Bank board members must be personally liable for mistakes and banks’ riskier trading activities must be clearly separated from their more conservative lending ones, said MEPs in a resolution setting out Parliament’s priorities for a broad overhaul of EU banks.
Arlene McCarthy (S&D, UK), the MEP steering the position through Parliament told fellow MEPs "We need to deliver a change in culture… We are not out to ban activities but we want a structured and responsible universal banking model which can ensure funding to the real economy. Banking will always have risks but in a free market economy these should not be borne by very generous tax payer safety nets".
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The resolution, adopted by 528 votes to 87 with 73 abstentions, identifies core principles for structural reform, including:
- reducing excessive risks, ensuring competition, reducing complexity and limiting interconnectedness in EU banks, by separating banking activities that are essential for the real economy from risky trading and investment ones,
- improving corporate governance and creating incentives for banks to establish transparent organisational structures, increasing accountability and reinforcing a responsible and sustainable remuneration system,
- strengthening personal liability and liability for board members,
- ensuring that essential retail activities continue uninterrupted by problems caused by the investment arm of a bank,
- ensuring that risky trading and investment activities do not benefit from implicit guarantees or subsidies, the use of insured deposits or taxpayer bailouts,
- separating sources of funding and balance sheets for retail and investment activities and ensuring that capital is not shifted from deposits and credit activities to risky trading activities,
- promoting effective, fair and sustainable competition among banks so as to develop a well-functioning and efficient banking sector which facilitates lending to the real economy by ensuring universal access to banking services and reducing the cost of banking services, and
- ensuring that in the event of a bank’s failure, depositors can still have access to funds and that essential services credit, payment and deposit activities continue.
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