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European banks face tough dislosure rules

EU member states say that the disclosure rules are unworkable.

The European Parliament is pressing for tough disclosure rules for banks and limitations on bankers’ bonuses as part of the law implementing the Basel III international accord.

Under the proposal, banks would face the threat of revealing their profits and taxes in every country they operate apart from disclosing their bookkeeping practices.

Although the proposal has backing of the European Commission, majority the EU member states, however, are opposing the initiative.

Meanwhile, negotiations broke down on Tuesday over issues of bonuses and the disclosure rules. Fresh discussions will be held next week.

Ireland, which holds the EU presidency, floated options including raising the maximum bonus ratio to 3:1 or partially exempting bail-in bonds, which are written down when a bank fails.

Expressing its willingness to open discussions on technical details including the role of shareholders, the European parliament insisted on a 1:1 cap, which can be increased to 2:1 with shareholder approval.

Philippe Lamberts, a Green member of the European Parliament (MEP), described a tentative offer of a future review to see whether the transparency rules should apply to banks as “an insult to lawmakers and citizens”.

Sharon Bowles, the chair of the parliamentary committee involved, said the disclosure rules were quite modest for an industry at the heart of the economy. “If the council can’t support them then they have something to hide,” Bowles said.

MEPs argue that the transparency requirements for banks are in line with the French, German and British demands that were made at a G20 meeting in Moscow.

Michel Barnier, the EU commissioner responsible for the reforms, said: “I fully support the European parliament in wanting to impose transparency requirements for banks by country, for taxes paid, profits and state aid received.”

The move follows a negative report by the Organisation for Economic Co-operation and Development (OECD) that revealed how the multinational US companies like Starbucks, Apple and Amazon have either avoided or reduced tax.