Brussels, 19/06/2013 (Agence Europe) - The Ecofin Council will seek to agree joint rules for banking restructuring, in Luxemburg on Friday 21 June (see EUROPE 10869).
A political agreement in principle, designed to give the future Lithuanian Presidency of the Council of Ministers a mandate to negotiate with the European Parliament, will be based on the following triptych: - the design of the bail-in tool by determining a hierarchy of private creditors (shareholders, junior creditors, depositors with savings in excess of €100,000); - the sums to be allocated to the national restructuring fund; - the minimum debt (MREL) eligible to be contributed in the event of a restructuring exercise, which the bank must owe. Central to the negotiations will be the interaction between these three elements: greater flexibility for the member states to determine the list of instruments eligible for the bail-in will make it necessary to set more stringent requirements for the other two elements. However, the United Kingdom is resolutely opposed to any talk of an ex ante contribution to restructuring funds from the industry.
On Wednesday 19 June, the national ambassadors to the EU (Coreper) discussed the level of the MREL (10% of liabilities?). “We are not far from creating a new prudential ratio”, the same diplomat stressed, drawing a parallel with the work on the leverage ratio of the CRD IV package on the requirements for banks' own funds. As not all of the data are available, a revision clause calling for the expertise of the European Banking Authority (EBA) will be brought in to analyse the value and methodology needed to determine harmonised rules in this field.
The Ecofin Council will also tackle the specific recommendations for each country made to the member states at the end of May and will enshrine without debate the agreement on an early reaction mechanism in the event of VAT fraud (see other article). (MB/transl.fl)