Remarks at the opening of the Frankfurt office of the Spanish Banking Association

Speech by Danièle Nouy, Chair of the Supervisory Board of the ECB,
at the opening of the Frankfurt office of the Spanish Banking Association, Frankfurt am Main, 16 November 2016

José María,

Ladies and gentlemen,

Describing the beginning of his epic journey, Christopher Columbus said: “Following the light of the sun, we left the old world”. In a sense, that quote also applies to the Spanish Banking Association’s decision to open an office in Frankfurt – its first outside Spain, in fact.

In the old world, national banking supervisors supervised national banking sectors; in the new world, European banking supervisors supervise a European banking sector.

Against this backdrop, your decision to come to Frankfurt means three things to me.

First, it shows that you are willing to join us on our journey towards a truly European banking sector. It shows that you see European banking supervision as a serious effort to increase the stability of the banking sector and to provide a level playing field for all banks.

This constructive attitude has been demonstrated by Spanish banks since the ECB took over banking supervision in November 2014. Currently, we directly supervise no fewer than 14 Spanish institutions. The supervisors tell me that the working relationship with these banks has always been very professional and positive.

Second, coming to Frankfurt shows that you have courage. After all, we have set sail for the new world in the middle of a storm. Everyone knew that it would be a challenging journey: the economic waters we have to navigate are still rough, which affects both banks and supervisors.

One of the challenges we are facing is the high level of non-performing loans across the euro area – more so in some countries than in others.

In Spain, the level of non-performing loans is higher than the European average. Therefore, Spanish banks have to address this issue too. Even though it is the banks themselves that have to resolve the problem of non-performing loans, banking supervision also has a role to play. Yesterday, we closed the public consultation on our guidance on non-performing loans. We will now study the responses and finalise this guidance.

Another issue that makes our journey a bit more difficult is regulatory fragmentation. In spite of the single rulebook, banking regulation still differs from country to country – at least to some degree. While it is true that we have made some progress by harmonising the execution of national options and discretions in European regulation, we are not quite there yet. For instance, regulatory differences remain as a result of the transposition of European directives into national law.

If we are serious about creating a level playing field for banks, regulation has to be further harmonised. Ideally, harmonised banking supervision should go hand in hand with harmonised banking regulation.

Third, your decision to open an office in Frankfurt means that not only did you embark on the journey with us, you also want to help us get to our destination. It is a new world for all of us – in a sense, we are all pioneers. Settling down in this new world requires mutual understanding and, consequently, dialogue. I am convinced that opening your office in Frankfurt will improve that dialogue, which in turn will help us to work together towards our common objective: a safe and stable banking sector that serves all European citizens.

The ECB’s mission is to implement not just tough, but also fair, supervision across the entire euro area. And fairness calls, among other things, for a sense of awareness of specific issues and problems. That in turn requires a constant dialogue between banks and supervisors. I hope that your presence in Frankfurt will continue to inspire our dialogue.

So, just like Christopher Columbus, you have left the shores of the old world. However, whether you have followed the light of the sun is another matter – it is fair to say that Frankfurt is not quite as sunny as Madrid! On the positive side, though, you are likely to encounter a number of other types of weather – rain, sleet and snow, for instance!

Joking aside, I am sure that you will soon discover that life in Frankfurt is very comfortable. It is a European city and, as European citizens, you will quickly feel at home. Furthermore, Frankfurt’s excellent digital infrastructure and the eighth largest airport in the world make the distance between Madrid and Frankfurt feel a lot shorter.

I hope your new office here in Frankfurt becomes not only a symbol for a continent that is growing closer together, but also an important step towards the European banking union. I look forward to working with you.

Thank you for your attention.

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