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Eurozone-bound banks should take 3 years at most to move in, ECB's Nouy says

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Eurozone-bound banks should take 3 years at most to move in, ECB's Nouy says

Lenders looking to enter the eurozone should take at most three years to move in, according to ECB Supervisory Board Chair Danièle Nouy.

In an interview, Nouy said the central bank can agree to a transition period but it should not take long, adding that banks have "to start with resources that are proportionate to the risk they are moving over."

Nouy reiterated that banks that want to move to the eurozone should make sure they "actually do move" there, saying "their capacity for trading, hedging, risk management and so forth in the euro area has to be commensurate with the size and the risk of the relocated operations."

Her comments come in light of London-based financial institutions looking to establish bases in the EU to continue serving clients after the U.K. exits the bloc. She added that "empty shell companies", or companies registering risks in the EU but conduct actual operations from other countries, should be prohibited.

Asked about the recent money laundering debacle in Latvia and Danske Bank A/S' Estonian branch, Nouy said anti-money laundering efforts require a common European framework and regulations rather than directives. She added that supervision would be more effective if there was a regulator with responsibilities similar to that of the ECB, a separate central body working with national institutions.

"I have talked to European legislators about this too, and I am convinced that it will happen in the future…" Nouy said.

The central bank came under fire in recent months when allegations of money laundering dogged Latvia's ABLV Bank AS, which falls under its direct supervision, but Nouy reiterated that the ECB is "not mandated to investigate money laundering," adding that the regulator will not be involved in ABLV's self-liquidation but expects that an "independent valuer" should be assigned to the bank to assess possible reimbursements to investors.

Nouy also said that profitability remains a major issue for the European banking system, as there remain some lenders that have not been earning their cost of capital for a few years. She noted consolidation is needed to alleviate the problem both in the eurozone and the whole of Europe.