Banks Must Come Clean - Eu Commissioner

The only way to restore confidence in global financial markets is for banks to come completely clean about their exposures, Charlie McCreevy, EU internal market commissioner, said today.

McCreevy told the Guardian: "There's no commercial paper market in Europe and it appears that last week's rate cut by the Bank of England made no difference at all because there's no confidence at all."

"What we need is a situation where every financial institution puts all its cards on the table so everybody can see clearly what they have and how they have valued things - and over a period of time that's the only way to put confidence back into the world."

The Irish commissioner also highlighted the time it would take for banks to regain consumer and regulatory confidence. "This excessiveness built up over a long, long number of years and didn't happen just in the last six months. It would be lovely to think that would be finished in a couple of months but it will only wash itself out over a period of time."

His comments come as UBS, the European bank most savaged by the sub-prime crisis, came under fresh pressure over the appointment of Peter Kurer as chairman. Activist shareholder Olivant repeated its claim that Kurer does not represent a break from the past as he is an "insider" who served on its risk committee for several years.

Kurer admitted to the Financial Times that it could take three years to restore UBS' battered reputation.

McCreevy, who oversees the European banking sector, has been reluctant to endorse tougher regulation in the wake of the sub-prime crisis but said changes would come in the medium to long term. "But no regulatory change will restore confidence overnight because if that were the case it would have been done."

But he also indicated he would bring forward proposals for stricter oversight of credit rating agencies later next month and planned to go ahead with his proposals for "colleges of supervisors" to watch over the EU's 46 cross-border banks, with one national regulator being assigned the role of lead supervisor. The idea is canvassed in proposals to beef up the EU's capital requirements directive published today and due to be finalized in October.

On rating agencies he said: "To be fair, some agencies have put forward their own proposals ... There will be changes, either voluntary or enforced, and I prefer voluntary but if it needs regulatory change I will not be afraid to do it."