Friday

28th Apr 2017

EU lawmakers reach agreement on bank rescue rules

  • A symbol of the crisis? EU lawmakers say new bank rules would prevent a repeat of the RBS bailout. (Photo: Fergus Ray Murray)

MEPs and ministers have agreed new rules to rescue insolvent banks that would target bondholders not savers, following the final round of talks in Strasbourg.

The bank recovery and resolution directive, which will apply to all 28 EU countries, sets out the hierarchy of creditors to be 'bailed-in' in the event of a bank crisis.

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.

Shareholders and bondholders would be first in line, with savers last in the queue, while tapping public money to prevent a bank collapse would only be done as a last resort.

The new rules on bail-in will take effect from January 2016.

Under the agreement, the bail-in rules would apply at least until 8 percent of a bank's total assets have been wiped out.

Welcoming the deal on Tuesday night (11 December), Gunnar Hökmark, the centre-right MEP tasked with steering the legislation through Parliament, said that the bail-in mechanism "sends a clear message that bank shareholders and creditors will be the ones to bear the losses on rainy days, not taxpayers. "

"We also established clear rules to deal with the most exceptional cases in which overall financial stability is in danger," he said.

 

For his part, financial services commissioner Michel Barnier remarked that the deal was "a fundamental step towards the completion of the Banking Union."

The bill will also require all EU countries to set up a national fund to cover the potential costs of bank resolution.

The fund will be worth 1 percent of the total deposits held in a country's banks by 2025 and be financed by a bank levy.

Negotiations on the directive began in 2012 but were given added political charge in spring in the wake of the hurriedly agreed Cypriot bail-out.

The first offer to Nicosia from eurozone finance ministers in March featured a one-off 6 percent levy on all savings worth more than €20,000 to raise a €7 billion contribution from Cyprus as part of the €17 billion rescue package. The proposal panicked markets and saw savers scramble to take their money out of Cypriot banks.

Since then, lawmakers have been keen to reassure citizens that their savings will be safe. They have also been anxious to avoid a future repeat of the multi-billion euro taxpayer funded bailouts given to banks during the 2008-9 crisis.

The agreement secures the first part of an ambitious wish-list of banking reforms. EU lawmakers are also hoping to sign off on reforms to the EU's rules on deposit guarantee schemes which protect the first €100,000 of individuals' savings.

Meanwhile, finance ministers will return to the negotiating table next week in a bid to agree their position on plans to create a single resolution authority and fund for the eurozone.

EPP group frustrated with Orban

Orban's ruling Fidesz party is getting too much to handle for the EPP group, as they are once again forced to defend the Hungarian premier's controversial actions.

Verdacht gegen Russland bezüglich Macronhacking

Laut einer neuen Studie haben russische Spione auf dieselbe Art und Weise versucht die Passwörter von Macrons Leuten zu stehlen, wie es sie auch beim Hacking der US Wahlen taten.

EU telecom watchdog plan dead on arrival

The European Commission wants to upgrade the Body of European Regulators for Electronic Communications into an agency, but both the parliament and member states are against it.

EPP group frustrated with Orban

Orban's ruling Fidesz party is getting too much to handle for the EPP group, as they are once again forced to defend the Hungarian premier's controversial actions.

EU telecom watchdog plan dead on arrival

The European Commission wants to upgrade the Body of European Regulators for Electronic Communications into an agency, but both the parliament and member states are against it.

News in Brief

  1. EU has no evidence of NGO-smuggler collusion in Libya
  2. Poland gets 'final warning' on logging in ancient forest
  3. Commission gives Italy final warning on air pollution
  4. Romania and Slovenia taken to court over environment policies
  5. Report: EU parliament says FN jobs cost €5mn
  6. Turkey suspends 9,000 police officers
  7. May hosts Juncker at Brexit dinner
  8. 700,000 people granted EU asylum

Stakeholders' Highlights

  1. ECR GroupSyed Kamall: We Need a New, More Honest Relationship With Turkey
  2. Counter BalanceParliament Sends Strong Signal to the EIB: Time to Act
  3. ACCARisks and Opportunities of Blockchain and Shared Ledgers Technologies in Financial Services
  4. UNICEFRace Against Time to Save Millions of Lives in Yemen
  5. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  6. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  7. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  8. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  9. ACCAEconomic Confidence at Highest Since 2015
  10. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  11. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process
  12. Nordic Council of MinistersNordic Region and the US: A Time of Warlike Rhetoric and Militarisation?

Latest News

  1. EPP group frustrated with Orban
  2. Verdacht gegen Russland bezüglich Macronhacking
  3. 'Serene' EU warns UK against Brexit 'illusions'
  4. EU telecom watchdog plan dead on arrival
  5. Russische Fake-News überschwemmen die sozialen Medien Frankreichs
  6. EU agency stuck with London rent bill
  7. EU anti-fraud office ditches Martin Schulz probe
  8. Commission launches bid to make Europe social