EU banking deal set for 'long, complicated' talks with MEPs
19.12.13 @ 18:50
BRUSSELS - European Parliament President Martin Schulz has warned member states that their just-agreed deal on banking union lies far below MEPs' ambitions and will be subject to lengthy negotiations.
"These decisions are rather remote from what the MEPs in the economic and monetary affairs committee have agreed," Schulz said Thursday evening (19 December).
After difficult talks, EU finance ministers on the eve of the summit reached a compromise on how banks should be wound down in future - seen as essential to stop future financial crises.
But critics say the agreement is vague in many places and highly complex in others, meaning that the essence of the bank union - being able to quickly wind down a bank and to have a fund to do it with - is missing.
Speaking after addressing the leaders on the "worrying direction" they have taken, Schulz said "the negotiations with the European parliament will be long, difficult and complicated."
He said the issue is about the fundamental question of whether a common project is made on a communitarian basis - involving the EU institutions - or on an intergovernmental basis.
EU states have said that a single fund resolution fund should be built up to a capacity of €55 billion over 10 years using bank levies and that decisions on a failing bank will be taken by a multi-armed resolution board. The board itself is to be established as part of a treaty agreed between governments.
"We reject the idea of a further intergovernmental treaty," Schulz told leaders.
He also said that the ministers' promise to find a solution among themselves should money be needed before the €55 billion is in place is "not concrete."
MEPs want the European Stability Mechanism - the eurozone bailout fund - or the EU budget to be available as a backstop, something that is a no-go for Germany.
Meanwhile, Schulz likened the fact that it is set to take over 100 people to deliberate on whether a bank should be shut down to going to hospital and being treated by the administrative board rather than a doctor.
"If a bank cannot be wound up within a weekend in order to prevent a run on the banks, the system is too complicated. In other words, the commission must play a central role here," he said.
The extent of the EU commission say in the whole process was a key area of dispute among member states. They eventually opted to give it a minor role.
But although Schulz has warned about lengthy negotiations, there is an external timetable.
Both sides are keen to hammer out a deal before EU elections in May.