Brussels, 04/02/2014 (Agence Europe) - The European Parliament is refusing to budge on its demand that the single resolution mechanism (SRM) be created on a genuinely common basis using the Community method. The European Commission has published proposals in an attempt to strike a balance between the EP's views and those of the Council of Ministers because the two sides are miles apart and inter-institutional talks begin on Wednesday.
It takes two to tango, commented Antolin Sanchez Presedo (S&D, Spain) on behalf of his Portuguese colleague, Elisa Ferreira, rapporteur on the issue but unable to attend due to pneumonia. He said the EP would continue to negotiate honestly with the EU Council of Ministers but would not relax on its role as co-legislator (see EUROPE 11009).
Calling for broad support from plenary, the majority of MEPs repeated their demand of an SRM able to intervene rapidly in the event of bank collapse and able to treaty each bank fairly regardless of the member state in which it is registered. Sanchez Presedo pointed out that the EP was determined to get a common system with a common fund.
MEPs are still not convinced of the legal necessity for an intergovernmental agreement for the establishment of the single resolution fund for financing the winding-up of big banks in the eurozone, a fund to be financed by the banks themselves. They were not won over by a letter to MEPs from German Finance Minister Wolfgang Schäuble, outlining the Council of Ministers' plans. It can all be done using the Community method, stated Corien Wortmann-Kool (EPP, Netherlands). She said she understood Germany's legal concerns, but was unhappy about Germany turning the issue into a deliberate undermining of the draft legislation. Imagine if somebody tried to that in the Bundestag, said Sylvie Goulard (ALDE, France).
The other major stumbling blocks are the fact that MEPs say that the SRF must be pooled from the start, rather than after a ten-year transition period (as demanded by the ministers). MEPs openly criticise the cumbersome decision-making process for winding up a bank which, as desired by the ministers, leaves the final decision-making in the hands of the member states.
Reality check. Paying tribute to Ferreira's “innovative” report and clearly despite a desire to do so, Greek Foreign Minister Evangelos Venizelos could not go along with the EP's position. He wondered how progress could be made that combined the intergovernmental approach with genuine EP involvement in order to find a workable solution asap. Pointing out his experience as finance minister, he stressed the intergovernmental nature of the decisions taken in the height of the Greek crisis and called for a genuinely unified savings protection mechanism.
As things were getting heated, the Commission cleverly pointed out that its basic position was similar to that of the European Parliament. Pragmatically, it called on MEPs to take a realistic line and endorse the drawing up of an intergovernmental treaty with as many checks and balances as possible. EU Internal Market Commissioner Michel Barnier said the real issue was for the contents of the intergovernmental agreement to be restricted to the transfer and pooling of national contributions and for the provisions on the creation, governance, calculation of contributions and lending capacity among national compartments at the SRF to be incorporated in the normal legislative procedure.
Barnier brought up four areas on the financing of the SRM - speedier pooling of cash (a five-year transition period) for the SRF, while boosting cross-financing through loans between the different national compartments. After the transition period, the resolution board should be able to collect contributions from banks directly, including “ex-post” contributions after any intervention from the SRF. Barnier said the “temporary” intergovernmental agreement should come into the Community system once the SRF has been fully pooled. The final issue is the backstop to ensure the SRF always has enough cash, and Barnier stressed here that the SRF would only be used as a last resort.
The commissioner said it was not happy about a resolution procedure that left the member states the final decision-making power because financial stability is too important to be allowed to be sacrificed on the altars of institutional egos. He said the recent Court of Justice ruling on ESMA's powers to ban short-selling supported the credence of the idea that the Commission should be the European institution with its finger on the button when it comes to bank resolution (see EUROPE 11002). Barnier recommended increased democratic accountability for the future resolution board, an idea that was welcomed Venizelos, who said the debate had made him feel more optimistic. Barnier's comments were also welcomed by Werner Langen of Germany and Diogo Feio of Portugal. (MB/transl.fl)