from market forces. in fact, there may be too many banks in the euro area and it is not our job or inclination to block orderly processes of consolidation. you say that mergers are a solution to the low profitability, but no mergers are taking place. do we need to encourage hostile takeover bids? supervisors don ’ t do industrial policy but rather call on banks to challenge the viability of their business models, strategy and risk profile. you set expectations and requirements, and banks have to find ways to achieve them. we don ’ t have the tools to directly promote mergers and acquisitions and i don ’ t think the market should be subject to this sort of bureaucratic intervention. the soundest and most sustainable solutions are tough but reasonable supervisory standards and market solutions. the banking sector is reducing the cost of credit by lowering rates. should they also charge savers for their deposits? this is a matter for the banks, bearing in mind the potential reaction of customers. they have to take into account the advantages and disadvantages in terms of costs and revenues. what improvements would you suggest to management boards in spain? we hope that our recent review on governance and risk appetite will help banks to get to know both themselves and the industry standard better. we have seen major improvements in banks ’ governance, but we are far from having international best practice throughout the euro area banking system. we have, for example, spotted weaknesses in the skillsets and independence of some board members. the boards of all banks must have a broad mix of skills and different, independent viewpoints to contribute to the debate and reflect all aspects of a problem. that ’ s good for the continued success of an institution. and some banks must do more in respect of their risk appetite framework. banks are complaining that the ssm is interfering too much in their governance. good governance is decisive for economic success and the stability of banks. therefore, the relevant regulation gives us the task to push for sound governance structures in banks. bis central bankers ’ speeches the ecb will distinguish between capital requirements and capital guidance in 2016. how will it ensure that banks comply with the part which is not binding? the capital demand set by the supervisor ( srep ) is split in two, with a requirement linked to the overall risk profile and a guidance related to the results of the adverse scenario of the stress tests, among other factors. the latter would not be binding in the sense of triggering automatic supervisory decisions, such as a cap on dividends, but we

sabine lautenschlager : interview in expansion interview with ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the single supervisory mechanism, in expansion, conducted by ms alicia crespo on 7 july 2016, and published on 18 july 2016. * * * how will brexit affect the spanish and eu banking sectors? the good news is : there have been no funding, liquidity or operational problems in ssm banks since the referendum. operationally, financial markets have been functioning well. there is of course the risk that a prolonged period of uncertainty about the future relationship of the uk with the eu creates a wait - and - see mood, including increased risk aversion of investors and markets. with all due respect to the political process, it would be good to settle the situation in due course ; in fact this is very important. however, we are witnessing a new wave of risk aversion affecting share prices of banks not exclusively linked to banks with relevant exposure or operations in uk. this risk aversion might partly be linked to concerns about the future profitability of some banks. where should the city relocate to? frankfurt? paris...? it ’ s too soon to be talking about this. whether financial activities relocate away from london, and how they do so, depends to a large extent on the negotiations between the eu and the united kingdom, and on the type of relationship they arrive at. brexit has exacerbated the problems in the italian banking sector. should the government inject public money? as the banking supervisor for the euro area, we ensure that banks face up to their problems, have a strategy regarding the risks in their balance sheets and do their homework. in a bestcase bad scenario, private money supports banks which are struggling. in a worst - case scenario, the euro area is fundamentally better prepared than in 2008. we now have a whole set of instruments which allows the european commission, national governments, the single supervisory mechanism, the single resolution board, and other stakeholders to deal with difficult situations. but all of the post - crisis legal architecture is seeking to avoid taxpayers having to pay for bank failures. don ’ t rome ’ s plans go against the banking union? the responsibilities for state aid and resolution rest with the european commission and the single resolution board, in cooperation with the respective member state. i trust that any solution will fully respect the principles of