26th Oct 2016

Ministers time-wasting on bank union talks, MEPs say

  • Strasbourg: MEPs and ministers face an institutional battle as they try to agree rules on how to resolve failed banks (Photo:

MEPs have accused EU finance ministers of delaying tactics in negotiations on a single resolution fund for eurozone banks.

Deputies in Strasbourg voted on Thursday (6 February) by a strong margin to back a parliament negotiating strategy which rejects plans agreed by ministers to set up a common resolution fund to cover the costs of failed banks using an intergovernmental treaty.

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It would also establish a fully mutualised fund by 2018 - five years faster than the timetable proposed by ministers - and a centralised resolution authority.

On Wednesday (5 February) Parliament negotiators held their third round of negotiations with representatives of the Greek presidency, which has been tasked with brokering a deal on behalf of governments. But MEPs say that governments are unwilling to compromise.

"We've had three trialogues where the Greek presidency has had nothing to add beyond the Council's December position, and there are limits to how long we can go explaining our position," Sharon Bowles, who chairs the Parliament's economic affairs committee, said.

Ministers reached agreement in December on a new authority to deal with bank resolution cases, together with a common fund worth €55 billion paid by the banks themselves to cover the costs.

However, in a bid to pacify German government concerns that their taxpayers could be left liable for the bulk of the costs, ministers agreed that the governance and use of the fund should be subject to an intergovernmental treaty.

MEPs, together with European Commission officials, fear that this could lead to an unwieldy decision-making process when decisions on a bank's future will need to be made in hours rather than weeks.

For his part, financial services commissioner Michel Barnier wants the fund to be able to access financial markets and have a lender of last resort, such as the eurozone's bailout fund, if it needs additional monies.

The commissioner also called on governments to limit the scope of the inter governmental agreement to transfers from the fund, leaving its governance and the calculation of contributions in the hands of EU institutions

Although council officials believe MEPs will be more likely to accept a deal to avoid being blamed for holding up the legislation, the parliament's negotiating team continues to hang tough.

(The Parliament vote) "is a signal that the countries must change the deal considerably," said Sven Giegold, who speaks for the Green MEPs on the file. "If they don't do it, then things won't work out."

"There is no deadline. If need be, the work can be left unfinished to be picked up by the next parliament," said Bowles in a debate earlier this week. EU elections are in May and the next parliament will begin its legislative work in autumn.

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