BNP Paribas SA Chairman Jean Lemierre and Crédit Agricole SA corporate secretary Jérôme Brunel called for the regulatory treatment of the eurozone as a single jurisdiction to simplify capital requirements and reduce regulatory costs for banks in the region, Bloomberg News reported.
In an article prepared for a Malta conference, Lemierre said Europe's biggest banks need to meet higher capital buffer requirements because their activities across the eurozone are considered cross-border operations by regulators, according to the April 4 report.
Lemierre argued that eurozone banks would stop being "penalized" with higher capital requirements if the single-currency area were treated as a single jurisdiction. Crédit Agricole's Brunel, meanwhile, said such regulatory treatment would also drive down the cost for banks to meet the minimum requirement for own funds and eligible liabilities, or MREL, which aims to prevent taxpayer-funded bailouts of troubled banks.
"As things stand, banking groups headquartered in, and operating across the banking union would face internal MREL for their subsidiaries, despite their centralized risk management, their single supervisory authority, their single-point-of-entry resolution strategy and their single resolution authority," Brunel reportedly wrote in a separate article prepared for the conference, adding that it would be "logical" that internal MREL mandates be dropped for eurozone banking groups.