Thursday

28th Mar 2024

MEPs issue threat over bank resolution plan

  • Parliament's approval is required to agree the draft regulation which includes the bulk of the reforms (Photo: European Parliament)

The European Parliament is prepared to pull the plug on plans for a common rule book to wind up failed banks, deputies said on Thursday (16 December).

Ministers reached agreement in December on a new authority to deal with bank resolution cases, together with a common fund to cover the costs.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • MEPs fear the Parliament would be sidelined by plans for a bank resolution fund agreed by ministers (Photo: European Parliament)

However, in a bid to pacify German concerns that a mutualised fund, which would be built up to €55 billion over ten years, could lead to German taxpayers underwriting the bulk of the costs, ministers agreed that the governance and use of the fund should be subject to an intergovernmental treaty.

Following a meeting of political group leaders, deputies issued a joint statement saying the parliament "firmly rejects" plans for a third intergovernmental treaty in less than three years.

The same method was used to create the eurozone's bailout fund and the fiscal compact setting out debt and deficit ceilings.

The EU assembly's objections are to be spelt out in a letter to European Commission president Jose Manuel Barroso.

Although the parliament has no powers to block an agreement between governments, its approval is required to agree the draft regulation which includes the bulk of the reforms.

Talks between MEPs and ministers began last week but face a tight timetable if they are to reach agreement before May's European elections.

With the newly elected parliament convening briefly in July and a new commission to be elected in the autumn, failure to reach a swift agreement could disrupt the timetable for the banking union structure to be in place before the end of 2014.

For their part, deputies on the parliament's economic affairs committee agreed their own position in December demanding a fully mutualised fund by 2018 and a centralised resolution authority.

"The current state of play in the negotiations is not promising, given the wide differences between the Council and Parliament, meaning that no deal before the European elections in May is a distinct possibility," added the parliament statement.

But an EU official familiar with the negotiations, said that he was "confident that council (member states) and parliament can agree a deal that is satisfactory in political and material terms."

"It is in our material interests to have this in place as soon as possible," he said, adding that "the solution we found on SRM gradually delinks the connection between banks and the sovereign".

In the meantime, national officials will next week begin a series of weekly meetings in a bid to finalise the draft intergovernmental treaty by a self-imposed 1 March deadline before presenting it to EU finance ministers at a meeting on 10 March.

The draft treaty is to include provisions for expost contributions from the banking sector if the fund proves insufficiently large.

It will also spell out the rules on national contributions to the fund and the possibility of the eurozone bailout fund providing bridge financing.

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us