Re-capitalisation of banks

Monetary dialogue with the ECB: download European Parliament Briefing Paper December 2013.
Monetary dialogue with the ECB 2013


The comprehensive assessment is an important step in anticipation of the Single Supervisory Mechanism. It is expected that the outcome will suggest that some banks will need to be re-capitalised.

We argue that the assessment by the ECB should be done by the ECB behind closed doors and without interference or scrutiny of market participants or politicians. This should allow the ECB to carry out the comprehensive assessment without restraint. However, we do feel that the plan for this assessment, the methodology, the scenarios and the capital thresholds should be communicated in advance.

We also stress that the fact that the bail-in tool is to be implemented in 2018 creates some uncertainty. To be effective it should be clear how capital shortfalls are going to be dealt with. This means that a backstop has to be in place. We feel that this issue should be addressed more explicitly before the results of the comprehensive assessment will be communicated.

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