Nina Schindler is Chief Executive Officer at the European Association of Co-operative Banks (EACB), appointed in February 2021.
Before, Nina was Head of Government and Public Affairs EU at Deutsche Bank as of 2017. Throughout her carrier, she fulfilled similar positions for Commerzbank and the Association of German Banks in Brussels. Nina graduated as a lawyer in Germany and is holding an LL.M. (University of Exeter, UK).
She is a member of various committees at European Payments Council (EPC), at the European Financial Reporting Advisory Group (EFRAG) and at the European Banking Industry Committee (EBIC).
You have a long career in advocacy for the banking sector. Having started your professional path with the EACB, you have subsequently held various leading positions representing the German banking industry in Brussels. This allowed you to gain in-depth knowledge and experience on EU policy advocacy, communication and regulatory management. Since February 2021 you have been at the helm of the EACB: how does it feel to be back?
My start at the EACB marks the beginning of an exciting new chapter. It is a great honour to be entrusted with the responsibility to drive the association’s future agenda. After an interval of more than a decade, I am happy to be back on board to lead the association’s activities and to jointly work with the strong EACB team on the particular demands of our members and their co-operative business model.
“What one cannot do, many can do” - this guiding principle of Friedrich Wilhelm Raiffeisen has been one of the driving forces in the co-operative banking movement. The way, this has translated into the co-operative banking model, and its particular approach to the banking business very much appealed to me when I first worked at the EACB more than a decade ago and it left a lasting impression. When the opportunity to lead the association presented itself and the EACB was looking for a new manager, I did not hesitate to apply.
I feel privileged to build on the heritage of my predecessor, Hervé Guider, who developed a highly motivated and skilled team of regulatory excellency here at the EACB Secretariat. Moreover, he managed to engage a broad member base coming from all over Europe and beyond, which is dedicated and supportive to the EACB activities. This allowed me to hit the ground running.
Let me underline that co-operative banks and their business model have an important value to add to the banking landscape. Compared to the joint stock form of enterprise, the co-operative bank horizon is long term, not short term. Co-operative banks are focused on their stakeholders which are their members and clients, and not primarily on shareholders. Profit maximisation is not the objective, even if profitability is imperative for the sustainability of the bank. Indeed, the major part of the annual profit is used to strengthen the capital reserve and thus enhance the lending capacity and strength of the bank. As a result, economic and financial developments and legislative proposals impact co-operative banks differently com-pared to other banks.
Still, the co-operative banking model is not always well known and recognised. Therefore, I am very much looking forward to raising awareness and to putting the interests of co-operative banks at the forefront. It is the core task of the EACB to bring the differences of co-operative banks to the attention of regulators and legislators and to explain possible unintended consequences if the specificities are not well reflected in regulation. Notably, for the benefit of a sound, resilient banking system, EU regulators should encourage diversity in the banking sector, and policy measures should be drafted “business model neutral”, not only with joint stock companies in mind but also considering the particularities of the co-operative governance model.
Starting with the EACB under the exceptional circumstances of the COVID-19 pandemic, how is the crisis impacting the association’s agenda?
Needless to say, these are challenging times. The COVID pandemic has left its mark. EACB members have gone to great lengths to continuously offer support to their customers, both consumers and businesses, during the crisis, appreciatively applying the support measures put in place by regulators and supervisors. While it may have taken some time to get the implementation of those right in the beginning, the combined efforts of EACB members and policy makers have helped to alleviate the effects of the crisis and ensured continued lending to the real economy.
Even if some light seems to be shining at the end of the tunnel, the trust in a strong economic recovery after the pandemic remains fragile. COVID’s economic consequences will be felt for some time, by society at large, by economic actors, by consumers and by consequence also by the co-operative banking sector. There is concern about “cliff effects” at the exit from the COVID crisis, when public support measures end and enterprises have to service their loans again. Not all companies and consumers will necessarily be able to come out of this crisis unscathed. Insolvencies are expected to increase and the banking sector will have to absorb losses. The situation of banks’ balance sheets and the capitalisation of the economy will certainly come into focus. At the same time, co-operative banks will also want to play their role in facilitating the economic recovery. But this is not an easy task, as the current low-interest environment puts additional pressure on the profitability of banks. This will make 2021 a very demanding year.
The EACB shall maintain a close dialogue with legislators, regulators and supervisors to help ensure that the combination of economic support measures and the legal and supervisory framework for banks is conducive to recovery and does not restrict bank lending. Accordingly, all regulatory measures that were developed before the crisis will have to be scrutinized to see whether they fit into the current context. It is of great importance to the EACB to effectively support its members in this respect and to make their voice heard in the political debate.
Beyond the COVID crisis and its consequences, what main areas do you see shaping the future of banking in the EU – how are co-operative banks responding to the resulting challenges and opportunities?
Climate change and digitalisation are two developments that in and by themselves impact not only society but also the banking business to its core. This is because they translate into changing the behaviour of clients, but are also influential as a result of policy choices that are being made in these two areas. Banking institutions are thus called upon to enable the digital and sustainable transformation of the economy.
The pandemic has reinforced discussions on a sustainable economy in our societies. The work of the European Institutions on sustainable finance continues at great pace. Co-operative banks with their specific approach to banking and governance highly welcome and much appreciate the sustainable finance project. With their large SME and consumer customer base, co-operative banks are well placed to support moving our society to a more sustainable economy and to accompany the transition at local level.
Having said that, the resulting policy measures significantly affect banks and their services. This year the first piece of sustainable finance legislation, the Sustainable Finance Disclosure Regulation (SFDR), has become applicable. Its implementation presents substantial challenges to EACB members as not all pieces of the puzzle are yet available. And many more legislative initiatives are underway. The new Sustainable Finance Strategy later this year will provide new impulses. From the perspective of the EACB and its members, it is key that the new EU Sustainable Finance framework caters for an incentivising approach to stimulate the green transition rather than a penalising one.
The pandemic has also boosted digitalisation. Digital finance has helped citizens and businesses to overcome some of the downsides of social distancing. Not surprisingly, the European Commission has therefore not slowed down its agenda “to make Europe fit for the digital age” but is moving full speed ahead. It will be crucial for a successful transition to a sustainable and carbon-free economy that we take as much as possible companies and their employees with us on this journey.
For co-operative banks, the digital transformation of their decentralised approach to banking, based on personal ties with their members and proximity to their customers, is an important challenge. New channels for the maintenance of the contact with members/customers have to be found. EACB members are working on different concepts to redefine relationship banking for the digital age. They are carefully looking at all the new technologies that can support this, such as artificial intelligence, block chain, APIs etc, taking to heart the need to keep the customer in control of their data. The EACB is therefore keen to engage with policy makers on these topics.
All in all, I strongly believe that our members’ experience during the COVID pandemic combined with the Commission’s sustainable and digital finance agenda, provide an important foundation for further evolving the concept of “relationship banking” that characterises co-operative banks.
Regarding the EU legislative dossiers, which projects are on top of the EACB agenda?
For this year we are expecting some major legislative projects. Considering the relevance and range of the topics, the EU regulatory agenda is more than demanding. There are reviews of the capital framework for banks (Basel implementation and additional measures), some key elements of the investment services, consumer protection and anti-money laundering framework, of the framework for banking resolution and deposit protection and of the non-financial reporting directive, a legislative proposal on corporate governance, to name only some.
To illustrate with one example, the EU is moving towards the launch of the legislative process to implement the remaining Basel reforms (mostly known as Basel IV, despite being officially still part of the Basel III overhaul). These reforms are anticipated to have massive capital impacts on EU banks, in particular due to the mechanics of constraints imposed on internal capital models (output floors) and of other aspects, especially under credit risk like the treatment of real estate exposures, non-rated corporates, equity holdings, etc. We believe that the implementation process should be postponed, at least until the recovery from the COVID crisis, is well underway. And it has then to take into account the very nature of EU banking and credit markets, which are much less geared towards capital markets for both institutional and cultural factors.
This reality describes the major concern of our members: the regulatory landscape for banks has reached a degree of volume and complexity, which is quite burdensome. Regulatory costs are steadily increasing. While one kind of regulatory measure impacts the cost of capital and operations, other pieces of EU legislation directly impact the revenue side of banking. Budgets related to IT and compliance have increased multiple times over the past 10 years. Keeping the regulatory framework manageable for our banks remains therefore our key mission in 2021.