The European Economic and Social Committee (EESC) points out that a strong, diversified banking system with regional and community banks is essential for Europe's future, stressing that European banks will play a key role in the post-COVID-19 economic recovery.
The EU's Banking Union has to be in line with the social inclusion and sustainable development goals needed to ensure Europe's future competitiveness in the face of global challenges. To this end, the EU banking rules must recognise and promote the specificities of its diversified banking system, especially at regional and local level.
In the own-initiative opinion drawn up by Giuseppe Guerini and adopted at the July plenary session, the EESC argues that the main objective remains the security, stability and resilience of the EU financial system and that the measures taken since the financial crisis have proved to be necessary and effective and should therefore not be undermined. However, while acknowledging the progress made by the Commission in taking account of smaller banking institutions in its recent regulatory measures, the Committee points out that it would be useful to further increase the proportionality of banking rules with regard to the characteristics of their addressees, without sacrificing the effectiveness of prudential rules.
During the debate, Mr Guerini was sharp:
Although the financial system was originally built to fund entrepreneurs and to support business growth and employment, it has ended up neglecting this essential course of action and we are currently witnessing a financial system that largely fuels itself. The focus must be different, we need a banking union with a green and social dimension, one that is sustainable and inclusive.
The main issue is that the rules determining the conduct of the international and European financial system are not complete, leaving the consequences of bank failures to be borne often by small-scale private investors and by citizens in general through mechanisms that use public money. Furthermore, the prevailing regulatory approach has tended to be to build a one-size fits all system that has failed to preserve some specific features of the European banking ecosystem.
In other words, the rules adopted in recent years at international and European level have not always taken full account of the different models that contribute to the diversity of banks in Europe and this has had a significant impact on smaller and regional banks, which often take the form of cooperatives. The risk is that the fabric of small local banks, whose economic and social function is undeniable, may disappear because it has not been properly addressed by the regulators.
Against this backdrop, the EESC supports the recognition of a diversified banking system in the EU and endorses the recent decision to push back the date for implementing certain remaining elements of the Basel III accord. In particular, the Committee says that when the time comes, the new provision on capital requirements should be transposed in a way that properly caters for the diversity of banking business models in Europe.
In addition, the Committee calls for greater recognition of the unique role played by both small regional and community banks as well as by the larger cooperative banks. The former are, in some Member States such as Italy and Spain the main, if not the only, source of access to credit for thousands of citizens and businesses, while the latter may contribute, in countries such as Germany, Austria, the Netherlands and France, to systemic risks. Where appropriate, this should be duly taken into account in regulation and supervision.
Cooperative banks also play an important role in nourishing economic democracy, as they promote the participation of their stakeholders, who are not mere shareholders or clients, but partners who can participate on the basis of per capita votes in governance guidelines, which are in fact oriented more towards stakeholder value than shareholder value.
A diversified banking system, fed into by a range of stakeholders and rooted in regions and local communities, is therefore also an important guarantee for preserving shared, participatory social responsibility of citizens, SMEs and individual economic operators substantially involved in the real economy.
European banks, including regional and cooperative banks, will play a key role in the economic recovery following the COVID-19 emergency: the health emergency will only be overcome with much higher levels of public debt and, in order to ensure that resources arrive where they need to on time, the entire financial system will have to be mobilised. This will be part of a shared general effort involving public authorities and private players, where European banks will have to become "a vehicle for public policy" to support the economy and employment.