Earlier this week, the European Parliament held its final plenary session of the year, concluding the first half of the chamber’s eighth term, and the end of German Socialist Martin Schulz’s reign as its President. While a festive mood had already taken hold of Strasbourg proper, inside the European Parliament deputies, officials, visitors, media, and of course lobbyists and consultants were as busy as ever roaming through the maze that is the Louise Weiss building.
However, despite the lack of holiday spirit, at least for those working in financial services, the Commission Santa came early this year. On 23 November Commission Vice-President Dombrovskis presented a major legislative package updating EU banking regulations. This also included a special surprise element, proposing to require big non-EU banks doing business in Europe to set up and capitalise intermediary holding companies. While this was widely considered as retaliation against a comparable US rule for European banks, it will also factor into the broader Brexit planning decisions for US banks with European operations currently based in London.
The broader package implements several global banking standards and requirements into European law. Now it is up to the Member States in the Council and the European Parliament to amend the Commission’s proposal as they see fit. MEPs decided to treat the five legislative proposals in two packages. One implements the so-called Total Loss-Absorbing Capacity (TLAC) standard and consists mainly of amendments to the Single Resolution Mechanism and the Bank Recovery and Resolution Directive (BRRD). The other package amends existing capital requirement rules to implement, inter alia, the Leverage Ratio and the Net Stable Funding Ratio standards. The two biggest political groups, the centre-right EPP and the centre-left S&D, divided the two packages between themselves.
For a consultant, this preparatory phase is at the same time crucial and mildly frustrating. The personalities and competence of the political group leads influence the direction of a legislative text, but as the first step of deciding who will get these roles is a purely internal process, consultants are reduced to a wild goose chase to identify potential candidates, dark horses and front-runners. A number of factors matter, such as experience and seniority, nationality, workload, or personal ambitions of MEPs. On top of this comes the political context, such as Germany’s reported intention to see through these two “risk reduction” packages before finalising the stalled proposal for a European Deposit Insurance Scheme. For this reason, some people involved in the process expect a German MEP to take over at least one of the two packages. By the end of the plenary session, only a few names have been confirmed: Swedish veteran MEP Gunnar Hökmark (EPP) will lead on the BRRD/TLAC package, while Austria’s Othmar Karas MEP will be the EPP’s shadow for the capital requirements changes. Remaining positions for the two banking packages will be filled only over the next couple of weeks.
However, some names for other financial services legislations were confirmed: British Conservative Kay Swinburne retains an important role in the proposal on a framework for the recovery and resolution of central counterparties. She will get a colleague from the S&D group to lead jointly on the dossier, a rather creative solution no doubt owing to the new reality of the UK leaving the EU.
With the inauguration of President Trump, the triggering of Article 50 negotiations, important national elections in Europe, and high-level EU positions being up for grabs, the political rollercoaster that was the year 2016 will probably continue into 2017. However, before that happens, the Brussels babble will quieten down for at least a few days to give everyone the chance to take a deep breath – and maybe some hot mulled wine. Merry Christmas!