Vilnius, 16/09/2013 (Agence Europe) - Despite lukewarm support amongst EU finance ministers meeting in Vilnius, Lithuania, on Friday 13 September, the European Commission is confident that a compromise will emerge among the EU28 about its draft proposals for a single bank resolution mechanism (SRM), unveiled in July (see EUROPE 10885). The Lithuanian Presidency of the Council of Ministers is asked to come up with ideas on how to reconcile the various views.
We have to come up with results, warned Michel Barnier, EU Internal Market Commissioner, who said he was listening to the concerns formulated by the member states. Some countries, like Finland, are querying the Commission's power to trigger the resolution process in the future banking union. Barnier said the Commission's aim was not to win new powers for the Commission, but to set up an effective system. He said his department had looked at all the options and didn't oppose future improvement to the system, envisaging that the trigger role could be transferred in the future to the European Stability Mechanism (ESM), but it would not be possible to do that without changing the Treaty because the ESM is not an EU body and it only covers the eurozone.
If the system is re-designed in the future, the ESM would appear a better choice than the ECB, said a Commission source, not thinking that the ECB would want to be given the power to trigger the resolution mechanism. The ECB will become the eurozone bank supervisor in the autumn and it is better to keep the two jobs separate. The source argued that the idea of setting up a network of national resolution authorities rather than an EU agency, as reportedly suggested by a number of countries, would not make any progress or solve any of the problems.
At the moment, Barnier said it was more coherent and effective to give the Commission the trigger role, saying it would be based on a resolution plan drawn up by the Single Resolution Committee representatives of the ECB, the European Commission and the national authorities involved in the single supervision system.
After the meeting, Swedish Finance Minister Anders Borg said that Sweden had joined ranks with Germany (leader of the doubtful countries) and the United Kingdom. “It is a bit difficult to have the Commission being both responsible for state aid assessments and also being part of the decision on restructuring”, he argued on Saturday 14 September on his arrival for the second round of ministerial talks. Stockholm wants to remain outside the new mechanism and the Swedish government is also querying the way the national resolution funds and the single resolution fund attached to the resolution committee would interact. One minister is reported to have recommended measures at national level for winding up certain banks.
Commissioner Barnier does not oppose the idea of the new system only covering cross-border banks, which are a huge problem, explained Vitor Constancio, ECB vice-president, because winding them up nationally has thus far proved problematic.
Legality of the text. German Finance Minister Wolfgang Schaüble again challenged the legal basis of the new legislation. He said on Saturday that he wanted banking union to be done rapidly, but on a solid basis. The Commission and ECB do not want to discuss the legal basis now that the EU Council of Ministers' legal department has issued an opinion that Article 114 on the harmonisation of legislation within the single market is a solid legal basis. The legal departments of the Commission and ECB had already issued similar opinions. Welcoming this, Jörg Asmussen, member of the ECB's Executive Board, said it was now possible and necessary to make progress on banking union. Dutch Finance Minister Jeroen Dijsselbloem said there would be “interesting” debate over the few months, but “in a week and a half, the world might look different already”, because Germany's general elections take place next Sunday. French Finance Minister Pierre Moscocivi said there was no “appetite” for changing the EU Treaty.
Resolution Fund. Berlin is concerned about the setting up of a common bank resolution fund. Although in time, it would be financed by the banks themselves, Asmussen said that, in the early stages, it might be possible for it to borrow money from the ESM. The money would have to be paid back to the ESM, so there would be “no permanent transfer from the ESM to the resolution fund”. Constancio said that, as far as the ECB is concerned, the single resolution fund is crucial.
Timing. Moscovici, who broadly supports the Commission's proposals, said that non-euro countries were, along with Germany, the countries with the most doubts. He said he was surprised at Spain being not so close to the other eurozone countries as he had imagined, but refused to give any details. Drawing a parallel with the vetos during the talks on the single bank supervision mechanisms, he had no doubt that a compromise would emerge. Each country has its own initial view, sometimes expressed quite brutally, and the Commission and Lithuanian Presidency then draw inspiration from this and work on it - that's how Europe operates, he added, hoping the EU28 would reach agreement by the end of the year.
Commissioner Barnier listed the areas on which there is already agreement - the final objective and the applicable rules, namely those of the directive on restructuring and winding up banks. He welcomed the vote at the European Parliament's plenary on Thursday on the single bank supervision mechanism (see EUROPE 10920), noting that he'd noticed the same sense of urgency among the finance ministers. (EL/transl.fl)