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EC: No corp gov powers for ESAs

Monday 30 January 2012 – by Karina Whalley

The European Commission says it has no intention of giving the European Banking Authority or the European Insurance and Occupational Pensions Authority detailed powers to regulate corporate governance.

Speaking at a conference on EU regulation and supervision in Helsinki on Friday, head of the EC’s banking and financial conglomerates unit Mario Nava, said if corporate governance is limited to companies regulating themselves, it will be difficult to implement and risks being less effective.

But Nava said the commission will not at this stage invest the EBA or Eiopa with detailed powers to regulate corporate governance.

He stressed that European legislation on insurance regulation, Solvency II is principles-based and the onus is on the firm to demonstrate its governance, including corporate governance, and risk management are sound and appropriate to its risk profile.

Nava also said the European Commission’s proposed fourth revision of the capital requirements directive introduces principles and some rules on corporate governance for banks but he said this is up for further discussion by the European Council.

The Italian commissioner also called for more coordination on sanctioning powers to respond adequately to violations on a level playing field.

He commended Solvency II for its uniform toolkit for supervisors but said it does not yet contain harmonised sanctions. CRD IV ventures into the area but proposes only minimally harmonised sanctions, he said.

Also speaking at the Finnish Financial Supervisory Authority conference was Steven Maijoor, head of the European Securities and Markets Authority who said the main objectives for the body over the next two years includes the supervision of credit rating agencies and trade repositories.

He said: “Expect intense activity towards the single rulebook.”

Other speakers at the seminar included Andrea Enria, chair of the EBA and Gabriel Bernardino chair of Eiopa. While most discussion centred around greater cooperation between regulatory bodies, a member of the private sector highlighted the issue of blame.

“The division of responsibility between regulators and taxpayers, on one side, and the financial industry on the other, has to be redesigned,” Johnny Akerholm, head of the Nordic Investment Bank said.

“Regulators and taxpayers have taken over too much responsibility”.

He recommended that regulatory authorities should be able to take over and install new management in struggling banks, wind down and dissolve banks and enforce full transparency of the compensation system.

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