Toespraak Herman van Rompuy ter gelegenheid van het 50ste jubileum van de European Saving Banks Group (en)

EUROPEAN COUNCIL THE PRESIDT

Brussels, 30 October 2013 EUCO

PRESSE 448 PRPCE 193

Herman Van Rompuy i President of the European Council Gala dinner on the occasion of the 50th anniversary of the European Saving Banks Group Brussels

29 October 2013

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

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 percent 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

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

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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 i. 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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