Herman Van Rompuy President of the European Council ... - Europa

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Herman Van Rompuy President of the European Council ... - Europa

EUROPEA COUCIL

THE PRESIDET

EN

Brussels, 29 October 2013

EUCO 215/13

PRESSE 448

PR PCE 193

Speech by President of the European Council

Herman Van Rompuy, at the Gala dinner on the occasion of the

50th anniversary of the European Saving Banks Group

It is a pleasure to be joining you this evening. Let me start by congratulating your

organisation, the European Savings Banks Group, on your 50th anniversary. I consider all

younger than I as young! So your organisation is really young. All older than I belong to

the old age.

Of course savings banks have been around much longer. Their original objective was to

provide easily accessible savings products to all strata of the population. In some countries,

savings banks were created on public initiative, while in others, socially committed

individuals created foundations to put in place the necessary infrastructure. A key idea was

always to be close to citizens and to value every penny: because together these many

pennies can make a difference and provide valuable services: to borrowers and to savers.

The financial world has of course changed considerably since then; financial innovation

and increased financial integration in Europe, notably in the context of the Single Currency

has created new challenges, for you and your members, but also for us policymakers. The

sovereign debt crisis was of course the biggest of all!

The intensity of the crisis necessitated path-breaking measures. These were outlined in the

four presidents report. Member States lived up to the challenge: we are now moving

towards a fully-fledged banking union.

P R E S S

Dirk De Backer - Spokesperson of the President - ( +32 (0)2 281 9768 - +32 (0)497 59 99 19

Preben Aamann - Deputy Spokesperson of the President - ( +32 (0)2 281 2060 - +32 (0)476 85 05 43

press.president@consilium.europa.eu http://www.european-council.europa.eu/the-president

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This is not a coincidence. After all, the sovereign debt crisis was preceded by a severe

banking crisis. Still, some banks weathered the storm of the crisis relatively better than

others. A business model of collecting customer deposits to finance company investments

can indeed be more robust. In Germany, for example, despite the sharp slowdown, savings

banks expanded new business with companies by nearly 5 % in 2012. But not all savings

banks did well. Instead, what we learned from the crisis was- irrespective of the business

model - the importance of good risk management and good supervision. Indeed, since

2011, EU banks have been making good progress in balance-sheet repair. The Tier One

Common Capital Ratio for the largest EU banks stood at 11.9% at June 2013, against

11.1% for the largest US banks. The agreement on the new capital requirements directive

this summer will further support this process and make our banking system even sounder

in the years to come.

We are also making good progress on the banking union, which will need to be

comprehensive: to ensure a level playing field between banks, to avoid the creation of

pockets of vulnerability - because we know from the crisis that risk can emerge in all

corners - and to protect taxpayers.

The recent final adoption of the Single Supervisory Mechanism – placing all the banks of

participating member states under the direct or indirect supervision of the European

Central Bank in one year from now –, and last week's European Council, spelling out very

concretely the timetable for the adoption of the deposit and bank resolution directives and

the Single Resolution Mechanism regulation confirm clearly Member States' commitment

to the banking union.

The European Council of 24-25 October also stressed the importance of the comprehensive

assessment by the European Central Bank of the balance sheet of around 130 banks, before

it takes over their direct supervision.

It is a challenging exercise, for all concerned- the banks, national authorities, the ECB. But

it is a crucial one. The success of the comprehensive assessment will determine not just the

credibility and legitimacy of the Single Supervisory Mechanism, but it will also be central

in helping kick-start financial intermediation across Europe, and restore normal lending

conditions. Financial fragmentation continues to be a concern, especially in crisis

countries. The comprehensive assessment will improve transparency in the banking sector,

encourage repair where needed and build confidence, assuring all stakeholders that banks

are fundamentally sound and trustworthy.

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But access to finance is a deeper problem and one that touches in particular small and

medium-sized enterprises or SMEs. Given their importance in job creation in Europe, the

European Council has been rightly focusing on this segment of the corporate world. We

know, for example, that the regulatory burden for these firms needs to be manageable. This

is why the European Council welcomed the Commission's communication on Regulatory

Fitness. We also know about the many SMEs that need financing. The European Council

recognised this, calling on the Member States' Ministers and on the European Parliament to

agree on a significant increase in EU support through structural funds in the period 2014-

2020. The European Investment Bank, the long term financing vehicle of the Union, will

play a key role here in bridging the gap with the private sector.

Again, this is crucial for countries where financing conditions are tight. But it is

noteworthy that a shortage of innovative financial instruments and services also affects

very successful, internationally and R&D-oriented mid-cap firms in all Member States.

Many of these firms lack venture capital or credit lines that support their international

expansions. It is important that we overcome these market gaps if our firms are to

innovate, thrive and compete globally. Clearly, this should be food for thought for

policymakers, but also for the financial services industry and trade bodies.

In Conclusion, I would like you to take away three messages: thanks to the many reforms,

including the banking union, the Euro Area is fundamentally a stronger place. The type of

crisis that we have seen is now, in my eyes, inconceivable. The current gradual recovery,

however, needs to develop momentum. For that to happen, banks and especially savings

banks need to keep playing, more than ever, the essential role in the economy that has been

theirs since centuries. And finally, this crisis has shown that we need More Europe or at

least a more integrated Eurozone. Not for the sake of ideology but out of necessity. Europe

is a choice and an obligation at the same time!

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