Brussels, 18/11/2013 (Agence Europe) - On Friday 15 November, European finance ministers quickly realised that discussions on the single banking resolution mechanism were not going to come to fruition, as no member state was willing to change its stance.
Despite the “popular stereotypes” showing a “polarisation” of national positions, particularly on the scope of application or decision-making within the resolution committee, “there is room for compromise in any case”, was the positive summary of Lithuanian Finance Minister, Rimantas Sadzius. In the view of Commissioner for the Internal Market Michel Barnier the council “made progress” in that there is “a very broad agreement on the need to respect the timeframe of the European Council”, in other words the obligation for the ministers to reach a political agreement before the end of December. “Reaching an agreement in five weeks is possible only if all member states make compromises. No member state will get everything it wants in an ideal world”, he pointed out. A ministerial dinner was initially scheduled, but ended up not taking place.
In Germany, internal negotiations on the formation of a government are underway, meaning that no development is possible at this stage. German Finance Minister Wolfgang Schäuble therefore reiterated the stance of his country, which is opposed to the creation of a resolutely Community mechanism (see EUROPE 10960). He questioned the legal basis (Article 114, single market), stating that he would prefer Article 352. Referring to two opinions pending of the Constitutional Court of Karlsruhe on the compatibility of the European Stability Mechanism with the European Treaty, he recommended not gambling over the choice of legal basis. Berlin is in favour of bringing the scope of application of single resolution into line with that of the single supervision mechanism, under which 130 banks will be supervised directly by the ECB from November 2014. Germany also refuses to accept the creation of a single fund fed into by the industry and designed to fund the resolution processes. On these points, Germany has little or no support.
Anticipating the “bail-in”? An agreement on the single banking resolution mechanism will be closely linked to the agreement on the BRRD directive harmonising national resolution regimes. This directive will generalise the “bail-in”, which provides for shareholders and creditors of a bank to be asked to contribute before public, or European, money is mobilised. The Ecofin Council wants the bail-in rules to be applicable from 2018, whilst the European Parliament put forward the date of 2016. According to an expert, the date of entry into force of the bail-in is a real variable to be adjusted in the framework of an overall agreement on the resolution plank of banking union. “The earlier the bail-in is applied, the greater the likelihood that less use will be made of the resolution fund”, he noted. This position is defended by Germany, supported by Finland and, on Friday, even by the United Kingdom.
France has no wish to reopen talks on this issue. Along with the majority of countries, it is in favour of the most European resolution mechanism possible. “It is on the basis of the European Commission's proposal that we need to be working”, stressed French Economy Minister Pierre Moscovici.
The national experts will be tackling banking resolution at the Council again on Friday. On Monday evening, the economic and monetary affairs committee continued its discussions on the matter. (MB/transl.fl)