UNCLASSIFIED
OFFICIAL TEXT NOT YET RECEIVED
EXPLANATORY MEMORANDUM ON AN EU DOCUMENT
INTERINSTITUTIONAL AGREEMENT (IIA) BETWEEN THE EUROPEAN PARLIAMENT AND THE EUROPEAN CENTRAL BANK ON THE PRACTICAL MODALITIES OF THE EXERCISE OF DEMOCRATIC ACCOUNTABILITY AND OVERSIGHT OVER THE EXERCISE OF THE TASKS CONFERRED ON THE ECB WITHIN THE FRAMEWORK OF THE SINGLE SUPERVISORY MECHANISM
October 2013
Submitted by HM Treasury
SUBJECT MATTER
1. On 9 October 2013, the European Parliament approved in its plenary session an Inter-Institutional Agreement with the European Central Bank on arrangements for holding the ECB to account for its supervisory functions under the Single Supervision Mechanism (the “SSM”)[1].
2. The agreement is required as a result of two provisions in the Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (the “SSM” Regulation):
· Article 20(8) provides for an agreement to be concluded on the detailed arrangements for organising confidential oral discussions behind closed doors between the Chair of the ECB Supervisory Board and Chair and Vice-Chair of the competent committee of the European Parliament. This agreement should comply with confidentiality requirements in Union law.
· Article 20(9) requires the ECB and European Parliament to conclude appropriate arrangements on the exercise of democratic accountability and oversight over the ECB’s supervisory tasks. These should cover, inter alia, access to information, cooperation in investigations and information on the selection procedure of the Chair of the Supervisory Board.
3. The IIA covers the following areas:
· The ECB will submit to the European Parliament and publish on the SSM’s website an Annual Report on the execution of its supervisory tasks, and provide quarterly reports on the operational implementation of the SSM Regulation during the start-up phase.
· The Chair of the Supervisory Board will participate in ordinary public hearings on the execution of the ECB Supervisory Board’s tasks, as well ad-hoc exchanges of view on supervisory issues and confidential meetings.
· The ECB will reply in writing to written questions put to it by the European Parliament.
· The ECB will provide the European Parliament with a comprehensive record of the Supervisory Board’s proceedings, and publish on its website a guide to its supervisory practices.
· The European Parliament will implement safeguards to ensure that information provided by the ECB is treated with sensitivity.
· Procedures for the European Parliament to be involved in the selection process of the Chair of the Supervisory Board, including submitting questions to the ECB on the shortlist of candidates and the selection criteria.
· Arrangements for the ECB to assist in investigations led by the European Parliament and confidentiality requirements on information provided.
· The ECB will share its draft Code of Conduct for staff working on banking supervision with the European Parliament and inform the Parliament on its implementation.
· The ECB will inform the European Parliament on procedures for adopting ECB regulations, decisions, guidelines and recommendations, and the consultation process around the draft acts.
4. The IIA will be reviewed every three years.
Scrutiny History
5. Related EM 13682/12, 13683/12 and 13854/12 on:
· a Council Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions[2];
· a Regulation of the European Parliament and of the Council amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards its interaction with Council Regulation (EU) No…/… conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions[3]; and
· a Communication from the Commission to the European Parliament and the Council, A Road Map towards a Banking Union[4]
was submitted by HM Treasury on 2 October 2012. It was cleared by the House of Commons European Scrutiny Committee following a debate in the House of Commons on 6 November 2012. It was cleared by the House of Lords EU Select Committee upon the publication of their report European Banking Union: Key issues and challenges on 12 December 2012[5].
MINISTERIAL RESPONSIBILITY
6. The Chancellor of the Exchequer has responsibility for United Kingdom policy on European Union monetary and economic issues. The Foreign and Commonwealth Secretary is responsible for overall United Kingdom policy towards the European Union.
INTEREST OF DEVOLVED ADMINISTRATIONS
7. Financial services policy is a reserved matter under the UK's devolution settlements and no devolved administration interests arise. The devolved administrations have therefore not been consulted in the preparation of this EM.
LEGAL AND PROCEDURAL ISSUES
i. Legal basis
8. The agreement is being made in accordance with Article 20(8) and 20(9) of the SSM Regulation and the European Parliament’s Rules of Procedure, in particular Rule 127(1). The legal base for the SSM Regulation is Article 127(6) TFEU.
ii. Legislative procedure
9. The IIA was concluded between the ECB and European Parliament and formally adopted in the European Parliament’s plenary sitting.
iii. Voting procedure
10. Agreed by the European Parliament in plenary.
iv. Impact on United Kingdom Law
11. None. The IIA is not binding on the UK and concerns only relations between the ECB and the European Parliament.
v. Application to Gibraltar
12. Not relevant for the reason given above.
vi. Analysis of Fundamental Rights Compliance
13. Not relevant.
APPLICATION TO THE EUROPEAN ECONOMIC AREA
14. Not relevant for the reason given in paragraph 11,
SUBSIDIARITY
15. Not relevant for the reason given in paragraph 11.
POLICY IMPLICATIONS
16. The Government’s position is that the UK will not participate in any element of banking union, including the SSM. As the UK will not participate, the IIA will not impact directly on the UK.
17. The IIA was considered an essential component of the European Parliament’s agreement to the overall SSM legislative package. Although the Treaty base for the SSM Regulation (Article 127(6) TFEU) only requires the European Parliament to be consulted, an associated Regulation amending Regulation (EU) No 1093/2010 (the “EBA Amending Regulation”) has as its Treaty base Article 114 TFEU (co-decision) and the EP withheld their agreement to the SSM package as a whole until the draft IIA was concluded.
18. Now that that European Parliament has formally approved the draft IIA, the SSM Regulation and the EBA Amending Regulation will proceed to Council for formal agreement.
19. The IIA is consistent with the relevant Articles in the SSM Regulation and will not have an effect on the substance of the legislative package.
REGULATORY IMPACT ASSESSMENT
20. There is no direct regulatory impact from this IIA.
FINANCIAL IMPLICATIONS
21. There are no direct financial implications from this IIA.
CONSULTATION
22. The Government is engaging actively with other Member States throughout the negotiations on all aspects of banking union.
TIMETABLE
23. The European Parliament formally adopted the IIA at its plenary session of 9 October 2013. The SSM Regulation and the EBA Amending Regulation are expected to be formally agreed by the Council and thereby adopted in the coming days.
SAJID JAVID MP
FINANCIAL Secretary
HM Treasury
UNCLASSIFIED
[1] Official text not yet received. The European Parliament’s report, including the draft agreement, can be found at http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-2013-0302+0+DOC+PDF+V0//EN
[2] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0511:FIN:EN:PDF
[3] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0512:FIN:EN:PDF
[4] http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0510:FIN:EN:PDF
[5] http://www.publications.parliament.uk/pa/ld201213/ldselect/ldeucom/88/88.pdf