BERLIN: A regional German bank has filed a suit to avoid being supervised by the European Central Bank, becoming the first lender to take issue publicly with the central bank’s expanded powers.
In November, the ECB replaced national authorities as the entity responsible for directly supervising 123 of the largest banks across the eurozone, as part of an effort to improve supervision in the wake of the financial crisis.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. Landeskreditbank Baden-Württemberg, a development bank in southern Germany, said that while it agreed with the aims behind the ECB’s new role, it did not believe it should come under the central bank’s supervision, and had filed a lawsuit with the European Court of Justice to try to reverse this.
The ECB has a number of criteria for deciding whether a bank should fall under its purview. These include having assets of more than €30bn, playing an important role in a particular EU state, or engaging in significant cross-border activities.
L-Bank, which had assets worth €70.68bn in 2013, the last year for which figures are available, said that this “mechanical approach” was not appropriate in its case, arguing that it had a “legally enshrined remit to conduct low-risk development business”, and benefited from a “direct guarantee from the state of Baden-Württemberg”.
