Read-out from the College meeting: remarks by Vice-President Valdis Dombrovskis

Good afternoon everybody,

Let me start with the Readout of today's College meeting.

We discussed today the European citizens' initiative with the title "EU-wide referendum, whether the European citizens want the United Kingdom to remain or to leave".

We decided to declare the request as inadmissible, as the conditions for the registration of this initiative were not met. This matter simply falls outside our field of competence.

We have also decided to make two proposals today: the change of composition of the Committee of Regions and the European Economic and Social Committee. Because in terms of office, both committees will come to an end in 2020, but also because of the UK`s withdrawal from the EU.

Commissioner Oettinger briefed the College on the state of negotiations between the European Parliament and the Council about the 2019 draft budget, following the inconclusive outcome of the consolation procedure.

The College decided to empower Commissioner Oettinger to present the Commission's second draft budget later this week, and - in agreement with the President - to bring the negotiations to a good end on this basis.

We also discussed the situation in Ukraine, where escalating tensions in the Azov Sea over the past days have led to the seizures of Ukrainian vessels, and shots being fired at them by Russia, as well as injuries to a number of Ukrainian service men.

These developments are unacceptable, and we expect Russia to immediately release the vessels and the crew, and to ensure the needed medical assistance to the Ukrainian service men.

International law obliges the Russian Federation to ensure unhindered and free passage of all vessels through the Kerch strait. Therefore we expect Russia to restore the freedom of passage at the Kerch strait.

As you know, the EU does not and will not recognise the illegal annexation of the Crimean peninsula by Russia, and condemns its aggression towards Ukraine.

High-Representative Vice-President Federica Mogherini has been in touch with several partners since this escalation has started, and will continue to engage on this issue in a view of broader international response. The EU's Political and Security Committee has also met earlier this week to discuss the situation and the next steps.

Today, the Commission also adopted a long-term strategic vision for a climate-neutral European economy.

Vice-President Šefčovič and Commissioner Cañetewill present this in detail right after this press conference.

But here is my quick take away:

This strategy presents evidence that the fight against climate change also brings many new economic opportunities.

This is why we should accelerate our sustainable finance agenda to mobilise funding towards the low-carbon transition.

Finally, the Commission adopted two progress reports on Banking Union and Capital Markets Union, so let me now turn to this.

In about two weeks, EU and euro area leaders will meet to decide on the next steps for deepening of the Economic and Monetary Union.

This will be a decisive meeting at an important time:

In today's uncertain global climate, Europe needs a currency union that can withstand future economic shocks, and allow the euro to play a stronger international role.

Lately, negotiations have accelerated on several outstanding pieces of legislation that would bring concrete benefits to EMU and to its citizens.

But with the European Parliament elections approaching rapidly, this is a critical moment for achieving the progress we need on pending legislation.

So today, the Commission is publishing two reports:

The first report highlights the significant progress in reducing risks in the banking sector, and in lowering the rate of Non-Performing Loans in European banks.

And the second takes stock of progress in building the Capital Markets Union, and calls on the European Parliament and Member States to accelerate their work.

Let me begin with the Banking Union report.

The report shows that financial stability in the EU has been considerably reinforced, and risks to the banking sector continue to decrease.

In particular, in the course of a year,the average rate of non-performing loans has decreased by 1.2 percentage points, so now it is down to 3.4 percent.

In Croatia, Cyprus, Hungary, Ireland, Portugal, and Slovenia, we have even seen decreases by 3 percentage points or more.

This is good news for the EU economy!

A lower rate of NPLs means that European banks are more stable and profitable, and better able to lend to households and companies.

However, there are still pockets of weakness that need to be tackled.

In particular, there are very high NPL ratios in Greece and Cyprus, at 45 and 28 percent correspondingly.

This is one of the reasons why we should make progress on the legislative package to further reduce non-performing loans, which the Commission presented this spring.

It is also good news that we are close to a deal on the 2016 banking risk reduction package.

This would improve financial stability, while making life simpler for smaller banks.

Given the progress on risk reduction, the process of completing the Banking Union is now overdue.

So the Commission calls for an agreement on the backstop for a single resolution fund, and further steps towards a European Deposit Insurance Scheme.

Let me now move to the report on the Capital markets Union, which has a clear message:

The European parliament and Member States need to accelerate their work to lay the building blocks of the Capital Markets Union by the end of the current mandate.

We have already some achievements, such as:

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  a simplified prospectus for listing on public markets,
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  new rules to boost investment into EU Venture Capital Funds,
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  and an agreement on Safe, Transparent and Standardised securitisation.

And just today, the Council agreed on a stance on the EU framework for covered bonds, so the trilogues can start on this.

But out of the 13 proposals we presented to build the Capital Markets Union, 10 are still on the desks of co-legislators.

And 3 proposals to enable greener and more sustainable finance are also pending.

By adopting these outstanding proposals:

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  we could help direct savings to where they can be the most productive.
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  We could diversify sources of funding for smaller companies, so they are less dependent on bank loans.
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  And we could make it easier for companies to access deep pools of funding, regardless of where they are located.

In addition, thanks to the CMU, we could:

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  further integrate EU financial markets,
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  improve their shock absorption capacity, and
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  increase private sharing of financial risk.

The results would be a stronger and more resilient Economic and Monetary Union.

And it could also reinforce the [international] role of the euro, by making it attractive for more market participants to use it.

Today's Communication sets out the benefits of various CMU proposals:

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  For example, with an ambitious deal on Pan-European Personal Pensions Product, the resulting economies of scale could give savers access to better products at lower costs.
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  with our proposal for the cross-border distribution of investment funds, an investor would be able to easily buy shares in funds from all over the EU.
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  And with our proposals on sustainable finance, savers would be able to invest their money in green financial products, without worrying about greenwashing.

As I have said before, Brexit makes the Capital Markets Union even more urgent, as currently many EU companies rely on funding and financial services from the City of London.

EU heads of state and government have repeatedly expressed their commitment to completing the Capital Markets Union.

But progress so far has not been sufficient.

So EU leaders should renew this commitment when they meet for the European Council and the Euro Summit in December.

And they should make sure it is followed up swiftly.

Thank you very much.

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