Nov. 6 (Bloomberg) -- Ralph Hamers, chief executive officer of ING Groep NV, said a proposed European banking union will only work if all the planned elements are in place.
The European Central Bank takes on oversight of all euro-area banks next year, the first step in leaders’ June 2012 pledge to break the cycle in which banks and nations compound each other’s financial strains. The ECB and the European Commission, the European Union’s executive arm, are now pushing for a joint authority to handle bank failures.
“The banking union consists of separate pillars,” Hamers told reporters in Amsterdam today, when asked if he was concerned about continued disagreements among EU member states on the proposed Single Resolution Mechanism. “The banking union will really only work if all those pillars are fulfilled and agreed upon.”
The bank-failure blueprint, presented in July by Michel Barnier, the EU’s financial-services chief, has met with a barrage of complaints from governments, with Germany among those to have expressed the strongest concerns.
As originally conceived, the banking union would also have included a third “pillar” in addition to ECB supervision and the single resolution system: pooled deposit guarantees. That idea has since been abandoned in favor of pursuing an agreement on “a common network of national deposit-guarantee schemes,” according to the commission.
Hamers said ING, which has operations across Europe, “can only benefit” from a banking union, which would help to promote economic recovery and provide a solution to “the euro-zone issues that we currently face.”
Specifically, Hamers said the banking union is needed to ensure a “level playing field” for European lenders and to spur the free flow of capital and liquidity across borders, which “isn’t happening” at present.
To contact the reporter on this story: Maud van Gaal in Amsterdam at firstname.lastname@example.org