Banking package: Parliament and Council reach an agreement

The Parliament and the Council negotiators took a major step towards reducing risks in the banking system and building the Banking Union.

On Tuesday, two deals were concluded on banks’ resilience and on a clear roadmap for banks to deal with losses.

A deal to amend the EU i’s prudential requirements should help to boost the EU economy by increasing lending capacity and creating deeper and more liquid capital markets.

Peter Simon (S&D, DE) the rapporteur for the prudential requirements said:

"This is a big step towards global financial stability. The EU is drawing further lessons from the financial crisis and delivering on its promise to protect taxpayers’ money by further regulating the financial sector. In the future, banks will be subject to stricter leverage and long-term liquidity rules. Furthermore, we made sure that systemically important banks must have significantly more own funds to cover their losses in order to strengthen the principle of bail-in in the EU."

A separate deal on a clear roadmap for banks to deal with losses, should ensure that they hold enough capital and debt to not have to resort to taxpayer bailouts and define conditions for early remedial measures.

Gunnar Hökmark (EPP, SE), the rapporteur for the recovery and resolution package for banks, said: “This is a very important step in the completion of the Banking Union and in reducing risks in the financial system. The agreement is balanced, as it sets requirements on banks but at the same time also ensures that banks can play an active role in financing investments and growth".

Roberto Gualtieri (S&D, IT), the Chair of the Economic and monetary affairs committee, said: "The European Parliament has contributed significantly to delivering a comprehensive and balanced package which reduces risks in the EU banking sector and protects taxpayers, while providing the necessary incentives to sound lending to the real economy and to the reduction of NPLs. We now call on the next European Council to take the necessary steps and to be sufficiently ambitious on completing the Banking Union and deepening the Economic and Monetary Union. I would also like to thank the Austrian Presidency for the excellent cooperation"

More details on both deals can be found here.

Next steps

The Plenary will have to officially adopt the agreement; the vote should take place early next year.