The ECB, which has grown in confidence through its handling of the financial crisis, has reached for new powers to go through banks’ books in the same way as the national watchdog. The move will alarm City executives and politicians from major parties, many of whom warn against the dangers of regulatory overlap.
A paper published yesterday outlined plans for a pan-European macro-economic risk monitoring body, the European Systemic Risk Board (ESRB), and three smaller agencies. The document argued the ESRB should have “access to supervisory information on financial institutions” as it “may be relevant to the conduct of macro-prudential monitoring, the oversight of payment, clearing and settlements systems and the safeguarding of financial stability in general”.
The news comes as banks brace themselves for proposals from the Basel committee which could see a steep rise in capital requirements for groups that bring in outside investors to fund subsidiaries. Analysts said banks with expanding operations in emerging markets, such as HSBC, BNP Paribas, Crédit Agricole and Natixis, would be particularly impacted by higher capital requirements.