September 1, 2015 / 2:18 PM / 2 years ago

National laws hamper ECB's work as single supervisor - ECB Dickson

The famous euro sign landmark is pictured outside the former headquarters of the European Central Bank (ECB) in Frankfurt, Germany, July 17, 2015. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) - Diverging national laws on banking supervision are hampering the European Central Bank’s work as single supervisor of the euro zone’s largest lenders and the rules need to be harmonised, one of the ECB’s top supervisors said on Tuesday.

The ECB took over regulation of the region’s biggest banks late last year, but Julie Dickson, a member of the bank’s supervisory board, said national laws empowering authorities in member countries still interfere with its work.

Dickson singled out a German draft law that delegates certain regulatory powers to the ministry of finance.

“In my opinion, national legislation empowering national authorities to issue binding prudential legislation interferes with the ECB’s competences,” Dickson said in remarks prepared for a speech to be delivered in London.

“If this practice increases, the harmonisation and the establishment of uniform conditions of competition will be hampered significantly.”

The ECB has no power to compel national governments to cede their regulatory authority over banks, which Dickson seemed to acknowledge. She said nations had great discretion regarding the quality and composition of bank capital and these rules, many of which are enshrined in local legislation, make it difficult for the supervisor to fulfil its mandate.

National laws need to be harmonised to help the ECB do its job, Dickson said -- it needs to be the only supervisor for large banks in the euro zone.

“It is the ECB’s view that it should be the exclusive competent authority to exercise supervisory powers vis-à-vis significant banks, including those powers that are laid down in national law,” Dickson said.

“We are calling for a degree of additional convergence in European bank regulation to help us meet our goals.”

Reporting by Francesco Canepa; editing by Balazs Koranyi, Larry Kking

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