Brussels, 19/04/2013 (Agence Europe) - Negotiations between the political groups at the European Parliament (EP) are progressing on a draft directive to harmonise national bank resolution schemes. The draft report by Gunnar Hökmark (EPP, Sweden) will be put to vote on Wednesday 24 April in the economic and monetary affairs committee, although the S&D wants the vote to be delayed.
Representatives of all the political groups will meet on Monday 22 April for their final talks ahead of the vote on Wednesday. Philippe Lamberts (Greens/EFA, Belgium) told this newsletter it was not clear whether it would be possible for the EP to decide on its negotiating stance on Wednesday.
'Bail-in'. In reaction to the controversial Cypriot bailout, a key aspect of the new legislation will lay down the order in which investors and savers cash can be raided. The political parties at the European Parliament seem to agree that savers with more than €100,000 in an account will only have their cash raided as a last resort, and savers with under €100,000 in their account will not lose money because the EU rules protect them against being raided in a bail-in. Only the S&D is calling for savers with more than €100,000 in their accounts to be exempt from bail-ins.
Philippe Lamberts drew a distinction between individual banks that go bankrupt, where it would seem logical to raid savings of more than €100,000, and a systemic banking crisis where raiding the savings and bank accounts of small businesses could have a worse impact on financial stability. Hence the rapporteur's suggestion to combine bail-ins with state bailouts. The right wording had to be found, he said, and a decision reached on the exact thresholds when savings of over €100,000 would be raided as a last resort.
At the Ecofin Council in Dublin recently, EU Internal Market Commissioner Michel Barnier said that the Commission would be recommending that savings and investments should be raided in the following order when banks are restructured - first shareholders, then junior bondholders, then senior bondholders and finally savers with more than €100,000, if necessary (see EUROPE 10827).
2018 rather than 2015. The EP is sticking to 2018 for the bail-in rules to come into force in the EU, as suggested by the Commissioner. Several countries, including Germany, and the ECB, are calling for the start date to be brought forward to 2015, when a new directive comes into force (see EUROPE 10818 and 10820).
The draft legislation asks member states to set up a bank resolution fund that banks will be required to finance ahead of any crisis. There was no such fund in existence in Cyprus when Laiki, the country's second-biggest bank, was dissolved and good assets were transferred to Bank of Cyprus. MEPs back the idea of national funds. The Commission wants such funds to be used as a matter of course in the event of a crisis, but the rapporteur wants use of them to be optional. The Greens agree with the Commission.
EBA. Another controversial area to be addressed on Monday is the power of the European Banking Authority (EBA). Lamberts wants an EU body to have the power to provide binding mediation in the event of disagreements among national bank resolution authorities, like what was decided upon for the eurozone bank supervision mechanism. This view is in the minority and is made problematic by the fact that the legislation setting up the EBA says it cannot have binding powers on decisions that will have an impact on member states' budgets. (MB/transl.fl)