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The European Parliament’s Economic and Monetary Affairs Committee hosted a confirmation hearing with Mrs Maria Luís Albuquerque, European Commissioner-designate for Financial Services and the Savings and Investment Union, on 6 November 2024. Bringing her experience as a former Finance Minister of Portugal as well as private sector expertise, Mrs Albuquerque exchanged views with MEPs on a range of topics including pensions, the housing market and securitisation, among others.

In her opening statement, Mrs Albuquerque placed a strong emphasis on ensuring the stability and integrity of the EU financial system as the basis for a strong and competitive European economy. She stated that, if confirmed, she would seek to actively support innovation and inclusive growth while encouraging social mobility and empowering consumers. 

She pledged to deliver on the Savings and Investment Union, coherent cross-border supervision, and additional opportunities to finance investment. She also underlined the need for a balanced approach in digital finance, to build trust in the financial system, and empower European citizens to participate in the financial system in a fair way.

Focusing on choice and protection for pensioners

Asked about the situation of pensions on the continent, Mrs Albuquerque responded that for her Europe meant “the 450 million citizens that composed Europe”. She highlighted that, when she spoke of the benefits of the Savings and Investments Union, it was about how it will translate into benefits for people, whether people were saving for their pensions or were already pensioners, who should all be protected. 

“It also about giving them choice,” she declared, so citizens could invest their savings in line with their own risk profile and horizon investments. “When I defend the need to build a Savings and Investments Union, the point is exactly to contribute, to have a wealthier Europe … Wealthier people have more opportunities and have better choices,” she underlined.

With regard to pension funds, she also commented that “pension funds are critical for the development of a proper capital market” and that “we need pension funds to be active market participants”.

Savings and Investments Union to address housing market challenges

Asked about the situation of housing and asset classes, Mrs Albuquerque saw that there had been “very low interest rates for a very long time”, which had led to the relative value of assets becoming distorted. She saw there was an incentive for real estate which had increased demand and led to a surge in prices, impacting the housing market. She commented that “building a Savings and Investments Union would contribute significantly to address that situation”. She stated that she was willing to engage with the Commissioner for housing and the College of Commissioners to see how they could potentially consider other measures.

EU banking package requires full implementation

In terms of the EU banking package which contains the Basel III reforms, Mrs Albuquerque stressed that “financial stability is absolutely key”. She did not agree with those who were “under the illusion” that if they would be more lenient or less demanding it would lead to short term gains. 

“The Basel III standards should be fully implemented”, she urged, noting that a part of the framework on the fundamental review of the trading book had already been postponed for one year.

She thought it was important to keep an eye on the level playing field and to ensure that the financial sector is competitive at international level, pledging that she would not participate in a “race to the bottom”.

She also noted that Solvency II had been reviewed, which she hoped would assist insurance companies in taking long term investments, and would see if changes introduced to the framework would produce the necessary results.

Securitisation as an important instrument 

Asked for her views on the EC consultation on securitisation, which runs until 4 December, she understood that there were some concerns about the risks, but said that it must not be confused with the misuse of the instrument in the past, as higher levels of financing were needed. “Our companies are far too dependent on the banking system,” she declared.

“It is a very important instrument to free up space on a bank’s balance sheet. Everything will need to be tested against financial stability concerns, Now we are in a consultation phase, we need to see what the issues are. It is too early to say on the redesign,” she added. 

Towards a new labelling scheme for sustainable finance

Asked about a potential review of the Sustainable Finance Disclosure Regulation (SFDR), Mrs Albuquerque remarked that “the framework is being misused”, creating greenwashing risks when products were being labelled as sustainable and she was not sure if they were. “I would look into the possibility of a proper labelling system for green investments but also for transition investments,” she explained, supporting those who are in transition “as that is where the majority of our production sector is”. 

She said that she was willing to propose a scheme that is adequate for labelling, which means setting minimum criteria which would have to be easily understandable and applicable, since “sometimes we make it too difficult and costly to implement on the ground”.

Need to drive growth in risk capital in Europe

Asked about the implications of President Trump’s election and the possible flight of companies to the US, Mrs Albuquerque remarked that “companies and investors – including retail investors – are leaving for the US as they cannot find here what they find there, which is a properly functioning market.” She saw an important role for third countries, including the UK, and predicted that if Europe could develop a deep and liquid market it would also attract investors from third countries.

She noted that while start-ups may initially find the funds to develop their project in Europe, they then need more funds to test their ideas. She saw that there were investors in Europe who may be willing to offer funding but understood that “they do not meet, they meet in the US”. She declared that “there is a need to have more risk capital in Europe” and also saw that there was a cultural issue in that “we have a tendency to punish failure”. She saw that other countries recognise the value in trying and that “failure often brings more opportunity”

Ensuring better implementation of existing rules

Mrs Albuquerque explained that her agenda was not about deregulation but ensuring that existing regulation is better implemented. She underlined that “we have too much red tape” and promised to work with the Commissioner tasked with simplification. She proposed that “we should put the brakes on legislation temporarily” to make sure that they are meeting their aims. “We need to make sure that our legislation is fit for purpose. If not, there is no reason why it is there,” she concluded.

Next steps

It has been reported that Mrs Albuquerque was approved as Commissioner-designate by MEPs after the hearing, and her candidacy is due to be confirmed as a part of a formal vote in the European Parliament on the entire College of Commissioners in the week of 24-28 November 2024, who will take up office for a five year term.

Photo credits: EC – Audiovisual Service