European Banking Union: Licensing and Supervision

Extract

[...] We find among credit institutions both branches and subsidiaries. For more information, these data are available on the websites of the BCE and of the Banque de France. ? The exercise of a dematerialized activity in other Member States The free provision of services of banks may be exercised through a an activity dematerialized in other Member States. In this case, it is defined as a cross-border service performed through offices or agencies who do not cannot be qualified as branches and who are implanted in another State. [...]

[...] The European Union system allows it to establish itself in other Member States of the European Union for its business. The Banking Union would not make sense if a German credit institution, wanting to carry out its business in France, found itself facing the French authority, which told it 'Hop, hop, hop Papiere bitte ' Do you have a license in France? ». If each bank that wants to establish itself in each Member State of the European Union had to formulate 27 requests to the 27 national authorities, it would be prejudiced to principles of freedom of establishment and freedom of movement, so highly praised by the Union and pushed into an even more extreme logic in banking and finance. [...]

[...] The European authorities had expressed their intention to duplicate this rule - which we know well in banking and financial matters - to the matter of service provision. Is it appropriate to refer to the Directive Bolkestein of 12 December 2006 and to the case of the Polish plumber. The idea is that a service provider established in a member state of the European Union sets up on the territory of another member state by exporting its national law. Thus, the Polish worker arrives in France being paid at the Polish rate, benefiting from Polish social protection, and so on in order to compete with local workers. [...]

[...] Attention Community freedoms are never exercised through filialization. If a bank constitutes a branch in another Member State, it cannot benefit from the passport. It will require an approval from the ECB and supervision, either from the ECB if the establishment is systemic and failing that, a supervision at the level of the host country and not from the country of origin. When a an establishment of credit having its head office in France wishes create a subsidiary in another Member State of the European Union, Germany, for example, the European Central Bank (ECB) will be always responsible for the issuance of the license for this new subsidiary. [...]

[...] This statement is less true on financial markets, which are interconnected. Most of the time, in terms of retail activities, it is therefore a matter of cross-border service provision. Although this is possible, it remains a residual activity for traditional banking operations. One can imagine a person living in Alsace and working in Germany. In this case, it is likely that they have an account with a German bank, and that bank offers its services beyond the borders, without having a branch in Strasbourg or Colmar. [...]