August 29, 2013 / 12:12 PM / 4 years ago

ECB's Mersch says timetable for new bank watchdog challenging

ALPBACH, Austria (Reuters) - The European Central Bank might start supervising euro zone banks later than planned due to bureaucratic hurdles, ECB Executive Board member Yves Mersch said on Thursday.

Mersch, in charge of setting up the so-called Single Supervisory Mechanism (SSM) along with ECB Vice-President Vitor Constancio, also called for a swift solution on how to cover potential shortfalls shown up in its bank balance sheet review.

The European Parliament is set to adopt a regulation during a September 9-11 session that will allow the ECB to supervise euro zone banks, with the SSM scheduled to start operating a year later. But Mersch said such a timetable was challenging.

“If it takes until the first quarter of next year to have the full-fledged Supervisory Board in place it will be quite challenging to have the SSM itself operational one year after the entry into force of the legal act, the earliest date foreseen by the regulation,” Mersch said in the text of a speech for delivery at a financial market symposium in Austria.

Before the ECB starts bank supervision, it wants to know what state the banks are in and plans to conduct a balance sheet assessment, which may reveal capital shortfalls. The ECB has repeated called on EU leaders to come up with a plan to deal with these, and Mersch repeated this call on Thursday.

“Backstops need to be in place before the assessment has begun. Put simply, if there are no backstops, there will be no assessment,” he said.

Reporting by Michael Shields; Writing by Eva Taylor, editing by Paul Carrel

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