Tuesday

5th Dec 2023

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.

Read and decide

Join EUobserver today

Become an expert on Europe

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

... or subscribe as a group

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.

Analysis

EU summitry - a useful evil

It's easy to be exasperated by the EU's seemingly endless capacity to have summits. But there is some method to the madness.

MEPs strike deal on bank supervision regime

MEPs and governments have reached a deal on legislation giving the ECB new powers to directly supervise European banks, but most will stay under national supervision.

Analysis

What are the big money debates at COP28 UN climate summit?

The most critical UN climate conference (COP28) ever will run from Thursday to mid-December — with talks on climate commitments and climate finance expected to determine the success of this year's summit.

Latest News

  1. Afghanistan is a 'forever emergency,' says UN head
  2. EU public procurement reform 'ineffective', find auditors
  3. COP28 warned over-relying on carbon capture costs €27 trillion
  4. Optimising Alzheimer's disease health care pathways across Europe
  5. Georgian far-right leader laughs off potential EU sanctions
  6. The EU's U-turn on caged farm animals — explained
  7. EU-China summit and migration files in focus This WEEK
  8. COP28 debates climate finance amid inflated accounting 'mess'

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Stakeholders' Highlights

  1. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  2. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Join EUobserver

Support quality EU news

Join us