Local view for "http://purl.org/linkedpolitics/eu/plenary/2003-09-01-Speech-1-090"
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"en.20030901.6.1-090"2
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".
Mr President, Mr Radwan referred to comitology; I should like to stress that one of the key comments which the Commission has received is that the new framework should be capable of being updated speedily. The Commission agrees that this is very important, and it is also recognised in the report that we are discussing here today. The Commission recognises Parliament's concerns about the use of comitology: it is an old subject that has often been discussed in this House. This concern is also reflected in the draft report presented by Mr Radwan.
In his introduction Mr Radwan raised an important point concerning soft law. I well understand the concerns of Parliament on this matter. Soft law means that Parliament may be circumvented. I accept the point of view of those who say that soft law must be kept within bounds so that the democratic contents of law cannot be adulterated. I accept that view but find it difficult to accept that the whole soft law concept would apply either to the accounting standards or to Basel II.
Mr Radwan also drew attention to accounting standards. Both areas – the accounting standards and Basel II – are hideously complicated. I think Mr Radwan would agree with that. Therefore it is reasonable that experts in those fields should be called upon to formulate rules, as is happening with the International Accounting Standards Board and the Basel II Committee on which the Commission is an observer.
When all that has been done, the results will be set out in the form of directives. There will be a directive on Basel II and on international accounting standards. Therefore, Parliament will be within its rights to make any complaint it wishes to and to raise issues. Once again, while accepting Mr Radwan's point of view on soft law in general, to apply it to Basel II or to the accounting standards is not the right thing to do.
All of the proposed provisions, both Articles and annexes, will be contained in the Commission's proposal and all will have to be agreed according to the codecision procedure. Therefore, Parliament will be fully within its rights in making all the comments it wishes to make. As I have said a number of times in this House, the Commission supports Parliament's desire to have Article 202 of the Treaty amended, as Mrs Randzio-Plath knows very well.
The second point I would like to raise is the matter of SMEs. It was mentioned by a number of Members – Mr Karas, Mr Markov, Mrs Villiers, Mr Ilgenfritz and others. I should like to point out that numerous improvements have been made in order to ensure fair and proportionate capital requirements for bank lending to SMEs. Examples of this are the lowering of the requirements for riskier borrowers; a discount of on average 10% for smaller borrowers and allowing SMEs to be included in the retail portfolio when the loan is for less than EUR 1 million. Mr Karas asked whether that could be indexed according to inflation. I would have absolutely no objection to that, but it is one of the issues that should be developed according to the comitology procedure.
Impact studies have been carried out and the results indicate that the new rules would result in fair and proportionate capital requirements for exposures for SMEs, so SMEs stand to benefit, and therefore I cannot agree with Mr Ilgenfritz. I would refer him to Mrs Villiers' very pertinent comments which directly opposed his views. I would suggest that these two Members of Parliament have a short debate on the matter, but certainly the Commission agrees with Mrs Villiers.
Then there is the matter of venture capital, which Mr Ettl in particular referred to. The Commission shares the view that venture capital and equity investments in start-up companies are important.
However, the purpose of prudential legislation, and that is what we are discussing, is to protect the financial system and the interests of depositors and savers. Indeed, Mr Ettl himself drew attention to the need for consumer protection. Therefore we must be sure that we do not treat riskier investments, for example in venture capital firms, on a basis which is too lax, therefore running the risk of damaging consumer protection. As I mentioned earlier, however, I am happy to clarify that the small firm discount – i.e. the reduction of up to 20% for lending to smaller firms – will also apply to equity exposures to venture capital firms.
A number of Members have asked for further studies. The Barcelona European Council asked for further studies to be made on the impact of Basel II on the European economy. In the light of this request, a study is being carried out by PricewaterhouseCoopers. The draft report is due at the end of this year, with the final report available at the end of March. Results of the study are due to be delivered to the Commission early in 2004. As I said earlier, we have now carried out impact studies and next year PricewaterhouseCoopers will carry out further studies as a result of demands placed upon the Commission by the Barcelona European Council.
Mrs Randzio-Plath drew attention to the fact that only a limited number of banks will have to comply with the Basel II rules in the United States. However, according to Roger Ferguson, the 'number two' at the Federal Reserve, the fact that Basel II will apply to the 'ten plus ten' American banks – the ten biggest and the ten next biggest – means that more than 99% of US foreign banking assets will be covered. Therefore, we can accept that there will be fair competition between European and American banks when they meet internationally.
Mrs Randzio-Plath and others mentioned the matter of procyclicality. As I said earlier in my introductory speech, increased risk-sensitivity is an important fact. It is my view – and I hope that of Parliament – that the report strikes the right balance in this regard. Modifications have been introduced to reduce the procyclic effects of the draft rules, which is a good thing. We also hope that better risk management as a result of the whole Basel II procedure will enable banks to be better prepared to deal with the effects of economic recessions."@en1
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