Meeting of Inter-Balkan Forum of Banking Associations Athens - 4 June 2010 Current Activities of the EBF Viktorija Proskurovska, Adviser, Economic and Monetary Affairs – Associates, European Banking Federaration

WHAT WE STAND FOR of sound banking representation We aim to achieve an integrated European financial services market 50 years of sound banking representation We aim to achieve an integrated European financial services market

EBF MEMBERS 31 national member associations: 27 EU Member States 4 EFTA countries 13 Associates

List of dossiers followed by the EBF

Current EBF Priorities Supervisory Package Supervisory Package Capital Requirements Directive (CRD3) Capital Requirements Directive (CRD3) Remuneration and Corporate Governance Remuneration and Corporate Governance Provisioning to Counter Pro-cyclicality Provisioning to Counter Pro-cyclicality Alternative Investment Fund Managers Directive Alternative Investment Fund Managers Directive Prospectus Directive Prospectus Directive Responsible Lending and Borrowing Responsible Lending and Borrowing Product Tying Product Tying Bank-Account Switching Bank-Account Switching SEPA End-Date SEPA End-Date

Supervisory Package The EBF strongly supports the establishment of the ESAs and ESRB and the creation of a single rulebook; At this stage, ESMA should have exclusive supervisory powers only on credit rating agencies; The EBF supports the proposed mechanism to settle disagreement between supervisors; The EBF calls for a clear definition of fiscal responsibilities and how the safeguard clause could be invoked, to avoid that this clause be abused; In emergency situations, the ESAs should be responsible for facilitating and fostering efficient cooperation and coordination of national actions. The ESAs should not impose decisions directly on financial institutions; The EBF supports that the ESA can ultimately issue a decision directly applicable to a financial institution to ensure a coherent interpretation and application of EU rules.

Capital Requirements Directive (CRD3) The EBF welcomes the initiative taken by the Councils Presidency to bring the proposal completely in line with decisions taken by the Basel Committee. The EBF highlights the need for undertaking an overall assessment of the cumulative impact of proposals that will reshape the regulatory landscape, including: the capacity of banks to lend to the economy, the availability of other financial resources to the wider economy and, ultimately the economic growth. The EBF supports the proposals on Remuneration Policies and Practices, in line with the G20. The EBF calls for the implementation date for new capital requirements to be aligned to that of the corresponding Basel Committees rules in non-EU countries.

Remuneration and Corporate Governance EBF position on CEBS consultation: short-term focused remuneration strategies may bring negative effects if they are not adequately balanced with a forward-looking approach; Therefore, remuneration policies must be brought within the scope of the supervisory review. The remuneration guidelines and legislation have to remain principle- based (one size fits all is an inappropriate principle, so general cap on remuneration is not desirable). There needs to be more clarity around the categories of staff that will be subject to the remuneration-related measures, and a definition of risk-takers should be established. There needs to be greater transparency concerning remuneration processes, however, confidential information should be protected.

Provisioning to Counter Pro-Cyclicality Part of the EBF response to the EC consultation on CRD IV addressed pro-cyclicality. The proposal for a provisioning model was based on the Expected Loss concept (an alternative to the IASB Expected Cash Flow model). The forward-looking element of the provisioning system will contribute to mitigating pro-cyclicality. The EBF model follows the business model of an entity. Changes in expectations are spread over the life of the portfolio. The EBF model is easier for users to understand and for preparers to implement at a reasonable cost.

Alternative Investment Fund Managers Directive The EBF supports the Commissions objectives of enhancing financial stability and investor protection addressed by the Directive. However, the EBF has some specific concerns, including: lack of international consistency; limitations for EU investors to invest in funds managed by non-EU based managers; restrictive delegation arrangements; and most importantly, the proposed depositary rules. They combine continued uncertainty around the specific obligation of depositaries with a reversed burden of proof and far-going liability for the assets under the management of the fund.

Prospectus Directive The EBF supports most of the Commissions proposals, intended to make the Prospectus Directive function more smoothly and to alleviate the admin. burden on issuers: the deletion of the denomination threshold for the choice of the home country in the case of non-equity securities; the extension of the validity period for the prospectus, base prospectus and registration document; and the alignment of the definition of qualified investors with MiFID. However, the EBF considers proposals to introduce the concept of Key Investor Information to be premature.

Responsible Lending and Borrowing EBF believes that great care should be taken not to attempt to introduce an EU solution to a US problem. Some cases of irresponsible behaviour have occurred in a limited number of EU Member States, but most gaps were filled in their respective legislations and practices. Regulating without having proven the bad practice is against EU Better Regulation principles. EBF supports the Commission in placing the policy focus on supervision issues, rather than on retail policy. The Commission should refrain from being prescriptive.

Product Tying The EBF believes that practices under scrutiny, with the exception of aggressive commercial strategies, are not per se detrimental to consumers and/or competitors in the retail financial services market. The EBF challenges the methodology, assumptions and empirical basis of the Commissions study, as they do not allow to deliver a comprehensive and correct picture of the market. Switching should not be taken (in isolation) as a mere parameter of lack of consumer choice, rather it is mainly an indicator of customer satisfaction. Consumers in the Single Market should have access to comparable, understandable and complete – but not overwhelming - information. The EBF believes that product tying and bundling does not affect a level playing field in retail financial services market.

Bank-Account Switching The EBF (as part of EBIC) proposed an initiative for self-regulation on bank account switching. Common Principles on Bank Account Switching (in force since Nov-09): Banks will provide consumers who want to switch current account with clear and complete information. New and former banks commit to facilitating smooth and timely switching, committing to completing their assigned tasks within 7 working days each. The new bank is the Primary Contact Point during the switching and in order to arrange the transfer of relevant information from the former bank. The new bank offers to inform creditors on behalf of the consumer on the changed account details. Consumers will have free-of-charge access to relevant general and personal information readily available at banks. Fees linked to other switching-related services (if any) will be transparent and in line with costs. The industry is monitoring the implementation of Common Principles.

SEPA End-Date EBF believes that whilst much progress has been achieved in SEPA implementation, the migration to SEPA is still an ongoing process. To complete the process, most effective means to further the migration to SEPA instruments would be the setting of an end date, both for SEPA Credit Transfer and SEPA Direct Debit. Losing momentum would result in a great loss for financial institutions. Trialogue on setting an end-date are ongoing.

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