 First of all, thanks for this warm welcome, which reminds me of all my past sins, but I think probably most people would say my basic, my business background to a large extent is in re-insurance, but again, that's part of the financial industry too. You danced the role of national supervisory authorities in banking union, and when I'm looking at Cyril, I'm asking myself why I had to come over from Germany to talk about that, because Cyril is always sitting a bit across the table from me when we are working on that. Well, what role do national supervisory authorities play in banking union those days? Are we an extra? Probably not. The role of a side kick perhaps? I think in films, unfortunately, side kicks often have a comic part or do have a sad end. I do hope that none of this is what we will see for the national supervisory authorities in the banking union, and I'm definitely sure that the director in Brussels hasn't planned it that way either. Anyone who reads the papers these days could form the impression that the European Central Bank will soon be supervising all of the roughly 120 or so significant banking groups in the eurozone directly and leaving no room for the national supervisory authority except for looking at what is kind of a consolation prize, the less significant smaller banks. It's called less significant institutions, which some of them take as a mere offence, but it's definitely not that simple. When the single supervisory mechanism comes into operation on November 4th, and I'm always getting a bit afraid and frightened when I'm realizing that's only six months to go, not all of the responsibilities for supervision will pass from the national to the European level, not even for the significant banking groups or institutions either. What is being created is an integrated supervisory structure in which the ECB and what are referred as the national competent authorities or NCA's conduct banking supervision together. All eurozone banks will be supervised in this new supervisory system in accordance with common standards. What role the ECB plays in this and what role is allocated to the national authorities depends on what supervisory powers are involved and how significant, how large the institution is. In future the ECB is expected to directly supervise around 120 significant banking groups when you have in mind the 128 we are looking at within the comprehensive assessment. My team has made a bit of guess that one or the other might actually not make it into the role of a significant institution, so that's why we are always considering it could be around about 120. The individual institutions that make up these 120 banking groups are totaling just under 1,200, which gives you a feel of complexity. Those are the institutions that belong to these groups, but this competence extends only to banking supervision. Powers devolving from the relevant European legislation, in particular CRR and CRD4, those are the main focus of the ECB and the single supervisory mechanism. Supervisory areas such as consumer protection, money laundering prevention, or other special laws, and now talking of my home country like fund brief legislation, or the rules around the building societies are not covered by the SSM. They remain therefore within the purview of national authorities. For the purpose of the SSM, an institution is significant. I'm sure you know all about that. If it's total assets at the highest level of consolidation, just another gimmick, is it accounting consolidation or supervisory or consolidation exceeds 30 billion euros or 20% of the home country's gross domestic product. In addition, I think the legislators were wise enough to look at cross-border activities, and in any case, so for all of us to have a bit of skin in the game, the three most significant institutions in each member state have to be under the ECB's helmet, which means that this is ranking from a Deutsche Bank to an institution, which if it had been located in Germany wouldn't have made it onto the list. Or I'm always making the joke that probably Deutsche has never ever looked that seriously at its Maltese subsidiary because unfortunately that Maltese subsidiary of Deutsche is one of the three largest banks in Malta, so makes it onto the list. For each significant group, the ECB is setting up a joint supervisory team, which is a word I think which you can't underestimate in its, well, importance. A member of the ECB staff will always head up any such team, so the ECB is clearly in the driving seat. Other members of staff of the ECB, so far not that many, and the national supervisory authorities are also represented on the joint supervisory team. To start with, I really have to stress, to start with, the only national supervisory authorities that will be represented are most likely those which have also been responsible for supervising the institution in question up to now. But express provision has been made for supervisors to also be appointed to the team from countries in which the banking question does not operate at all. And this, as you can imagine, is intended to strengthen the SSM or the joint supervisory team really as a single system. So to make sure that it's not just those that have always been involved being there, but I could, for example, foresee when we talked about that, we, I think, believe that we have a fairly powerful unit in checking internal models. And so what's wrong with someone from the French unit to work in Germany on one of the banks and someone from our unit to work in France? But I think not to cut it down, but also to be realistic at the starting point, it is for the start, the ECB heading this and the national supervisor that have so far been involved being part of the team so that you can at least hit the ground running. National supervisory authorities will therefore also in future play an active role in the supervision of significant institutions and not only as a stop-gap solution if it proves that the ECB can't manage to find sufficient staff in time. I can assure you I got the question on Thursday that the ECB had selected one of my staff for one of the ECB positions only to ask whether that person could start the job on the 15th of April, which getting that question on Thursday night gave me the feeling that leaves me with it's easy to count two working days for that person still being with us. So I said can we perhaps turn that around and ask them first how long will it take this lady to clean up her desk to make sure that the files at least come to something of an end and then to turn over and we graciously decided 15th of May could be a good option, which I thought I was very gracious and the ECB thought the same from there and so but again the SSM regulations stipulates that national supervisory authorities shall support the ECB in the supervision of significant institutions on a permanent basis and in practice implementation of this provision the supporting role will be performed as I said by the joint supervisory teams. The fact that national supervisory authorities will be involved in supervision of significant institution seems to appears a bit to feed this well-known prejudice that every country is said to protect its own national interest and see tries to see it as few powers as possible to the EU famous word which doesn't really translate into German except you make a long sentence is national buyers will stay. I think such a claim really fails to do justice to the construct of future European Banking Supervision. Practical considerations argue in favor of the structure that's now envisaged for now and I think over time needs to be a true European and I hope that Syrah is nodding and not shaking his head. In a single market and especially in a monetary union there are without doubt good reasons for centralizing certain supervisory powers. In banking supervision we are having to deal with a waste number of banks that conduct business on a cross-border basis which a national authority can't supervise effectively enough on its own even with the colleges having probably made a huge difference over time but it still remains we are somehow confined to our national borders. Although supervisory colleges in which supervisors can exchange information as I said cross-national borders have existed now for many years I think integrated supervision should hopefully be better able to foresee the overall situation and act accordingly without considering national interests first. It is also likely to be easier for integrated supervision to conduct peer review and make cross comparisons of institutions. Well that's one thing we all I think have envisaged whenever you look at something and you compare and then you get the argument but this is what you still have to keep in mind. So furthermore financial crisis of recent years has seriously harmed to be fair the reputation of banking supervision now my team was kind enough to say in some countries I think in more than just some. If the transition to a new age of supervision succeeds we would be we will hopefully be able to build up precious confidence again and contribute to the better functioning of the single market and monetary union and when I'm saying that I mean it two ways confidence between ourselves and confidence of the market I think both goes hand in hand. To cut a long story short I am really firmly convinced that integrated European banking supervision with genuine powers of intervention can bring us a great deal of stability and security and a greater deal than the sum of the national authorities. If it avoids itself of the comprehensive expertise of national supervisory authorities and not only in the initial phase where I'm saying so I think national supervisors though we have lost a bit of credibility in the past give the integrated supervision construct stability and the reason is obvious effective banking supervision requires that we know the undertaking that we know the legal economic framework in which they operate and keep in mind neither corporate law company law nor tax law and I could make that a longer list is harmonized in Europe so you need to know a lot about that to understand incentives that drive companies and more than anyone else it's the national supervisory authorities that really know hopefully what's going on in the country when you talk about bubble building up I think they have a high tower in Frankfurt but it might be a bit difficult to spot the last corner of Europe coming looking down from that tower and last but not least not an issue probably here for the for Ireland but a big topic in Germany for the time being the language barrier should not be underestimated either now the correct version is English will be the SSM's working language or de facto English will be the language of the ECB saying so I'm fully aware that there is a directive which is actually the first one ever which I didn't know so far is the directive one out of 58 which allow which sets out the language regime within the ECB it was in the EU sorry and now you could probably say that most people should in somehow be capable in direct communication between supervisor and bank to solve that unsurmountable problem between English and the local languages well you have already to be a bit fair that in a country with 80 million inhabitants and a bank that is not international they might be pretty stubborn and then you are up to an interpreter and the second but what is definitely when it becomes evident is when it comes to the valuation of assets when it comes to any kind of contracts the only bank in Germany that has got English as its working language is Deutsche most contracts even in Deutsche will be in German so therefore documents are written in the language of the country in question and can be assessed to that extent or only with adequate knowledge of that language now you might take a German to go to the Netherlands and he could at least guess what they are writing but if you were to take me to Greek I would be of no use help for anything this also I think argues in favor of a decentralized structure that involves national supervisory authorities in which overall responsibility rests with the center but which at the same time must allow sorrow examination of which duties are to be centralized and which should be remaining to some extent local also for efficiency sake and when I'm saying that I think I've made the point numerous times at the ECB we have to adhere to the language regime otherwise we put ourselves up at risk of being there's a litigation risk to that banks will do whatever it takes in sunshine times and the very thing time something goes totally wrong they would just say well unfortunately I never got that documentation in in my language and therefore I didn't know what I had to do so I think the ECB over time will unfortunately probably have to be Vap their translation capacity now turn it to the less significant institutions and I think there it would not bring much added value for a heavy involvement of heavy involvement of the ECB for that reason it I think it's perfectly reasonable for national supervisory authorities to main their existing it it to main remain their existing responsibility and power to look after these institutions in Germany we are talking about just under 1,700 banks of this kind it's except for one all of the savings banks and it's all of the mutual banks and it's a number of smaller private banks however the ECB will assume responsibility for ensuring that these less significant institutions are supervised in accordance with consistently high standards in all member states so that the ECB can fulfill this oversight rule we will have to report a lot to the ECB and in for particular supervisory measures it's planned for example for the dismissal of an executive director the ECB must be informed in advance so that it has an opportunity to assess the facts and the case itself and issue an opinion interesting perhaps to note this opinion for the less significant institutions is not binding on the national supervisory authority for the ECB has no authority to issue specific directions in this respect but the ECB if they don't agree might decide to take over direct supervision of that company I think rightly so the ECB will ensure will seek to ensure harmonization of supervisory practices over the long term with which in a single market is perfectly reasonable when I'm saying over the long term I am firmly believing this cannot be done in a great hurry there must be no harmonization for its own sake either after all there are once in a while good reasons for European legal acts containing national options and scope for different transposition in national law but it's also clear that where the directive provides for the supervisor for options for the supervisor up from November that supervisor for the eurozone will be the ECB or the single supervisory mechanism so over time we'll get by far larger harmonization there differences must simply not be smoothed over for regulatory purposes I think that's the one side national peculiarities that have developed over years must be taken into account and you can't reinvent the world within some months to go and they still have a right to exist if they have proven their worse or make perfect sense but it's up to the ECB over time to judge this Germany we are always very outspoken in saying we have a quite a peculiar banking system with three pillars savings banks mutual banks and private banks and I think it would be a mistake if you would just say now let's make sure it's all the same you have differences there which have proven to be also an add-on instability there has already been a lot of talk about the ECB's decision-making powers I should like to make a short discretion into who exactly takes decisions at the ECB well the ultimate decision-making is clear only the governing council can take any final decisions for in the name of the ECB however as regards future European banking supervision the governing council can act only on the basis of proposals from the new supervisory board in order to strengthen this supervisory board a non-objection procedure has been introduced so supervisory board proposals are deemed to have been accepted by the governing council if the governing council doesn't object within a period of ten working days or as the terms would put it 14 days which means two weeks the French would say it 15 days I've never got where you got this extra day from the there are only two possibilities for the governing council accept or reject this procedure is meant to keep supervision and monetary policy separate I think it's always been clear and it's always been our position I would have preferred a really clean separation but that would have only been possible if a system of supervision involving some institution outside the ECB had been created that would have acquired a man in the European treaties and that was not available at short notice as we all know but perhaps there's always hope so we can set that on the agenda for one of the next commissions to come or parliaments to come back to the supervisory board representatives of the national supervisory authorities play a crucial role here too for in addition to the chair of the board which is Daniel Nui the vice chair which is a ECB board member in this case it's Abinah Lautenschläger from Germany and for further representatives of the ECB of which three have by now nominated the one is Ignacio Angioloni a former employee of the ECB the second one is Julie Dixon who will be joining once her term as the Canadian financial regulator expires in summer and the third one is someone where I now go for the way not pronouncing the name because he would be upset it's a Finnish former regulator and central bank governor whose name I can't pronounce the and the four seats they have not yet allocated so beside that each national authority appoints a representative to the supervisory board the ECB cannot therefore take any decision against the will of all national authorities but it definitely can take a decision against the will of the national authority that is the was so far the home authority of this institution the SSM regulation stipulates that all board members shall act in the interest of the union as a whole and I think so far we could say and this is actually what's happening you might start out your sentence that as the German representative this is what is on your mind because this is what you occupied with but I have not gotten the feeling so far that we are really sticking to our little boxes I think we are all working for making this happen so I hope that over time this will lead to really bad best practice from the wealth of national experience the first test for that being the comprehensive assessment work on the asset quality review is proceeding a pace sometimes I get the feeling but time is we lose it is running away faster than we can really go forward but I think we are still in good shape and the stress test which goes together between ECB for the comprehensive assessment and the ABA for the entire EU is taking shape more and more I think as of as while we are speaking ESRB is having a conference call to tick off the stress test scenarios it needs a lot of wisdom for that I didn't understand all of them and the EBA I think will discuss this here is it tomorrow because that's and so this is taking shape National Supervisory Authorities are very much involved in the comprehensive assessment I can assure you that whoever we could allocate to this job is allocated to this job by now otherwise the whole thing might not succeed and I also think that it's sensible that we are using external advisors though I think history will tell them they can always show us which was the year of the comprehensive assessment there their revenues are going this and then there's the year where it all peaks and then they're probably coming back it is a it is a party for them but I think it was needed first of all we wouldn't have had sufficient people to really do a thorough comprehensive assessment in this fairly short time frame and secondly it's hopefully adding also to credibility of the exercise but again also here the leading role is played by the ECB alone and the ECB just for background is fiercely hiring people but for the time being most of the people working there are actually people that have been seconded from the national authorities but all in all that gives it at least as of today a team of roughly 300 well I don't want to join in the outcome of the comprehensive assessment my sense is that at least in the investment community there seems to be a competition about who puts up the highest number I've heard some numbers which sounded totally ridiculous some numbers probably well I think there will be something coming out we will see when the time comes whether some institutions may fail the test and have to be recapitalized restructured or potentially be resolved all together and let me be clear at least that's our position here recapitalization means existing on new shareholders bondholders and government money could only be the last resort if there's no other solution but I would agree with some that said and if you realize that a bank doesn't have shareholders to fund it doesn't have bond new shareholders found has to bail in its bondholders then there's probably an assumption that no one really wants to keep that bank so then probably resolution is a good idea to come it's a long story common banking supervision that is not supplemented by a common resolution mechanism the SRM is only half a loaf for that reason I very much welcome the fact that the European Parliament and Council recently agreed as a matter of principle on the regulation relating to the creation of a resolution mechanism and I think being here in Ireland has a great share that this that we got this that far and being an optimist I hope at least that while we are speaking the European Parliament has adopted it I didn't check my emails it's it is supposed to happen today but it's a long day and as someone said it's one of the largest schedules the parliament had I think they were threatened that they are not allowed to leave the room and go into election campaign if they don't finish their homework first but let's see what's going out of the coming out of this from my perspective it's always been important that the framing of the resolution mechanism is compatible with the existing legal framework I think that was more than clear from of gaxipless comments to start with this is the case as of today but and this is the reason why it is not the least complicated mechanism that has ever been put up but the SSM isn't either but in the long run treaty amendments should not be a taboo national authorities will assume an important role in the SS SRM as well in the drawing up of resolution plans and as members of the resolution board which could be thought of as kind of the counterpart to the supervisory board in my opinion I think as of now for now there is no alternative to this as long as the costs of a resolution are borne by national budgets ladies gentlemen banking union is far from being completed but of course but the course has been set for future Europeanization I try to kill that word when I saw it first it's unpronounceable at least for me at least it's going that far in the eurozone an extension to the whole of Europe with its 28 member states seems to be or may appear unrealistic in the short term but I think in it undoubtedly remains desirable in my view and giving a short presentation in London though I was at the drum embassy so I was on safe grounds I said proof for the success is that the UK wants to get in so I think we should all shoot for that maybe banking union will be as I said so successful in the end that even the UK wants to opt in but hopefully at least short term some outside the eurozone might decide to join not least because their banking system is so linked to the eurozone banking system this there is an option a possibility to that though it's not the most appealing way to get it done but I'll say it again in all enthusiasm for banking European banking supervision subsidiarity and proportionality need to be observed only if European institutions and national authorities work closely together and each of them perform the function for which it is best suited I think then we will achieve our common goal sustainable stable banking system so for me to go back to the very beginning it's not a problem that we national supervisory authorities appear somehow as a sidekick to some of these issues as long as we don't have to play the comic or sad part and I think we are all willing to be a very lively participant in this so it should work out well with that thanks for your patience and happy to answer any questions and looking at serial to see did I say something you would totally disagree with as a start okay thank you Dr. Koenig