International

The European Parliament today voted to approve a new set of rules governing banking. SP Euro-MP Dennis de Jong described the new regulations, known as the CRD IV package, as ‘full of holes, Swiss cheese legislation. In some parts, such as those governing leverage limits to which the bank must conform, the rules are an improvement on current regulations. There are big gaps, however. The liquidity demands will only be phased in from 2015 and the leverage ratio which specifies how much a bank can lend in relation to its available capital, from 2018.'

Because the package of measures was presented as the most important step after the crisis aimed at putting banks in good health, these half measures, De Jong argues, are particularly regrettable, adding that ‘My patience is really starting to run out. Certainly following the crisis in Cyprus, people are losing confidence in banks. I’m still not seeing proposals for splitting of normal and speculative banking activities. And it’s high time that member states were investing again in a state bank in which people could have confidence. Instead of that the Commission continues to encourage them to sell state banks off, as is happening in Slovakia, for example. The banking lobby clearly still carries a great deal of weight in Brussels.'

The vote on the CRD IV package was divided into two parts. The SP voted against the proposal to phase the measures in over such a lengthy period, but the section carrying improvements to capital demands and limiting bankers’ bonuses had the party’s qualified support, as De Jong explains. ‘Although I voted in favour, the capital demands are also far from perfect, and the proposal also left room for bonuses up to two years’ salary, provided the shareholders agree, and that in my opinion is still far too high.’