Thank you Melinda.
Welcome to all of you here in Brussels and joining us online.
Unfortunately our Vice-Chair, Jan Reinder de Carpentier was unable to join at the last minute, due to unforeseen events, but I know he is joining us online.
I know it has been said many times these past few months, but it really is wonderful to meet so many people in-person.
This, as you know, will be my last conference as Chair of the SRB – and so I am delighted that we have some of the banking sector’s top people with us today, as well as high-level regulators from Europe and beyond. Today, we tackle the question: European banks: are they resolvable and ready for crisis?
I don’t have a definitive answer to that question, but I do know that our speakers and panellists today will have plenty of comments and views on the state of our banking sector at present.
Ladies and gentlemen, a difficult winter is ahead of us. There are many who say that dark clouds are gathering, and not least due to the ongoing Russian invasion of Ukraine. How difficult the near future will be, no one knows but the uncertainties are clear for everyone.
But what we do know is that promoting financial stability by ensuring an even more robust banking resolution system is of the essence in uncertain times.
That is something we can help to control and manage in the interests of protecting depositors and the tax-paying public.
When the big financial crisis hit in 2008, the regulators had to introduce structural reforms to the EU banking sector to make it more stable and efficient. The ‘Liikanen Report’ was published nearly ten years ago, highlighting bank recovery and resolution as one of the key financial regulatory reforms. Time flies but it is also fair to say that the Banking Union had a flying start.
Today, we can tick off many of these recommendations. We have the Banking Union with two strong pillars for harmonised banking supervision and resolution. On top, we have established the Single Resolution Fund, which is on track to reach its target level by the end of next year.
It is simply true to say that we can’t predict or prevent any future crises, but it is also true to say that we can take action to be well prepared.
We can be ready for crisis by ensuring all European banks are resolvable and we at the SRB and the broader SRM are ready to implement the relevant resolution schemes if and when it is needed.
But, are they all ready for crisis right now?
That, ladies and gentlemen, is the fundamental question we are discussing today.
[Eurogroup and CDMI]
Before looking at today’s agenda, I want to recall some recent developments in resolution at EU level.
The resolution of Sberbank showed again that the system works:
- Financial stability was maintained.
- There was no need for a public bail out.
- The taxpayer was protected.
That is the definition of a successful outcome for resolution cases and it is reassuring that together with Banco Popular the system showed its effectiveness twice. Still, the SRB has been clear that further strengthening of the system is urgently needed.
Let us be honest – the June Eurogroup outcome was not everything the SRB and many others would have wished for.
But there is no point in looking at what is hopefully still to come. Let’s focus on the progress made, as there was a lot.
Looking at the Crisis Management and Deposit Insurance framework review, we support measures to enhance and support the framework, and look forward to the Commission’s proposal – and maybe the Commission will have something to tell us later today?
We can see that there is support for a wider use of the public interest assessment to cover small and medium-sized banks, and for the broadened application of resolution tools in crisis management at European and national level. Importantly, where we expand the scope of banks covered by resolution, we also need to make sure that there are effective funding options for those resolutions that support the existing European framework in the Banking Union and enable the market exit of those banks. Let me stress, we talk about market exit, not resurrection or life-support.
After all, resolution is not a free lunch. It needs MREL to be in place, burden-sharing by shareholders and creditors and sufficient additional funding, if needed for an effective outcome. This, in turn, means we need a control mechanism at the European level for using any external funding. This means that decision making should stay European, ensuring we don’t undermine the current framework, and in particular if we use the Single Resolution Fund. More - not less - Europe is needed.
No doubt our speakers will have much more to say on these topics throughout the day.
To the agenda now, and I hope you’ll agree that we have some really top-shelf speakers on a range of interesting topics today.
In a moment, we’ll hear from Jens Henriksson, the CEO of Swedbank. It will be most interesting to hear his views on recent developments, given also the geographic location of Swedbank’s operations. Later, we’ll hear the views from another part of Europe, with a speech by the Banque de France’s governor, François Villeroy de Galhau.
We proudly present our heavyweight panels today.
Our first panel will focus more on the current challenges, while our second panel will try to identify what more needs to be done in order to overcome this demanding times.
For my part, I’m looking forward to taking part the fireside chat just after lunch, where we might tease out some of these issues in greater detail.
Finally, before I conclude, I want to say a special thanks to the media present here in the room and online.
It is all fine that we carry out our work professionally and competently, but that alone is not enough. Confidence is crucial and we rely on you to communicate our messages to markets and to the people we serve and strive to protect – that is the European taxpayer. Your work is important in both peace-times and crisis-times. More than ever, we are aware of the pressures journalists are under to communicate news on an almost daily basis. Therefore I want to especially thank you for taking the time to follow our annual conference, whether it is your first, or whether you are a veteran! We appreciate your presence.
I want to conclude – and give the floor to the range of excellent speakers from both the public and private sector we have with us here today. We know you all have heavy agendas, so we are extremely grateful for your time today, and the importance you afford to the topic of banking resolution.
Ladies and gentlemen, we gather in a time of division and uncertainty. That is why I am so pleased to see us come together today, in the spirit of cooperation, to discuss and drive the financial stability agenda forward. Thank you.