Petr Nečas, the Czech prime minister, has said that his country is prepared to block the creation of a single supervisory system for the European Union's banking sector.
Nečas made his comments at the end of a two-day European Council in Brussels today (19 October), where leaders agreed to put the legal basis for a eurozone banking supervisor in place by the end of the year. The relationship with banks in EU member states outside the eurozone is among the many questions that have not been settled yet.
Nečas, who described this European Council as being devoted to “procedures and timelines” rather than to the substance of the supervisory mechanism, said there are a “lot of discrete points where clarity is lacking” and that the Czech Republic believes must be cleared up before he is prepared to sign up to a single supervisory mechanism.
“Nothing is agreed until everything is agreed,” he said, adding: “We are ready to reject the introduction of a single supervisory mechanism.”
He made clear the country's political calculation and why “it is in our great interest to have a sense of the entirety” of the new banking regime. Approval of “particular mechanisms” would be the country's sole opportunity to guarantee the country's interests, he said, as subsequent, ostensibly more technical decisions would require the support only of a qualified majority of votes in the EU's Council of Ministers.
He nonetheless emphasised that the Czech Republic has support from a range of countries, most particularly from Sweden and Denmark, which he described as having “similar or identical positions”, but also often the Netherlands. Other countries – including Poland and Luxembourg – share its position on individual issues.
Among the main concerns for Prague is the relationship between subsidiaries of international banks, an issue that is particularly problematic for the countries of central and eastern Europe. He said that Prague is keen to ensure, for example, that the national bank should be involved if a western European bank decided to transform a Czech subsidiary into a branch – a move that would remove the new branch from the supervision of the national bank in the host country. He cited Luxembourg as another country that is anxious about the issue of subsidiaries, a problem commonly referred to as the ‘home-host issue'.
