FRANKFURT, June 1 Reporting requirements for
European banks should be based on risk and not size, European
Central Bank supervisor Pentti Hakkarainen said on Thursday,
rejecting a German proposal to cut the reporting burden for
With a bank sector dominated by thousands of savings
cooperatives, Germany is pushing for easier supervision of small
banks, arguing that current rules place a disproportionate
burden on small institutions which are already saddled by high
costs and negative ECB rates.
"An approach to proportionality that relies solely on a size
criterion would not be a risk-based approach," Hakkarainen told
a conference in Lisbon. "The past has shown us many times that
it is quite possible for small banks to cause severe disruption
to the economy.
"So I advise against the proposal that I understand is
currently under discussion, which would reduce reporting
requirements for smaller banks in rather a crude way."
Instead, he advocated a more nuanced approach which would
lower reporting requirements only for the least risky banks.
Bundesbank board member Andreas Dombret recently warned that
smaller and medium-sized institutions - the vast majority of
Germany's roughly 3,500 banks - are overwhelmed by the task of
meeting compliance requirements due to the complexity of the
Instead, the Bundesbank and Germany's financial regulator
BaFin advocate what they call a small banking box, a separate
framework smaller lenders, which would not affect capital or
liquidity requirements but would still cut reporting and
disclosure rules, essentially creating a two-tiered system.
(Reporting by Balazs Koranyi and Andrei Khalip; Editing by Hugh