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EU banking watchdog says little sense in merger with insurance counterpart
May 31, 2017 / 1:43 PM / 2 months ago

EU banking watchdog says little sense in merger with insurance counterpart

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LONDON, May 31 (Reuters) - The European Union's banking watchdog said a merger with the bloc's insurance regulator would yield few savings as staffing was already cut to the bone in core areas.

The European Banking Authority (EBA) said a suggestion by Brussels that it should be merged with the European Insurance and Occupational Pensions Authority (EIOPA) in Frankfurt is "unlikely to create significant synergies in the core business" of regulation and supervision.

The London-based EBA was responding to a public consultation by the European Commission on the future shape of financial supervision in the EU, made all the more pressing with the bloc's biggest financial market, Britain, leaving in 2019.

The Commission aired a "twin peaks" model of centralising capital requirements for banks and insurance at a merged EBA/EIOPA, with conduct overseen by the European Securities and Markets Authority (ESMA) in Paris.

EBA said there could be savings from a merger in areas where it is understaffed, such as in economic analysis and data mangement.

"However, no material benefit in terms of reduction of costs in corporate functions is envisaged, as resources in these areas are already very slim," EBA Chairman Andrea Enria said in a letter to the Commission.

EIOPA said in its response that changes to the supervisory set-up should be assessed "carefully to ensure the continuation of an effective holistic and integrated approach".

EBA will have to move to another EU state due to Brexit, with several countries jostling to become its new home.

In its response to the consultation, ESMA said it wants a string of new powers, while EBA and EIOPA called for generally modest additions to their armory.

EBA said that since the European Central Bank, which has far greater resources, began supervising banks in the euro zone, the watchdog has suffered a "loss of visibility".

"Such arrangements might be reconsidered, as they generate an artificial disconnect between regulatory and supervisory functions," Enria said. (Reporting by Huw Jones; Editing by Toby Chopra)

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