Brussels, 10/07/2012 (Agence Europe) - At the ECOFIN Council in Brussels on Tuesday 10 July 2012, several EU member states, including Italy, criticised the draft bank and investment company bailout and crisis management plans.
Spain's finance minister said it was important to ensure that problems with banks did not cause problems for sovereign debt and the directive therefore needed to be seen in a wider perspective. On the question of sharing the financial burden, he said the devil was in the detail because collateral damage had to be reined in. Hungary agrees with the aims, but says that details like the relationship between host country and country of origin needed to be worked out, along with cost-sharing.
The draft directive is a step in the right direction but uses a decentralised approach that does not do enough to solve the causes of the current instability, said Mario Monti, the Italian prime minister.
At a press conference, Monti said he had asked for the directivce on bank restructuring and wind-up to be more ambitious and match the approach taken by the European Summit. He said it was an important aspect of the financial market reforms as a single control mechanism and savings guarantee system with a single bank wind-up fund, which would really help achieve a lasting solution to the current crisis and prevent any further crises of such a scale.
Luxembourg said the economic and social impact of the crisis management plans needed to be examined because if some parts of a bank have to be sold off, that will affect the host country. Several countries, Luxembourg and the Czech Republic for example, raised the question of funding.
Internal Market Commissioner Michel Barnier told Spain and Luxembourg that the savings guarantee systems needed to be well-connected with the wind-up fund and much work had gone into this at the Commission, although there was room for improvement and consolidation in talks with ministers and MEPs.
On the balance between home and host countries, Barnier said that the Commission suggested binding mediation powers for the European Banking Authority to make the process effective, which is one of the reasons why the integrated regulator that the European Commission will be working upon (the recent European Summit decreed that proposals are to be unveiled in September in this connection, see separate article) should cover all Member States.
The commissioner said that there was talk about pre-financing, but that did not mean that there would never be any financing after-the-event, which is why countries will be able to dip into the wind-up and savings guarantee funds. Barnier said he agreed with Spain on the need to pull out the stops to reduce the cost to the public purse.
The Commission briefed the Council on the revised bank capital rules (CRD IV), but none of the member states responded at the meeting. (LC/transl.fl)