As part of the public consultation on the review of the European Supervisory Authorities (ESAs) the European Commission has proposed merging the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA). This change is designed to replicate the ‘twin peaks’ structure common at a national level, with one market authority and one prudential regulator. The EU’s current sectoral approach has been in place since the ESAs were created in 2010 and was designed to reflect the existing division of tasks between the ESAs predecessors (the former Committee of European Banking Supervisors (“CEBS”), Committee of Insurance and Occupational Pension Supervisors (“CEIOPS”) and the Committee of European Securities Regulators (“CESR”)). It is hoped that this new structure would make supervision more efficient and able to meet the changes needs of financial markets regulation.
There is also a Brexit dimension to the proposal. The EBA is currently based in London and will need to be relocated once the UK leaves the EU. With EU officials already considering where best to move the EBA it makes sense to also look more significant structural changes. In this context, a move to Frankfurt to join EIOPA seems sensible. Discussions have been taking place behind closed doors for several weeks. The German government are understood to be particularly in favour of the proposal, but have the support of other key Member States. The current Director of the EBA, Andrea Enria has not shown huge enthusiasm but does acknowledge that the sectoral model is now outdated.
The issue is not yet closed with stakeholders invited to comment on the proposal until 16 May. The decision on the relocation of the EBA is unlikely to be taken before the end of the year.