Brussels, 26/06/2013 (Agence Europe) - As we were going to press on Wednesday 26 June, the Ecofin Council was preparing to examine the latest compromise package prepared by the Irish Presidency of the Council of Ministers for rules governing national bank resolution schemes (see EUROPE 10873).
EU Internal Market Commissioner Michel Barnier said that an agreement was within reach at ministerial-level, but two or three points needed to be finalised to strike a balance between harmonisation of the rules and the legitimate flexibility demanded by a number of delegations.
For bank restructuring, the member states will have the option of ruling out, under certain conditions and in exceptional and properly justified circumstances, the bailing in of financial instruments in addition to the ones already excluded from the directive (derivatives, senior bonds and debt maturing in fewer than seven days).
The most recent Irish Presidency compromise is dated Wednesday (see Twitter @AgencEurope). It keeps the discretionary powers requested by France and Sweden, but changes the rules on how the cost of exemptions is to be borne. When the financing of the exemptions is fully covered by other investors in the bank that are part of the bail-in, they must be treated in a fair way. When the financing is covered by the country's bank resolution fund, the fund can only intervene if the failing bank's shareholders and lenders have already absorbed at least 8% of the total eligible instruments. Intervention by a resolution fund must not exceed 5% of total eligible instruments or the total cash in the fund raised by levies and cash from the financial industry after the crisis occurred (in the three years following the bail-in).
An area still to be settled is France's demand to be allowed “in exceptional circumstances” to use “alternative” financial arrangements, such as public money (from the ESM?). This was opposed last week by Germany.
Special bail-in rules will be drawn up for non-euro countries like Sweden. (MB/transl.fl)