Brussels, 03/05/2013 (Agence Europe) - Most European countries oppose the idea of national bank restructuring funds being used to bail out failing banks. This emerged on Tuesday 2 May during debate about the draft directive to harmonise national bank restructuring systems. The Ecofin Council on Tuesday 14 May will discuss the matter, but agreement among the member states is not expected until June.
This position corresponds to the approach taken by the Irish Presidency of the EU Council of Ministers in a memorandum circulated to national delegations (see EUROPE 10839). The Presidency says the aim of the directive is to tackle moral hazard and EU legislation must not send the message that failing banks will be bailed out in any circumstances by the national bank restructuring fund.
The question has been raised about the purpose of these restructuring funds to be financed by banks ahead of crises. Dublin highlights the option of providing temporary financial aid by absorbing losses and providing cash flow and capital to establish bad banks to hive off toxic assets from the failing bank.
Several countries want the exact aim of the funds to be decided upon before looking at the question of how they are financed. One diplomat said that there was no point ruining the financing issue by answering it before one knows what the funds are for. The Irish Presidency submitted to countries the idea that the restructuring and deposit guarantee funds should, between them, hold 1% of the savings covered. On Thursday, no clear majority emerged for either higher or lower funding than this 1%.
“Bail-in”. It would now seem to be agreed that savers with more than €100,000 will not be exempt from raids in the event of a bank bail-in. The above-mentioned diplomat said that Cyprus had shown that this could not be ruled out as a matter of course. Spain is arguing for it, however, as is Italy for the bank accounts of small businesses.
As for when the bail-in rules will come into force, 2015 seems too soon for most countries, despite a request for this by Germany, Denmark, Finland and the Netherlands (see EUROPE 10818) and the ECB's desire for the start date to be 1 January 2015 (see EUROPE 10820). It is more likely that some point between 2015 and 1 January 2018 (the Commission's initial suggestion) will be chosen. (MB/transl.fl)