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Thank you, Commissioner.

I see already a hand online, so I will take that, that, question first online. It's from Paula. Paula, please. Thank you. Hello. Good afternoon. I have two questions.

One is if you can give us a bit of context on to what extent these considerations and proposals are driven by a divergence in,

regulatory approaches in other jurisdictions like the US and UK, and in what way does this try to address that? And then on EIS specifically.

My understanding is that this is focused on ensuring liquidity provision in times of crisis rather than loss sharing.

And so my question would be, have you given up on a full deposit insurance scheme? Thanks.

Commissioner, I hand it over to you for the questions. Thank you for your questions.

No, this is not driven by other jurisdictions.

I would say that the whole savings and Investments union strategy.

As the competitiveness focus that this Commission has from the very beginning is driven by the global context. This is a part of that.

So it's understanding that the context in which Europe lives today has changed, and that requires changes also on our side,

and the Savings and Investments Union is about the changes we need to bring about in the financial system, specifically for the banking sector.

There is the issue of the level playing field,

which we said that we are going to take that into account because it is important.

We want to be competitive in the global space, so what others are doing is something that we need to take into account,

but I wouldn't go as far as to say that this is what is driving our work, because the context is much broader than that.

On the EDIS, well, the EDIS 2015 proposal is still out there, but Now it's basically a placeholder.

We have already announced that we will be replacing it.

We know that that proposal is not going to make it, even because things have changed a lot since 2015.

In these last 11 years, there have been material developments across the board, so what we want is to preserve the same objective,

and if we go back to the circumstances under which we created the banking union and the why.

We had 3 pillars in the banking union because we were trying to solve the problem of having Member States having to deal with a crisis.

We had the financial crisis, then we had the sovereign debt crisis, and we could see that in both directions,

banks created a problem for sovereigns and sovereigns created a problem for banks.

This doom loop link between the two was at the heart of our decisions around the banking union, including no more taxpayers' money to be involved,

but part of that work was not completed, and that is what we are trying to do now, so we want to guarantee.

That there will be liquidity assured if needed in case of a bank failing, and if it is a cross-border bank, that it will be equally guaranteed on both sides of that border,

where the parent company is, but also where the subsidiary may be, and also that all citizens in Europe can feel.

And corporates, by the way, but mostly all people can feel that their deposits are equally guaranteed.

We have in law a €100,000 guarantee which applies to everyone, but if the sector itself does not have the capacity,

then it would have to be the fiscal capacity of the Member state.

So this is clearly what we are trying to address.

And just to close, and I know I have been Long on this,

but because it kind of ties the two things, this is not about emulating anyone, particularly the United States.

I've been saying this again and again on many different occasions about capital markets, about banking.

We are not trying to copy the United States, we are trying to create our own European model. That is efficient and capable to compete.

We are not copying anyone or following anyone. We are making our own path.

Thank you, Commissioner, for the very clear responses.

We have a couple of hands here in the room, sorry, in the front.

If you could also to my journalists here in the room, please, of course, identify who you are in the media you work for so that the Commissioner knows. Thank you. Thank you very much for the presentation. I have 2 questions.

The first one you already touched on how some things have changed since 2015.

I was just wondering if you look at the Basel II implementation as it happened in 2002, this is a bit of a retreat compared to that.

That already was something of a retreat compared to the proposals as they were envisioned in 2017.

So looking back with the strict conditions as they were formulated then, what did they overlook, what did they get wrong? And my second question.

When we look at the document, it's it's about streamlining standards, it's about simplifying legislation, boosting competitiveness.

Now this is the talk that we often hear here, and very often that results in an omnibus.

We haven't seen that word here, and I'm just wondering why you think that this should or should not qualify as an omnibus. Thank you.

On Basel III implementation, what we are seeing is other jurisdictions,

competing jurisdictions, who are also part of the Basel community.

Adapting the Basel framework to their own specificities, to the features of their own banking sector and their own objectives.

We have made some decisions in the past, including some, if I can put it like that, gold plating of Basel as well here at the European level, and now, with hindsight, With the benefit of experience, we think that we should take another look,

and especially at the proportionality debate, on the proportionality angle, because for small, non complex institutions, it's not just about size,

it's also about the type of business model, whether it's simple, it's complex, whether it's internationally active or not.

So we need to look at that and see how we can, within this framework, most likely, we can. Make it more proportionate.

There is some proportionality already, of course,

but we think we need to go further and we need to remove some layers which we don't think are necessary and create complexity.

So we will obviously continue to focus on financial stability, it's a prerequisite, but we think we can make it easier.

So on the simplified streamline, everything we do in this Commission has that mindset.

Everything we do from now on truly has to ask the first question that it needs to ask is,

is this the simplest possible way we can do this, and everything we change, we try to make it simpler.

That does not necessarily mean that everything we do is omnibuses, so we need to separate the two topics.

And the banking sector in particular, the whole framework,

it's a complex in itself, it's a complex structure.

Given that we want to preserve financial stability, we do not want to give away what we have achieved,

we need to make sure that we are consistent and coherent.

So again, it's not about the banks, it's not for the sake of banks, it's because These are important to finance the economy,

and so we need to get it right, and we think that merits and requires a comprehensive,

broader approach, which will bring a lot of simplification.

By the way, completing the banking union is also a major simplification exercise. Thank you, Commissioner. Sabina, please.

Sabina Rosetta, with Dansa News Agency, thanks for the floor and thanks for the presentation.

The report says that the Commission will use its enforcement toolkit against unjustified national intervention in bank matters, but the Commission has already powers, and in the UniCredit Banco BPM case,

the Commission's preliminary assessment of the Italian Government's use of the so called golden power,

so the special screening power over strategic transactions came only a few days before the bid was withdrawn.

While the broader infringement procedure has still not produced a final resolution. So what will change in practice?

How will you ensure that the Commission intervenes early enough to affect a live transaction rather than when it is already too late?

And then I have a second question, if I may.

The report announces measures to address excessive concentration on sovereign exposure and encourage banks to diversify their sovereign bond portfolio.

Could this reduce demand for debt of high indebted countries and push up their funding costs? Will you impact assessment examine this aspect?

How will you avoid the This could create an asymmetry with insurance,

since they won't have this requirement. Thank you. Thanks for the question.

So two questions about very different topics on the enforcement or the infringement procedures. I do not comment on individual cases.

That is our rule, and I will also not do it this time.

When we say that we will use enforcement more, it is.

The obligation, the duty of the Commission, as guardian of the Treaties, to make sure that legislation is faithfully implemented in all domains,

and when we see that in any institution, any Member State is not complying.

Those rules are overstepping their powers, misusing their powers,

have legislation which is not compatible with the European rules, then we have to act.

What we are saying is that we will be be stronger in this, in the sense that we will act faster, we will be applying this in more domains,

because we really believe it's very important to have the same rules which, by the way,

were agreed by everyone, implemented in a harmonized way across the EU.

So this is signaling that we will use this tool in the future and we will make the best use of it. On the issue of sovereign exposure.

As I was saying before in one of the previous questions.

This is about the creation of the banking union. We are talking about market integration.

In market integration we have a European perspective, so we have European banks,

and European banks buy assets, including European assets, and they should be. They expected to diversify their exposures.

Let me say that now, as we stand, the prudential concerns we may have around these exposures are not comparable to what they were in the past, so I'm not saying that we are spotting a problem,

but from the perspective of a well functioning system, Diversification is a good way of managing risk and considering,

as I said in my introductory remarks, that risk is needed in the system.

A proper risk management strategy across the board is also very important, so diversification is important,

including on sovereign bonds, and if everyone diversifies, then I see no reason why the global demand should change.

Maybe the buyers are not exactly the same, but the overall demand if we look at it from this perspective,

I see no reason why it should change. Thank you, Commissioner.

I would like to take some questions online as well.

Of course, I'll come back to the press room too. Tommaso online, please.

Yes, good afternoon, Tommaso Gallaboti in Carnos Italy. Just two questions if I may.

The first one is a follow up on EDIS because I have seen that you have buried it and then resuscitate it under a different name.

May you please explain the difference what entails the difference between a scheme and a mechanism?

I guess that the change of wording is not, I mean, By chance,

and the second one is a more general question, if I may.

Because I've checked the market capitalizations of two of a European bank, Deutsche Bank.

In 2007,

it capitalized $65 billion while Morgan Stanley capitalized $56 billion.

Now Deutsche Bank capitalizes $60 billion and Morgan Stanley $360 billion so something has clearly gone wrong.

I wonder, I mean, I know it's difficult but I mean the banking union was launched in 2012. And we're still here with the communication.

Wouldn't be, wouldn't be better to come up with some harder legislation and confront the Member states to, I mean,

because it's their fault after all, because the, the banking union has been stuck in the Eurogroup and the Ecofin for a long time. Many thanks. Thanks.

So I'm Not 100% sure we'll be able to answer the question on scheme versus mechanism, but I will, of course, give the floor to the commissioner,

but I was sure by listening to the question that Thomas Tommaso has been around for a while because this,

peculiarities of European language are something that only insiders typically, think about.

No, there's, there's no specific intention, under the different words.

It is going to be a different approach also.

Because, as I said, the situation has changed.

Now we have one single resolution fund fully funded.

We have no legacy issues anymore, particularly on NPLs, as we had when we discussed this first.

We have the DGS or the national guarantee schemes also fully funded, so the situation is different.

We need to look at it from a different perspective and find a way forward which delivers the same.

Objective, not necessarily following the same path, but there are no details yet.

We are still working on it, and by the way, we will handle or put forward legislation.

I'm not sure I would call it hard legislation, but legislation in any case in the 1st quarter of next year, so that is coming.

We want to have a bit more time between now and then to continue to engage with the different stakeholders and see if we can.

We have the guarantee that we have the full input into the system now, starting the discussion on the basis of the report already with the direction of travel more or less announced,

because it helps to focus the discussion and we will take it from there.

The numbers you use to compare a European bank and an American bank are actually interesting.

Because they show that in the time in the last 20 years, slightly less than 20 years, the American banks have grown a lot more,

and the one you mentioned is not even one of the biggest ones,

and that actually makes a big difference because bigger banks are more competitive,

including within Europe, so they have the same rules.

They have the same reporting requirements, they are subject to exactly the same framework,

and yet they do better because it is important to have that scale.

Some of these things are like fixed costs, so if you have a layer of a fixed cost, if you're big, it doesn't really matter.

For example, you have a big compliance department, so having more or less requirements doesn't matter that much.

You have a big legal requirement, it doesn't matter that much.

If you're smaller, the impact it has on you is much bigger.

So simplification is very important for our banks.

It will also, by the way, support foreign banks operating in Europe,

but it's clearly not the whole explanation of the problem.

It's just part of the problem, but we don't think it's even the bigger part of the problem. Thank you, Commissioner.

I would like to take some more questions here in the press room if anyone has a question. Yes, bet you. Go ahead. Good afternoon.

Regarding the measures to Enable cross-border groups to better allocate capital and liquidity with some safeguards in,

in times of crisis.

So, how did it work in in practice? And which banks will be concerned?

Ma, how it will work in practice, as I said, this shows the direction of travel on the details we are still working on, but what we know from the past,

and especially still going back to the memories of the financial crisis,

is that when we had problems, some host Member States were left alone.

So the parent company did not give the necessary support, liquidity and capital.

There was also not the trust built between the authorities of the different Member States,

the home and the host, and that has created a situation where we have become too complex.

For example, we apply Basel not only at the consolidated level but also at individual level,

so that part of complexity is also related to the fact that the banking union is not complete. So we need to guarantee.

The key is that we allow cross border banking groups to manage capital and liquidity efficiently so that they are not trapped in host Member States,

but there are mechanisms in place and guarantees that both in normal times and in stressful times,

those host Member States,

those host banks will receive all the necessary support and that financial stability. Host member states will also be guaranteed.

So it's a question of how we design the framework to deliver this outcome.

Again, we will still be putting forward the proposals, the concrete proposals on where this will be spelled out,

but the intention is this to guarantee that you can manage this as a group efficiently.

Just to give you an idea,

I quoted you the numbers of the cost of supervisory compliance and reporting,

so the 24 billion.

The liquidity trapped in this situation, because of this mechanism not being present or the trust not being there,

costs us in liquidity EUR 230 billion, according to the ECB estimate.

So this is the difference in impact that we are talking about, and given that we are talking about competitiveness,

that is why it is so important that we address this problem as well.

Just liquidity trapped is estimated at 230 billion, which could be put to use in the European economy. Thank you, Commissioner. There's a number 2 to think about.

Any other questions here in the press room?

I don't see any more questions online either, so I think we can wrap up.

I do thank you all for joining us.

I know, as I said, it has been a very busy day with lots to report on, so thank you for being here. I, sorry, Commissioner.

There's one more hand online from, from Frannie.

So I'm gonna give it to Frannie and then we will close up.

That was really the 11th hour hand, Frannie, but please go ahead. Can Wait, can you hear me? Yes, I can.

All right, Fanny who with MLX, just a general questions, in the report you gather inputs from both supervisors and,

the industry, but you keep your options open as you said.

But what do you think would, what do you expect,

to be the most difficult task and decision, to make, in the upcoming package? Frannie, sorry.

And if I can also just ask you to identify yourself because it's, it's for our, our transcript purposes. Sure, this is Pennyro with M Lex. Mr.

Let me first start answering what will be more difficult to achieve. I alluded to the cultural shift.

I think that's the difficult part, you know. That culture, its strategy for breakfast.

The most difficult part is this change in mindset, a different culture approach.

When we talk about compliance, it's about everyone taking responsibility and focusing on substance,

everyone looking at material risks, not just all risks.

It's about building trust, it's about respecting rules.

It is about understanding that exceptions don't necessarily deliver a better outcome.

It's looking at the common interest as something that serves the individual interests of Member States.

This is the most difficult part to get because that's what drives the political momentum and ultimately will deliver.

You can draft perfect rules and then if you don't have the right attitude in following those rules, you may still fail on the objective.

In terms of what will be difficult to discuss, well, it depends on how successful we are in actually conveying this message.

I am hopeful because we already have a number of proposals tabled, many of the discussions are already ongoing,

and I think there is a general awareness of the importance of what we are doing across the financial sector.

Of how urgent this has become, or in another way to put it, the costs of not moving are constantly increasing, so the choices need to be led by this, and I think that is the most challenging part,

but considering the ongoing engagements already and the feedback we had from many stakeholders,

I think that we will have a more positive attitude, so we will be able to deliver.

It has to involve everyone, as you mentioned, its supervisors, its industry, its national competent authorities, its EU level authorities,

its auditors, bank compliance officers, banks' boards,

everyone needs to share this responsibility, and obviously the Commission.

We also need to do our job better.

We need to use our powers better, we need to also contribute to accountability, to oversight,

to continuing to keep an eye on this and correct where it needs to be corrected.

So it's a collective effort, but given that we seem to share the collective goal, the collective effort should be warranted. Thank you, Commissioner.

I wanna just ask one last time in the press room whether there are any last-minute questions.

If not, then we can conclude this press conference.

Thank you to the commissioner, most especially for giving us a very comprehensive overview of what is in this communication,

and I wish you all a very good reporting on this, communication. Thank you.

And a good summer break if I may. Enjoy. Thank you.