Abstract
This chapter gives an introduction of the banking regulatory framework in Europe with respect to cooperative banks. To this extent, it first discusses the concept of proportionality and the main adaptations needed to the relevant regulation in order to take into account the cooperative banking singularities. Second, it gives a general overview on the main impacts of regulation on the cooperative banking business model, in particular as concerns capital requirements, governance requirements and the recent evolution in the payment services directives.
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Notes
- 1.
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.
- 2.
Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012.
- 3.
Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council.
- 4.
Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes.
- 5.
Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC and Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU.
- 6.
Regulation No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012.
- 7.
Directive 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC.
- 8.
Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE).
- 9.
Recital (7).
- 10.
Recital (8).
- 11.
Recital (128).
- 12.
Basel III provisions only state that implementing regulation should require that capital instruments of non-joint-stock companies are fully equivalent to common shares in terms of their capital quality as regards loss absorption and do not possess features which could cause the condition of the bank to be weakened as a going concern during periods of market stress (BCBS 2011).
- 13.
Commission Delegated Regulation (EU) 2015/61 of 10 October 2014 to supplement Regulation (EU) No 575/2013 of the European Parliament and the Council with regard to liquidity coverage requirement for Credit Institutions.
- 14.
A detailed categorisation of the different categories of capital is included in the CRR.
- 15.
The relevance of such a phenomenon is even higher considering that cooperative banks use less than commercial banks the Internal ratings-based (IRB) approach previewed in the CRD IV-CRR and that usually allows, with respect to the standardised approach and for the same portfolio of assets, a non-negligible reduction in the capital requirements.
- 16.
The reform of the Banche di Credito Cooperativo in Italy previews, inter alia, the possibility for cooperative banks to combine into a single structure with a head holding company, controlled by the banks and tasked with intervening in the event that a governance failure takes place or a bank of the network experiences difficulties. To a large extent, the new structure can be seen as a “reinforced IPS”.
- 17.
Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC.
- 18.
The deadline for the transposition of the Directive in the EU Member States was set to 13 January 2018.
- 19.
The adoption by the Council and the European Parliament of the regulatory technical standards (RTS) developed by the European Banking Authority and validated by the European Commission is expected by September 2019. From that date of the adoption, banks will have 18 months to implement the required changes. These include in particular the so-called Strong Customer Authentication (SCA), which in practice will allow third parties to access the customer’s payment accounts information.
- 20.
Examples of these providers are Sofort, Ideal and Trustly.
- 21.
Note here the cases of Airbnb (leader in the short-term real estate renting sector without owning any real estate), Netflix (leader in the home entertainment sector producing only a small share of the contents proposed to its clients) or Uber (leader in the urban transportation sector without owning any car).
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Migliorelli, M. (2018). Cooperative Banks and Banking Regulation in the EU: Key Elements. In: Migliorelli, M. (eds) New Cooperative Banking in Europe. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-93578-2_4
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DOI: https://doi.org/10.1007/978-3-319-93578-2_4
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