Activities

In 2011 the GEB members decided to publish their first position paper on the complex relations between the pre-crisis regulation, the construction of a common Level Playing Field in Europe, the determinants of the crisis, the proposed solutions and their expected consequences on the banking system.

The GEB has become more active in representing its members’ peculiar point of view on the banking business since 2009, in the aftermath of the global financial crisis: it is well known that the problems originated in large financial players but the regulatory reforms that followed heavily impacted the whole banking industry; the emergency of the situation usually led to poor and quick ex-ante evaluation of the combined effects of the reforms on the level playing field and especially on the smallest players.

The small, privately owned or closely held banks in the GEB, traditionally focused on creating sustainable value over generations, started to feel the material danger of seeing their business models completely displaced by the new rules, despite the values and the conservativeness used in their day to day activities.

In 2011 the GEB members decided to publish their first position paper on the complex relations between the pre-crisis regulation, the construction of a common Level Playing Field in Europe, the determinants of the crisis, the proposed solutions and their expected consequences on the banking system.

In particular, the position paper highlighted that:

  • - state aids, “Too big to fail” hypothesis and agency ratings;
  • - Basel 2 implementations and RWA measures;
  • - overregulation and lack of proportionality in regulation;
  • - lack of dimensional data on the banking system at the EU level.

were creating a very toxic environment for smaller players risking to be destroyed despite sounder values and safer behaviors: banks with high levels of retail deposits were witnessing strong competition on funding through the very high rates offered by leveraging on the wholesale benefits assured by the supposed (or actual) State support.

The paper received audience at the EU Commission and in most of the banking associations and authorities in the GEB countries. Two follow up documents in 2012 and 2013 reckoned the progresses done in some areas of concern, especially on funding, but several issues still remained.

GEB Position paper - June 2011

GEB Position paper - Revisions and updates - June 2012

GEB Position paper – progress review – June 2013

In 2014 the GEB activity was mainly focused on the persisting biases produced by the RWA measures: while the unexplained RWA variability was still under investigation by several authorities around the world, the adoption of RWA based measures of riskiness in the contribution to the newly created Deposit Guarantee Scheme and Single Resolution Fund threatened to further increase the biases in the short run. The GEB registered in the EU Transparency Register with ID number 448805113968-65 and took part in the consultation processes on SRF contribution (July 2014) and DGS contribution (February 2015). The GEB was also received by the EBA to discuss the issues.

Risk related DGS & SRM contributions – July 2014

Public consultation on the contributions of credit institutions to resolution financing arrangements launched

GEB RWA based measures and DGS contribution

In 2015 the GEB members focused on the still lacking proportionality in the overwhelming flow of new regulation introduced in Europe, despite the high place given to the principle in EU norms. In June 2015 the GEB members produced a short position paper on the concern new rules imposed disproportionally higher compliance costs on smaller players, thus inducing an unlevelled playing field; in July our delegates took part in the EBA seminar on proportionality, enriching our knowledge on the complexity of the issue. In September 2015, the consultation on CRD IV offered the occasion to reexamine many of the topics already discussed in previous years. In November 2015 our delegates took part in a meeting organized by German Spardabanks to identify possible common interests in the EU regulation processes. In December 2015, we appreciated the EBA opinion on the remuneration practices which probably signed a landmark in the proportionality debate.

GEB EU position paper on proportionality – June 2015