The importance of international regulatory co-operation is now widely acknowledged and is on the agenda of inter-governmental meetings. At last June’s G7 summit in Lyon, the heads of state called for maximum progress preceding the Denver summit in June 1997 on “enhancing co-operation among the authorities responsible for supervision of internationally active institutions, importantly by clarifying their roles and responsibilities.” Ahead of the Lyon Summit, Basle and IOSCO had announced a joint initiative to strengthen cooperation in this area, referring to the work of the Joint Forum of banking, securities and insurance supervisors, which was set up to promote information exchange on international financial conglomerates, and consider establishing for each a lead regulator. The need for the international regulatory community to address successfully the challenge of supervising multi-functional global financial conglomerates is an issue of particular significance to the UK. This is because of the international nature of the London markets uniquely so amongst the world’s major financial centres. The failure of one or more major overseas firms may cause systemic problems in London where at the end of last year, overseas banks accounted for 57% of the total assets of the UK monetary sector, with US banks contributing 8%. Furthermore, almost three quarters of the 478 banks which take deposits in the BIS Review 21/1997  - 13 -  UK are branches or subsidiaries of overseas financial institutions, including 37 from the US. US firms have, of course, particular importance in certain markets.

The resolution authority could, in turn, better take into account certain strategies, and thereby accept a certain level of risk. A likely effect of recovery options or transfer tools is that the structure of the remaining group might become less complex and therefore carry less risk. Besides, the stance on waivers of internal requirements for entities located in the same Member State (or even in the same Banking Union) has proven overly conservative. We need pragmatism, and consistency between the SRB and the SSM: when an entity has been waived from capital requirements, or is simply not subject to capital requirements, the resolution authority could apply the same on MREL. Proportionality to risk could entail other changes, such as the calculation of banks’ contribution to the SRF. As of today, the size of institutions has an overwhelming importance in the determination of these contributions. This is more than questionable: size does matter in order to bring an institution under the scope of resolution, but size and risk are two different notions and they should be more clearly differentiated in technical implementation. In order to ensure the fairness of contributions, and greater adherence to the SRM overall, it is necessary to adapt formulae accordingly. Beyond fairness, penalising the largest banks or groups prevents the emergence of pan-European groups, which is one of the Banking Unions’ objectives. Here let us acknowledge that  Page 5 sur 5 we have collectively failed so far; we have a Banking Union without really crossborders European banks. This is a major weakness.