Photo: Flickr user MPD01605/Creative Commons (2008)
Finance: The European Central Bank will take over direct supervision of several “significant” Luxembourg banking groups.
Five Luxembourg financial firms will have to answer to Frankfurt in two months time. After a nearly year-long review, the institutions were named to the European Central Bank’s “final list of significant credit institutions” on Thursday.
The list included a total of 120 European banks “whose direct supervision [the ECB] will assume on 4 November”, the central bank said in a press release. Collectively the 120 financial firms “account for almost 85 per cent of total banking assets in the euro area”.
Europe’s central bank said it selected institutions based on “the total value of their assets, the importance for the economy of the country in which they are located or the EU as a whole, the scale of their cross-border activities and whether they have requested or received public financial assistance from” Europe’s bailout agencies.
Luxembourg’s significant banks
The ECB named Luxembourg banks BCEE, Precision Capital--which owns BIL and KBL--and State Street to the list because each institution’s total assets were between €30bn and €50bn at the end of 2013.
RBC Investor Services and the Luxembourg business of Swiss bank UBS were added because each bank’s total assets represented more than 20% of the Grand Duchy’s GDP.
On Friday, a spokeswoman for UBS in Luxembourg confirmed its inclusion on the list, but said the bank had no comment at this time. A representative of RBC said it would have no comment.
As of this writing, representatives of Precision Capital and State Street had not yet provided comment to Delano. BCEE had not returned Delano’s message seeking comment.
“Less significant” banks
Clearstream, which had been named to the ECB’s preliminary list of 130 large banks last year, joined dozens of the Grand Duchy’s other banks on the “less significant institutions” list.
These banks will continue to be regulated directly by the CSSF, Luxembourg’s national financial regulator. “However, the ECB can decide at any time to exercise direct supervision in order to ensure consistent application of high supervisory standards,” according to the central bank.
Brussels added responsibility for identifying and regulating systematically important banks to the ECB in the wake of the financial crisis.
The ECB said both lists will be updated “regularly”.