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Proportionality as the Organizing Principle of European Banking Regulation

Proportionality is a precious tool for managing complexity, and banking law provides numerous examples of complexity in view of plurality of the actors and levels of governance and legislation involved as well as the plurality of fundamental principles and fundamental rights touched upon, whether more or less intensively. In this sense it can be stated that, besides being a general principle of Union law, proportionality is an organizing principle of Union banking law. The very function of proportionality is to reconcile the need for uniform rules and for the further integration of the single market with the adaptation of the rules, with proper justification, to realities that are still very different within the internal market, in order to achieve fair and efficient application of the law. This is why the harmonization of banking law, if it undeniably curtails the discretion of Member States in certain respects, also leaves a considerable number of tools for the accommodation of national specificities, thus embedding proportionality in decision-making procedures at national level. Consequently, the exercise of discretion by the supervisor, in relation both to technical regulations of general application and individual decisions, requires thorough justification and carefully drafted criteria in order to demonstrate the application of proportionality as well as the equal treatment of all parties. For this reason, judicial control will be exercised more intrusively in terms of ensuring respect for the principle of proportionality when individual decisions significantly limit the rights and freedoms of private actors. Whether by drawing up different categories of credit institutions and adapting requirements and procedures accordingly, by granting individual exceptions, by making use, or not making use, of options and discretions, banking supervisors should certainly look to proportionality as their guiding principle.