Brussels, 29 October 2013
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
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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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