Sunday

19th Nov 2017

ESM bank bailouts will not happen soon, says Schaeuble

  • Schaeuble - No ESM bank bailouts any time soon (Photo: World Economic Forum)

German finance minister Wolfgang Schaeuble Monday (3 December) reiterated that no bank recapitalisation could take place until the EU's planned banking union is up and running.

The move deals a blow to ailing banks hoping for swift capital injections from the European Stability Mechanism.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Schaeuble was appearing alongside French Finance minister Pierre Moscovici at a hearing of the European Parliament's Economic and Monetary Affairs committee.

He said that "recapitalisation of banks by the ESM will not happen next week and is unlikely to happen soon", adding that hopes that banks would have immediate access to emergency funding were "exaggerated expectations".

Schaeuble was also at pains to stress that any bank bailouts would be accompanied by strict conditions and would have to be formally applied for by national governments. He also emphasised the need for strict separation between the ECB's new supervisory powers and its role in formulating monetary policy.

However, addressing questions by Spanish centre-right deputy Pablo Zalba Bidegain, he acknowledged that "Spain can't wait that long".

Earlier the Spanish government submitted a formal request for €39.5 billion of emergency funding to prop up its stricken banking sector. Ireland is among the member states most anxious for the ESM to provide support for Anglo-Irish and the Bank of Ireland, both of which had multi-billion euro losses

The €500 billion permanent bailout fund came into force in September, and will replace the Luxembourg-based European Financial Stability Facility (EFSF).

EU finance ministers are meeting in Brussels on Tuesday to discuss proposals to establish a eurozone banking union. The draft legislation would establish the European Central Bank as a single supervisor of the eurozone banking sector, and is expected to come into force in 2013, with EU leaders recently agreeing that the legal framework should be in place by the end of 2012.

Formal negotiations between ministers and MEPs are also set to begin in the coming days after the Economic committee agreed its position on the package last week.

Schaeuble's remarks are the latest attempts by the German government to downplay the possibility of widespread bank bailouts from the ESM. Berlin is also anxious to ensure that its regional Ländesbanks are kept out of the scope of supervision.

Meanwhile, Moscovici called for new political structures, and possible treaty change, for the eurozone. "We need to look at the role of the executive in the eurozone and a eurozone minister", he said, while also mooting the possibility of creating a committee of MEPs charged with dealing solely with the single currency area.

MEPs expressed concern that further integration of the 17 eurozone countries with banking union risks the fragmentation of banking supervision and of the single market.

However, Schaeuble said that the best way to ensure "fair treatment in banking supervision" was for the ten non-euro countries to participate in the banking union.

Ministers at odds on banking supervision

Ministers remained at odds on how to include non-euro countries in a planned banking supervision scheme, threatening a 1 January deadline.

MEPs ponder how to fight tax havens

After the Paradise Papers brought new revelations about tax dodging across the globe, including in the EU, the European Parliament wonders how to step up the fight.

News in Brief

  1. Bonn climate talks extend into Friday evening
  2. UK needs to move on Brexit by early December, Tusk says
  3. Puigdemont extradition decision postponed to December
  4. Ireland wants written UK guarantees to avoid hard border
  5. US did not obstruct climate talks, says German minister
  6. EU signs social declaration
  7. Puigdemont to be heard by Belgian judges
  8. Steep fall in migrants reaching EU

Stakeholders' Highlights

  1. European Jewish CongressAntisemitism in Europe Today: Is It Still a Threat to Free and Open Society?
  2. Counter BalanceNew Report: Juncker Plan Backs Billions in Fossil Fuels and Carbon-Heavy Infrastructure
  3. Nordic Council of MinistersNordic countries prioritise fossil fuel subsidy reform
  4. Mission of China to the EUNew era for China brings new opportunities to all
  5. ACCASmall and Medium Sized Practices Must 'Offer the Whole Package'
  6. UNICEFAhead of the African Union - EU Summit, Survey Highlights Impact of Conflict on Education
  7. Nordic Council of MinistersNordic Council Calls for Closer Co-Operation on Foreign Policy
  8. Swedish EnterprisesTrilogue Negotiations - Striking the Balance Between Transparency and Efficiency
  9. Access EuropeProspects for US-EU Relations Under the Trump Administration - 28 November 2017
  10. World Vision20 November: Exchange of Views at the EP on Children Affected by the Syria Crisis
  11. Nordic Council of MinistersSustainable Growth the Nordic Way: Climate Solutions for a Sustainable Future
  12. EU2017EEHow Data Fuels Estonia's Economy

Latest News

  1. EU keeps former Soviet states at arm's length
  2. EU leaders make pledge on social issues after populist backlash
  3. EU agencies and eastern neighbours This WEEK
  4. Germany slams Dutch call for more ambitious EU climate goal
  5. Mind the gap: inequality in our cities
  6. Climate activists 'disappointed' with EU at climate talks
  7. Davis outlines UK vision on Brexit in Berlin
  8. German coalition talks in near collapse