MEPs issue threat over bank resolution plan
By Benjamin Fox
The European Parliament is prepared to pull the plug on plans for a common rule book to wind up failed banks, deputies said on Thursday (16 December).
Ministers reached agreement in December on a new authority to deal with bank resolution cases, together with a common fund to cover the costs.
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However, in a bid to pacify German concerns that a mutualised fund, which would be built up to €55 billion over ten years, could lead to German taxpayers underwriting the bulk of the costs, ministers agreed that the governance and use of the fund should be subject to an intergovernmental treaty.
Following a meeting of political group leaders, deputies issued a joint statement saying the parliament "firmly rejects" plans for a third intergovernmental treaty in less than three years.
The same method was used to create the eurozone's bailout fund and the fiscal compact setting out debt and deficit ceilings.
The EU assembly's objections are to be spelt out in a letter to European Commission president Jose Manuel Barroso.
Although the parliament has no powers to block an agreement between governments, its approval is required to agree the draft regulation which includes the bulk of the reforms.
Talks between MEPs and ministers began last week but face a tight timetable if they are to reach agreement before May's European elections.
With the newly elected parliament convening briefly in July and a new commission to be elected in the autumn, failure to reach a swift agreement could disrupt the timetable for the banking union structure to be in place before the end of 2014.
For their part, deputies on the parliament's economic affairs committee agreed their own position in December demanding a fully mutualised fund by 2018 and a centralised resolution authority.
"The current state of play in the negotiations is not promising, given the wide differences between the Council and Parliament, meaning that no deal before the European elections in May is a distinct possibility," added the parliament statement.
But an EU official familiar with the negotiations, said that he was "confident that council (member states) and parliament can agree a deal that is satisfactory in political and material terms."
"It is in our material interests to have this in place as soon as possible," he said, adding that "the solution we found on SRM gradually delinks the connection between banks and the sovereign".
In the meantime, national officials will next week begin a series of weekly meetings in a bid to finalise the draft intergovernmental treaty by a self-imposed 1 March deadline before presenting it to EU finance ministers at a meeting on 10 March.
The draft treaty is to include provisions for expost contributions from the banking sector if the fund proves insufficiently large.
It will also spell out the rules on national contributions to the fund and the possibility of the eurozone bailout fund providing bridge financing.