Activities of Syed KAMALL related to 2013/2021(INI)
Plenary speeches (1)
Laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (debate)
Shadow reports (1)
REPORT on reforming the structure of the EU banking sector PDF (197 KB) DOC (112 KB)
Amendments (27)
Amendment 11 #
Motion for a resolution
Recital B
Recital B
B. whereas in the five years since the 2008 global economic and financial crisis, the EU economy has remained in a state of recession, with Member States providing subsidies and implicit guarantees to banks through such schemes as the deposit guarantee scheme as well as liquidity provision from central banks and outright nationalisation of banks which are at risk of insolvency;
Amendment 22 #
Motion for a resolution
Recital C
Recital C
C. whereas excessive risk-taking, excessive leverage, inadequate capital and liquidity requirements and, the excessive complexity and consequent opacity of the overall banking system were at the rootcauses of the financial crisis, resulting in markets not functioning properly;
Amendment 27 #
Motion for a resolution
Recital C a (new)
Recital C a (new)
Ca. whereas the loss of prudence in accounting standards as a consequence of the adoption of international financial reporting standards played and continues to play a central role in allowing banks to give a view of their accounts that was and is not always true and fair with particular reference to IAS 39 on loan loss provisioning;
Amendment 36 #
Motion for a resolution
Recital D
Recital D
D. whereas the current post-crisis weakness in the structurstate of European markets, in particular the weak financial state of EUmany banks, demonstrates the need for further reform in order to serveensure that the banks do not benefit from being 'too big to fail', ensuring that the markets once again can begin serving the wider needs of the economy;
Amendment 47 #
Motion for a resolution
Recital E a (new)
Recital E a (new)
Ea. whereas the recent bailout package in Cyprus originally included a tax on all bank deposits, thereby undermining confidence in the deposit guarantee scheme of that country;
Amendment 51 #
Motion for a resolution
Recital F
Recital F
F. whereas research by the Bank of International Settlements (BIS) suggests that once bank assets exceed a country's GDP, its financial sector has a negative impact on economic growth, as human and financial resources are drained from other areas of economic activity6 ; also notes that the ability for any country to withstand the fallout from a collapse of such a systemically relevant bank will be called into question and that the fiscal health of the country in question will be severely undermined;
Amendment 66 #
Motion for a resolution
Recital G
Recital G
G. whereas the financial crisis demonstrated the problem of cross- contamination between banks' retail and investment activities, whilst also noting that 'risky' activities took place in both retail and investment arms of banks;
Amendment 85 #
Motion for a resolution
Recital I
Recital I
I. whereas, since it is neither feasible nor desirable to effect a bank separation post- failure, an effective recovery and resolution regime is needed in order to provide authorities with a credible set of tools, including a bridge bank, so that they can intervene sufficiently early and quickly in an unsound or failing bank to enable its essential financial and economic functions to continue, while minimising the impact on financial stability and ensuring that appropriate losses are imposed on the shareholders and creditors who bore the risk of investing in the institution in question, and not by taxpayers or depositors; whereas such recovery and resolution plans are not necessary for other types of private company, suggesting that there is a specific problem with the market in financial services; whereas if the market were functioning properly, financial institutions would be able to fail without any need for a recovery and resolution plan; whereas therefore the problem lies within the structures and interconnections between financial institutions;
Amendment 98 #
Motion for a resolution
Recital J
Recital J
J. whereas the EU banking sector remains highly concentrated: 14 European banking groups are global systemically important financial institutions (SIFIs), and 15 European banks own 43 % of the market (in terms of asset size) and represent 150 % of EU-27 GDP, with individual Member States citing even higher ratios; whereas the ratio of bank size to GDP has tripled since 2000; whereas there is a huge degree of diversity in the European banking sector both in terms of size and business model;
Amendment 99 #
Motion for a resolution
Recital J a (new)
Recital J a (new)
Ja. whereas currently the state guarantees and implicitly subsidises the whole financial system via liquidity support, deposit guarantee schemes and nationalisation programmes; whereas it is only appropriate for the state to guarantee essential services that ensure the smooth running of the real economy, such as payment systems and overdraft facilities; whereas structural reform is simply about ensuring the state only guarantees essential services and that non essential services are priced by the market;
Amendment 121 #
Motion for a resolution
Paragraph 2
Paragraph 2
2. Takes the view that while current proposals for reforms of EU banking sector rules (including the Capital Requirements Directive and Regulation, the Recovery and Resolution Directive, the Single Supervisory Mechanism, the Deposit Guarantee Schemes Directive and shadow banking initiatives) are vital, a more fundamental reform of the banking structure is essential, and complementary to the other proposals; notes that the above initiatives do not tackle the issue of 'too big to fail' but are primarily about strengthening existing structures; suggests that further reform is required in order to allow markets to function, which would in turn allow banks to be resolved without state intervention.
Amendment 133 #
Motion for a resolution
Paragraph 2 a (new)
Paragraph 2 a (new)
2a. notes that consumer confidence in the financial services sector can only be restored if banks act in the interests of their customers, and not solely in the interests of their shareholders and employees; emphasises the need for customers to be alerted to the fact that their money is not kept in the bank itself but lent out to other enterprises, companies and governments; notes that on this basis, deposits are in fact investments in the bank and that retail investors must have this made clear to them when opening deposit accounts;
Amendment 159 #
Motion for a resolution
Paragraph 4
Paragraph 4
4. Reminds the Commission of the warning issued by the European Banking Authority and the European Central Bank (ECB) that financial innovation can undermine the objectives of structural reforms, and insists that structural reforms be subject to periodic review7 to ensure that financial institutions are not benefiting from regulatory arbitrage;
Amendment 167 #
Motion for a resolution
Paragraph 5 a (new)
Paragraph 5 a (new)
5a. Notes that the HLEG did not look at the issue of accounting standards and their role in financial crisis in sufficient depth; notes that European company law requires that accounts must be true and fair in order for directors of a company to discharge their liabilities to creditors and shareholders of companies; suggests that as a consequence of international financial reporting standards being overly complex and being principally about providing information to the share trading part of capital markets, these standards did and do not give a true and fair view of banks' accounts; notes that despite commitments from the IASB to update IAS 39 on loan loss provisioning from an incurred to expected loss model, its adoption has been delayed due to concerns expressed by FASB that the revised IASB model is still not a lifetime expected loss model; notes that although moving to an expected loss model recognises the problems caused by IAS 39 during the crisis, the added complexity may well create problems of their own; argues that, therefore, structural reform must include a thorough assessment of what role accounts should play in driving better governance of banks;
Amendment 180 #
Motion for a resolution
Paragraph 6 a (new)
Paragraph 6 a (new)
6a. notes that existing proposals, although welcome, seek to tackle specific activities, relationships and products that are perceived to be problematic; argues that the ongoing crisis is in part due to the fact that banks and sovereigns are inappropriately connected via implicit and explicit state guarantees as a consequence of certain banks being too big to fail; suggests that further reform is required in order to ensure that banks do not benefit from implicit or explicit state guarantees and they are subject to market forces as other private companies are;
Amendment 186 #
Motion for a resolution
Paragraph 6 b (new)
Paragraph 6 b (new)
6b. Suggests that banking reform must identify which financial systems, services and processes must be protected in the event of a crisis to ensure civil order is maintained; argues that it is only appropriate for the state to guarantee these essential systems, services and processes; points out that non essential services should be priced at the market rate;
Amendment 190 #
Motion for a resolution
Paragraph 7
Paragraph 7
7. Considers that an effective banking system must deliver a change in banking culture in order to reduce complexity, enhance competition, limit interconnectedness between risky and commercial activities, improve corporate governance, create a responsible remuneration system, allow effective bank resolution and recovery, reinforce bank capital and deliver credit to the real economy; suggests that this will be achieved by introducing a greater degree of personal liability to ensure the managers of companies take responsibility for the actions and decisions of their employees;
Amendment 228 #
Motion for a resolution
Paragraph 8
Paragraph 8
8. Urges the Commission to come forward with a proposal for mandatory separation of banks' retail and investment activities in order to ensure that the state only guarantees essential banking services;
Amendment 248 #
Motion for a resolution
Paragraph 9
Paragraph 9
9. Urges the Commission to come forward with a proposal for such mandatory separation through the establishment of a thorough, transparent and credible ‘ring fence’ around bank activities that are vital for the real economy, such as those relating to credit functions, payment systems and deposits; takes the view that in the event of a bank failure, the ring fence must ensure that the retail entity continues business unaffected by operational problems, financial losses, funding shortages or reputational damage resulting from the resolution or insolvency of the investment entity; notes that simply banning certain activities does not tackle the problem of the state guarantees and subsidies being used by the arms of the bank involved in non essential banking services;
Amendment 260 #
Motion for a resolution
Paragraph 9
Paragraph 9
9. Urges the Commission to come forward with a proposal for such mandatory separation through the establishment of a thorough, transparent and credible ‘ring fence’ around bank activities that are vital foressential for the functioning of the real economy, such as those relating to credit functions, payment systems and deposits; takes the view that in the event of a bank failure, the ring fence must ensure that the retail entity continues business unaffected by operational problems, financial losses, funding shortages or reputational damage resulting from the resolution or insolvency of the investment entity;
Amendment 275 #
Motion for a resolution
Paragraph 10
Paragraph 10
10. Urges the Commission to ensure that trading activities are priced by the market and do not benefit from implicit guarantees, the use of insured deposits or taxpayer bailouts and that these activities do not pose a risk to the delivery of ring- fenced retail services;,
Amendment 305 #
Motion for a resolution
Paragraph 12 – point a
Paragraph 12 – point a
(a) separate legal entities, with separate sources of funding for the bank's retail and investment entities, in order to ensure that the state guarantee and subsidy for the retail arm does not cross subsidise the investment entity;
Amendment 341 #
Motion for a resolution
Paragraph 13
Paragraph 13
13. Urges the Commission to take into account the ECB's proposal to establish clear and enforceable criteria for separation8 ; urges the Commission to identify services essential to the functioning of the real economy; argues that such services should be within the ringfence and that all other non essential services should be outside the ringfence to ensure they are priced by the market free from distortion by state guarantees and subsidies;
Amendment 415 #
Motion for a resolution
Paragraph 21
Paragraph 21
21. Urges the Commission to include provisions introducing personal accountability and liability for board members on both sides of the ring fence and at group level; suggests that in this context the Commission should explore how to encourage a return to the partnership model of company management;
Amendment 449 #
Motion for a resolution
Paragraph 27 a (new)
Paragraph 27 a (new)
27a. Urges the Commission to conduct a study to ensure that accounting standards used by financial institutions give a genuinely true and fair view of banks' financial health; points out that accounts are the main source of information for an investor to understand whether or not a company is a going concern or not; notes that auditors can only sign off accounts if they are true and fair, independent of the financial standards used by preparers of financial statements; believes that if auditors are unsure that a company is a going concern they should not sign off the company's accounts, even if they have been drawn up in line with accounting standards; this should however be a driver of better management of the company in question; suggests that international financial reporting standards do not necessarily give a true and fair view of accounts, as shown by numerous examples of banks collapsing despite their accounts having been signed off by auditors;
Amendment 459 #
Motion for a resolution
Paragraph 28 a (new)
Paragraph 28 a (new)
28a. Urges the Commission to require banks to explain to their customers when opening deposit accounts that their money is in fact loaned to the bank and is not necessarily on deposit; emphasises that customers be made fully aware of what their deposits are being spent on; suggests that such information should be given to the customer before the account is opened; argues that this will incentivise individuals to learn more about how risky a bank's business model is and will ensure consumers are fully aware of the risks of their money being left with the bank in question; notes that deposit guarantee schemes protect up to €100,000 but also notes that deposit guarantee schemes can be bypassed, that they are only as resilient as the state that stands behind them and that they encourage moral hazard;
Amendment 478 #
Motion for a resolution
Paragraph 31
Paragraph 31
31. Asks the Commission to bring forward measures to facilitate consumer switching between banks including the idea of bank account number portability and assist in improving consumer choice in the banking sector by reducing the barriers to entry and exit and applying proportionate rules to new entrants to the market;