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UPDATE 1-ECB'S Nowotny says don't rush bank supervision
September 17, 2012 / 6:48 PM / 5 years ago

UPDATE 1-ECB'S Nowotny says don't rush bank supervision

* Quality must come before speed in bank supervision

* Ambitious for ECB to oversee major banks by mid-2013

* Most bank control should remain local (Adds details, background)

VIENNA, Sept 17 (Reuters) - The European Central Bank should not be rushed into assuming responsibility for supervision of the euro zone’s banks before it is ready, ECB policymaker Ewald Nowotny said on Monday.

“On the question of bank supervision, quality must come before speed. I consider it very dangerous to present apparent solutions under time pressure,” Nowotny said during a panel discussion on Europe’s future perspectives.

Nowotny said it was ambitious to expect the ECB to oversee the euro zone’s major banks by mid-2013, as envisaged by the European Commission.

“With all respect for the political guidelines, we are the ones with the responsibility. We will only take it over when we are properly equipped,” he said.

He added that day-to-day control of the currency bloc’s 6,000 banks should remain with local regulators, with the ECB stepping in only in exceptional circumstances.

Having the ECB supervise big lenders is an important element in any future banking union, and is a prerequisite for the euro zone’s permanent rescue fund, the ESM, to assist banks directly rather than through governments.

Nowotny said deepening the European Union should take precedence now over widening the community.

“What we need now is a discussion about deepening. That means also that the discussion about widening takes second place. We have to put the emphasis on this discussion about deepening, and then it has to be step by step,” he said.

Reporting by Georgina Prodhan; editing by Ron Askew

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