The European Union (EU) sought to patch up differences with Britain over financial regulation, saying on Tuesday there was room for exemptions in a draft European banking law to accommodate stricter local supervision of lenders. Jonathan Faull, head of the European Commission's financial services unit, said it was a matter of crafting exemptions in the draft EU bank law so Britain, Sweden and others can tailor their local supervision.
"I am sure that this will end up in a perfectly reasonable set of rules which will respect the general principles, that we have wherever possible a single rule book in the EU," Faull told an industry conference. The UK worries its ability to continue imposing additional capital and liquidity requirements on domestic banks will be significantly curbed under a draft EU law now being approved.
Government, Bank of England and the Financial Services Authority officials lined up to ram home the message. Jurisdictions must retain the right to apply higher levels of regulation, Britain's Financial Services Minister Mark Hoban told the conference. "This is particularly important for countries like the UK that are home to large global financial centres," Hoban said.
Andrew Bailey, director of UK banks at the FSA, said there was a very clear need for EU bodies like the European Banking Authority (EBA) to set "sensible boundaries" where supervision remains national and where there should be proper pan-EU co-ordination. The European Commission, which drafted the bank capital law that is troubling Britain, wants a single set of rules for the EBA to apply across the 27-nation bloc.