EU needs stronger markets watchdog for virus recovery: Barclays

[LONDON] The European Union needs centralised supervision of stocks and bonds if it wants a capital market that is on a par with those in the United States and Britain, the boss of Barclays Bank in Europe said on Friday.

The European Commission is due in September to set out measures to accelerate the creation of a capital markets union or CMU, made more urgent by Britain's departure from the bloc and the need to recapitalise companies after the Covid-19 shock.

Efforts so far have been patchy, with bank loans still providing most funding for companies, rather than stock or bond issues.

But most EU states remain opposed to a major centralisation of supervision, such as an EU version of the US Securities and Exchange Commission, preferring to maintain a national role in markets.

"Centralised supervision and regulation is very important and you see this in other places where there are very deep and extensive debt and equity capital markets," said Kevin Wall, chief executive of Barclays Europe.

He said the political and economic stars were aligned and it was in every EU state's interest to have a deeper and more liquid capital market, Wall said.

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"Over the last few months in the crisis... we have seen, relatively, a lot more equity issuance in the UK, in the (United) States, than we have across Europe. One of the reasons is the capital markets union, its development and progress," Wall said.

Verena Ross, executive director of the EU's European Securities and Markets Authority (ESMA), said having uneven supervision and detailed national rules were a major barrier to a genuine CMU.

But the "mixed model" of national and EU supervision is likely to stay, she said.

Danuta Hubner, a member of the European Parliament, said it was time to get on with creating a CMU that makes the EU globally competitive.

"We cannot spend the next 10 years reflecting on what is more important," she said.

REUTERS