We welcome this initiative from Commissioner Hill and his team at the new DG FISMA, going beyond the narrow remit in CRD 4, asking the right questions, setting the right tone of enquiry and openness, not imprisoned by past decisions. We particularly welcome the material on proportionality and simplification (question sets 13 and 14 at the end). We would be very happy to contribute to the ongoing debate on these matters.
The BSA and its members support sensible and appropriate capital rules. Like cooperative banks across Europe, building societies did not cause the financial crisis, and proved generally more resilient. But our members have paid directly and heavily through the UK’s Deposit Guarantee Scheme for the costs of resolving failed UK banks (Bradford & Bingley, Icelandic subsidiaries, etc). Some “prudential repair” was necessary. But we saw early on the risk that the cumulative impact of post-crisis measures could reach, and go beyond, a “tipping point” where the net benefit of tougher regulation in terms of economic welfare falls to zero and then goes negative. We therefore welcome the Commission’s recognition of this issue in relation to the impact of CRD 4 on bank lending – but this is only part of the whole picture.
The BSA belongs to the European Association of Cooperative Banks, and we support the wider EACB response to this consultation. In our own response, we concentrate on issues of direct relevance to our building society members, and draw on actual experience over the implementation of CRD 4. We do not cover SME or infrastructure lending.
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