Saturday

23rd Mar 2019

Ministers crawl toward bank resolution deal

EU finance ministers will reconvene on Wednesday (26 June) in a last-ditch attempt to agree on common rules to wind down ailing banks.

Ministers failed to reach a deal despite almost 20 hours of talks in Luxembourg that ran from Friday into Saturday morning.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Ministers failed to reach agreement despite 20 hours of talks in Luxembourg (Photo: The Council of the European Union)

A common position is required before ministers can open negotiations with the European Parliament, which agreed its own stance on the new regime in May.

The bank resolution and recovery directive, tabled by the European Commission in June 2012, was widely seen as a precursor to the single resolution mechanism (SRM) for the eurozone, a controversial piece of legislation expected to be proposed in the coming weeks by the EU executive.

The directive sets out a hierarchy of shareholders and creditors who would be "bailed in" to bear losses if a bank got into serious difficulties, leaving savers as the last in line to lose money.

By forcing shareholders and major creditors to pay for a bank collapse, ministers hope to avoid a repeat of the multi-billion euro taxpayer funded bailouts following the 2008-9 financial crisis.

Although there had been earlier disagreement over the prospect of rules requiring all member states to set up bank-funded resolution funds earlier in negotiations, the main stumbling block was over how much flexibility governments should be granted in making decisions on winding down banks.

The UK and Sweden are among a group anxious to be allowed to invoke a "financial stability" clause to take account of spill-over effects that resolving a single bank could have on the rest of the sector.

However, Germany and the Netherlands are among those believing that too much flexibility would create new imbalances between the bloc’s weaker and stronger economies.

The previous evening, on Thursday (20 June), ministers agreed guidelines on how the eurozone's emergency bailout fund can inject money directly into struggling banks.

Starting in mid-2014 when the eurozone's new bank supervision regime begins, €60 billion out of the European Stability Mechanism's €500 billion lending capacity will be allocated to bank recapitalization.

“I think we can reach a deal if we take a few more days,” said Michel Barnier, the EU's commissioner on financial regulation.

“We are not far off now from a political agreement,” he added.

For his part, French finance minister Pierre Moscovici claimed that "90 percent" of the work has been completed.

However, Irish counterpart Michael Noonan cautioned that there are still “real issues” to be resolved.

“There is no guarantee there will be a solution on Wednesday,” he noted.

EU ministers agree rules on bank collapses

Bank shareholders and creditors will be first in line to suffer losses if their bank gets into difficulties, according to draft rules agreed by ministers Thursday.

News in Brief

  1. EU leaders at summit demand more effort on disinformation
  2. Report: Corbyn to meet May on Monday for Brexit talks
  3. Petition against Brexit attracts 2.4m signatures
  4. Study: Brexit to cost EU citizens up to €40bn annually
  5. NGOs demand France halt Saudi arm sales
  6. Report: Germany against EU net-zero emissions target
  7. Former top EU official takes job at law firm
  8. Draft text of EU summit has Brexit extension until 22 May

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Italy takes China's new Silk Road to the heart of Europe
  2. What EU leaders agreed on climate - and what they mean
  3. Copyright and (another) new Brexit vote This WEEK
  4. EU avoids Brexit crash, sets new date for 12 April
  5. Campaigning commissioners blur the lines
  6. Slovakia puts squeeze on free press ahead of election
  7. EPP suspends Orban's Fidesz party
  8. Macron is confusing rigidity with strength

Join EUobserver

Support quality EU news

Join us