Labour MEP for Munster, Phil Prendergast, has hailed the recent approval by the European Parliament of the toughest banking regulation package enacted at EU level since the onset of the financial and economic crisis in 2008.
The legislative package requires credit institutions to keep more capital reserves as a buffer to withstand crises, strengthens EU-level supervision and transparency, and includes a cap on bankers’ bonuses.
Speaking in Strasbourg, at Parliament’s plenary debate after the vote, Ms. Prendergast said: “The agreement between Member State governments and Parliament to limit bankers’ bonuses is a very welcome breakthrough, together with provisions on remuneration that aim to deter short-termism and risky behaviour.
“In terms of much needed reform on capital requirements, this house has faced the usual barrage of resistance and lobbying from the financial sector.
“Again, the deal reached between the Member States and Parliament represents a badly needed improvement to avert the disastrous outcomes of risky behaviour in the financial sector.
Ms. Prendergast also welcomed the provisions exempting smaller retail loans from increased capital requirements, a priority of Labour’s group in Parliament: “I wish to stress the importance of flexibility provisions for SMEs. These are a crucial means to facilitate financing for the real economy, preventing higher credit costs for those who need it most and invest in productive, growth-generating activities.”
Further to the positive vote on the compromise package, Ms. Prendergast added a note of caution: “We must remain alert to systemic risk and moral hazard in this sector, and I look forward to Commissioner Barnier’s proposals on shadow banking and further and robust financial sector reform.