EU Lawyers Say ECB Oversight Requires Rethink of EBA Mediation

European Union lawyers called for a reexamination of draft rules for the European Banking Authority in light of plans to give the European Central Bank oversight over euro-area lenders.

EU plans unveiled in September to hand supervision powers to the ECB need to be reviewed to ensure the Frankfurt-based central bank doesn’t have privileged status at the EBA, according to the legal opinion, prepared by the legal service of the EU’s Council of Ministers and obtained by Bloomberg News.

“Differences in treatment between the ECB and the national competent authorities of non-euro-zone member states are not justifiable,” according to the document, dated Oct. 9. The provisions in the draft law “should be reexamined so as to ensure equal treatment of all credit institutions concerned.”

The legal service’s opinion adds to calls from nations including Sweden and the U.K. to rethink how the supervisory plans will affect the EBA. The concerns center on legal rules that would give the EBA the power to give binding instructions to national supervisors, while being unable to do the same for the ECB.

Anders Borg, Sweden’s finance minister, has described the plans as “unacceptable.”

The legal service endorsed proposals to create a supervisory board within the ECB on condition that the final decision-making power of the central bank’s Governing Council remains unaffected. Non-euro nations could also participate on the board on this basis.

The supervision laws should also “clearly” set out how the ECB would collaborate with national regulators, according to the document.

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