Local view for "http://purl.org/linkedpolitics/eu/plenary/2010-07-06-Speech-2-455"
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"en.20100706.30.2-455"2
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"Madam President, ladies and gentlemen, we are now debating another aspect of the response to the economic crisis, namely the lessons that can be learnt from it. After supervision has been dealt with, the next issue is how best to reform those remuneration practices which encouraged reckless risk taking, how best to reform capital requirements.
Ladies and gentlemen, some of you are undoubtedly concerned that these crucial reforms will not come into effect by the end of 2011. I am very aware of this risk. Nevertheless, when it became clear that the United States would not be in a position to implement the Basel Committee’s new rules on the trading book by the end of 2010, during my recent visit to the United States, I reviewed this matter with the US Treasury Secretary, Tim Geithner, and we reached an agreement, at international level, on a date for the application of the new rules. This international agreement was reached in May, when the Basel Committee agreed that the member countries would apply the new rules by the end of 2011.
With very flexible and internationalised markets, I think that it is extremely important to have global convergence, particularly between the Americans and the Europeans. I believe that by negotiating this deadline, we have ensured that all our international partners, chiefly the United States, will implement the rules in accordance with the amended timetable.
I am aware that these negotiations on CRD 3 have sometimes been very difficult. I should like, Madam President, to thank Mrs McCarthy and the shadow rapporteurs once again for the perseverance, creativity and receptiveness they have shown. I am delighted that I, my staff and my colleagues within the Directorate-General are able to work with you with such understanding.
Regarding these two points, I should like to thank and congratulate your two colleagues, Mrs McCarthy and Mr El Khadraoui, the shadow rapporteurs who have worked with you, and who have demonstrated the commitment of your Parliament to a more responsible, more sound, more stable economy, to markets that should be placed once more – I repeat – at the service of the real economy, at the service of the citizens, rather than the reverse. This is an objective on which the Commission, in general, and I myself, in particular, are in full agreement.
Since my hearing, I have supported responsible European businesses, focused on the citizens, in order to improve the governance of financial institutions. I would like to thank Parliament for its support on these issues, on these tasks. I agree with your observation, Mr El Khadraoui. There must be binding measures on the remuneration policies of financial institutions. I am therefore delighted with the compromise reached by the three institutions on the revision of the directive on capital requirements, known as CRD 3. It is a balanced, well-conceived compromise which sends a strong political message to the banks and to the public.
This revised directive will strengthen the regulation system and increase the requirements for capital in areas where risks are under-capitalised. It will limit those remuneration practices which, I repeat, encouraged excessive risk taking, which have, rightly, been condemned by European citizens. It is a very important reform which tackles aspects which made a very significant contribution to the causes of the recent crisis: the trading book, complex securitisations, and remuneration practices. It is a text which not only transposes at European level the principles of the Financial Stability Board, which we agreed at the G20 in Pittsburgh, in September 2009, but which also goes beyond this by setting clear and stringent limits on variable remuneration, while allowing credit establishments and investment companies a margin of flexibility.
The payment of bonuses to directors of banks receiving State aid is greatly restricted. I think that that is fair. The clawback mechanism will also allow for a portion of the bonuses to be reimbursed in the event of under-performance. I also welcome the fact that these measures must be implemented by the Member States from 1 January 2011. I think that it is very important for the bonuses awarded in 2010, but not yet paid by 1 January 2011, to be fully covered by these new rules.
Finally, ladies and gentlemen, rapporteurs, we shall propose corresponding rules for the other financial sectors, such as the insurance sector or investment fund sector, while showing respect for, and taking full account of, the particular features of each of these sectors.
A few words about corporate governance in general, because beyond these aspects, Mr El Khadraoui’s report clearly illustrates how necessary it is to improve the governance of all businesses. This is one of the key elements of a more robust and more stable regulatory framework. I have begun this task. I recently put forward an international agenda for a financial regulation for growth. The Green Paper of 2 June 2010 on corporate governance in financial institutions is a first step in this direction. We are examining the role of auditors, of members of management boards, in order to check that everyone with a responsibility is fully competent to fulfil it. This is one of the requests made in your report, Mr El Khadraoui. Your report also deals with conflicts of interests, the role and function of boards of directors, risk management, the roles of shareholders, supervisory authorities and auditors in financial institutions. We shall open a two-month period of genuine consultation on all these issues.
I also intend to undertake a study next year on corporate governance beyond the financial sector, in particular, concerning the role of shareholders, diversity, and the role of women, for example, in the composition of corporate boards of directors.
Thirdly, there is the matter of the modernisation of capital treatment. I have just referred to CRD 3 and the issue of remuneration. This is a different issue to those of the capital requirement for high-risk activities and the bank trading book, which are both at the root of the crisis. We now know that the current levels of capital held against these assets were totally insufficient in the face of the financial crisis. CRD 3 strengthens regulation in this area, remedies deficiencies in the ways in which capital in relation to the trading book has been calculated and considerably increases the levels of capital held against its assets."@en1
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