for breaking the link between sovereigns and their banks.
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