* Commissioner tackles German reservations on ECB role
* Barnier says national authorities to keep some powers
* German bank bodies against EU-wide deposit guarantees
By Michelle Martin
BERLIN, Sept 20 European Commissioner Michel
Barnier is seeking a compromise with Germany on banking union
plans that would allow local regulators to carry on supervising
banks but under common euro zone guidelines.
Barnier, who is at odds with Germany over his proposal to
give the European Central Bank (ECB) powers to oversee all euro
zone banks, told reporters in the German capital on Thursday:
"Of course I will work on a compromise with Berlin and other
However, Barnier's attempts to soothe Germany stop short of
scaling back the ECB's remit.
Giving the ECB a bigger role is part of the euro zone's
efforts to provide a long-term fix for its sovereign debt
crisis, which has been complicated by the bad debts weighing on
many of the bloc's banks.
Banks have had to be shored up using European Union funding
in countries including Spain and Ireland, and Barnier, the
bloc's financial services chief, emphasised the need for a more
integrated system to rebuild financial stability.
Chancellor Angela Merkel's government wants the ECB's new
powers of oversight to apply only to systemically-relevant or
cross-border institutions - a position that got clear backing
from lawmakers in her centre-right coalition this week.
But Barnier said banks that had run into difficulty since
the global financial crisis had tended to be small and
medium-sized institutions, such as Spain's Bankia,
Franco-Belgian Dexia and Britain's Northern Rock, rather than
cross-border institutions whose problems had much wider
"That's why, after many consultations, we suggested that it
should be possible (for the ECB) to supervise all banks but this
will of course functionally be carried out by national
supervisors," he said.
"(German bank supervisor) BaFin will maintain its role but
there will be a kind of manual for all banks which come under
the control of the European supervisor. National authorities
will of course be the ones who put the contents of this manual
The commission wants EU leaders to approve the ECB's new
role at their summit in December when unanimity is needed.
Barnier, visiting Berlin to meet politicians and business
groups, said national supervisors would continue to be
responsible for protecting consumers and taking measures against
WORRIES ABOUT SPAIN
The Association of German Banks, representing major lenders
like Deutsche Bank and Commerzbank, parts company with some
German policymakers in wanting the ECB to have power over all
euro zone banks.
"One of the decisive lessons we learnt from the financial
crisis was that ... for all market participants the same
supervisory rules hold good and must be uniformly applied," it
said in a statement.
"Supervision needs to be decoupled from national interests,"
it added, saying this did not mean ECB employees would need to
inspect every institution because the plan allows the ECB to
fall back on national oversight bodies.
Earlier this week Merkel warned against rushing to create a
new pan-European supervisor under the ECB, saying it was more
important to put a credible watchdog in place than to meet
Europe's self-imposed January deadline.
Barnier said Merkel had raised important points but added:
"It is a question of credibility to deliver quickly what we
He said he did not want a new EU-wide deposit guarantee fund
but rather for EU states to set up their own deposit guarantee
funds, which could then borrow money if necessary.
In Germany, private banks, savings banks and cooperatives
have all developed their own systems to protect clients' money.
Georg Fahrenschon, head of the German Savings Banks
Association, said Barnier's proposal was really motivated by the
need to rescue Spanish banks: "Spain is doing everything it can
to avoid having to take a bailout from the ESM (European
Stability Mechanism) itself."
In June euro zone leaders agreed that the ESM, the euro
zone's permanent bailout fund, will be able to directly
recapitalise banks once the ECB takes on the role of a euro
zone-wide bank supervisor.
Germany's Cooperative Bank Association signalled it does not
want the ECB to oversee banks that operate only on a national
level, even if it delegates supervision to national authorities.