peter praet : creating an enabling environment for pan - european banks in the banking union remarks by mr peter praet, member of the executive board of the european central bank, at the eurofi financial forum 2018, vienna, 5 september 2018. * * * in recent years, the european union has achieved major progress towards financial integration. we now have a single supervisor and a single resolution authority, and banks are subject to the same european rulebook. the banking union contributes to providing effective mechanisms for cross - border risk - sharing and broadening the sources of funding within a country, thereby promoting macroeconomic stability and growth. however, we still observe a number of obstacles that hinder the fungibility of capital and liquidity of banking groups. very often, these obstacles relate to regulatory fragmentation and ring - fencing of national markets. further harmonisation would help to address many of the issues, while appropriate prudential safeguards can be put in place to address possible financial stability concerns by national authorities. first, a number of national options and discretions are hindering the practical application of cross - border liquidity waivers within the union. while such waivers are explicitly allowed by the crr, and already contain prudential safeguards, so far the ecb has received almost no application for their use from the banks it supervises. an important reason for this lack of applications is the existence of national large exposure limits on intragroup exposures in several european countries. these limits prevent institutions in these countries from transferring liquidity within the group in a flexible manner and thus represent practical obstacles to the use of liquidity waivers. effectively, they are hindering the free flow of liquidity in the banking union and should be harmonised further. second, the proposal to have cross - border capital waivers within the eu was not taken forward in the on - going review of the crr, which is a missed opportunity. such waivers would be consistent with the establishment of the ssm and the banking union and help to support the free flow of capital across the union. on the one hand, it is understandable that some national authorities are concerned about the possible financial stability implications of the proposal. on the other hand, such concerns could be addressed by making the waivers subject to additional prudential safeguards, and by putting in place appropriate transition arrangements that account for the planned further progress on the banking union. third, the major progress we have made in our banking union needs to be recognised also in the international

crisis. this was the case both for the total volume of lending and its contribution to the consolidated result, while the depreciation of emerging countries ’ currencies also came into play. 11 in any event, the weight of external business in the main spanish banks ’ ordinary net income has increased. hence, without taking into account the however, behaviour was uneven in firms ( with an increase of 6. 6 % ) and in households ( where there was a decline of 5. 6 % ). see, for example, the october 2020 bank lending survey in spain. menendez - pujadas and mulino ( 2020 ) summarise the results of the survey for the participating spanish banks. see d. rodriguez - miera and r. vegas ( 2021 ), “ impact of the dividend distribution restriction on the flow of credit to non - financial corporations in spain ", analytical articles, economic bulletin, 1 / 2021, banco de espana. the return on equity ( roe ) stood at - 3. 1 % ( 10 pp down on the figure of 6. 9 % recorded a year earlier ), and at 4. 8 % if extraordinary adjustments are stripped out. in particular, as discussed in the previous fsr, the two biggest banks made adjustments to their goodwill for an amount of over €12 billion in the first half of the year, and one of them made further adjustments to its deferred tax assets. moreover, in its end - of - year accounts, one bank, as a result of its merger being approved, recorded a fair value correction for an amount exceeding €5. 5 billion, in accordance with accounting regulations. net interest income and fees also showed year - on - year declines, of around 10 %, while gains on financial assets and liabilities ( up 35 % ) and operating expenses ( a decline of almost 11 % ) were the only items that improved compared with the previous year. the fall in operating expenses led net operating income to increase slightly – by 0. 7 % – on the previous year. the crisis affected unevenly those countries where spanish banks'main exposures are to be found ( gdp fell by 8. 5 % in mexico, 4. 5 % in brazil, 1. 5 % in turkey, 3. 5 % in the united states and 9. 9 % in the united kingdom ). adjustments made by the main spanish banking groups to the goodwill of their uk and us subsidiaries, net ordinary earnings on external business stood above 80 %