Wednesday

27th Jul 2016

EU summit lays out next steps for banking union

  • Tax payers are angry at having to foot the bill for reckless banks (Photo: Matt Buck)

EU leaders meeting Thursday (13 December) in Brussels have agreed to take further steps toward banking union including the political and legal minefield of common rules on winding up ailing banks while making sure the tax payer does not foot the bill.

Text agreed after the lengthy meeting says the European Commission should "in the course of 2013" make a proposal for a single resolution mechanism for all member states that are part of the newly-agreed bank supervisory system.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

It also proposes a tight timetable for agreement suggesting that MEPs and member states treat the matter as a "priority" with the "intention of adopting it during the current parliamentary cycle." Parliament breaks up for the European elections in Spring 2014.

"This will be the next important building block of our Banking Union. This will mean that taxpayers will not have to pick up the bill in the future and that the sector will pay to solve its own problems," said commission president Jose Manuel Barroso.

The agreement to push ahead come directly after member states - following marathon discussions just ahead of the summit - finalised a deal to give the European Central Bank a direct and indirect supervisory role over all eurozone banks.

The details of that deal - including how to work out relations between euro and non-euro countries - were complicated enough, but winding up or propping up banks and deciding how their outstanding bills ought to be paid is likely to imply even tougher talks.

One EU official told this website that it is likely to cement north south divisions in the EU as politicians take a hard look at where weak banks are located.

"The single resolution mechanism should be based on contributions by the financial sector itself and include appropriate and effective backstop arrangements," says the text referring to money that will be needed to plug the holes left by sick banks.

The text also speaks of the need to ensure a "fair balance" between home and host countries - mild language for a complicated issue.

The text does not say who would pay the bills upfront. Instead it says the "backstop" should be "fiscally neutral over the medium term" by ensuring that "public assistance is recouped by means of ex post levies on the financial industry."

EU council president Herman Van Rompuy said that where the public money should come from is "a matter for discussion and decision later on."

"There is not yet a proposal tabled, but it was made clear that it should not be taxpayers but rather the banks themselves, who are to clean up if a bank gets into trouble", Danish Prime Minister Helle Thorning-Schmidt said, according to Berlingske Tidende.

While the commission is to come forward with a common resolution plan, there are already two pieces of harmonising legislation in this area on the table. They set out national minimum standards for protecting depositors and dealing with failing banks. The summit text urges legislators to reach agreement by June 2013.

EU to tweak rules on Chinese 'dumping'

The EU Commission has tried to fudge the issue of whether China is a “market economy” amid efforts to protect European industry from cheap exports.

Stakeholders' Highlights

  1. GoogleHelping Emergency Services Find You When You Need It Most
  2. Counter BalanceWhat's New in the Investment Plan for Europe: Business as Usual or True Innovation ?
  3. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event 2016
  4. GoogleHow Google Fights Piracy: Creating Value While Fighting Piracy
  5. EJC"My Visit to Israel" - Opinion by MEP Lopez Aguilar, Chair of the EP Working Group on Antisemitism
  6. World VisionChildren Migrating, Out of School and at Work as Hunger Deepens in Southern Africa
  7. European Healthy Lifestyle AllianceStand-Up (and Exercise) to Prevent Chronic Diseases
  8. Centre Maurits CoppietersLaunches a Real-time News Hub Specialised in EU Stakeholders
  9. Dialogue PlatformFethullah Gulen Calls for International Probe Into Turkey Coup Allegations
  10. GoogleEU-US Privacy Shield: Restoring Faith in Data Flows and Transatlantic Relations
  11. World VisionWorld Leaders & Youth Advocates Launch Partnership to End Violence Vs. Children
  12. Counter BalanceReport: Institutionalised Corruption in Romania's Third Largest Company