Brussels, 17/02/2014 (Agence Europe) - On Monday 17 February, European finance ministers examined the intergovernmental deal to set up a single bank resolution fund (SRF).
Spanish Economy Minister Luis de Guindos said it was possible to fine-tune the agreement in principle reached by the Ecofin Council in December on the single bank resolution question, part of banking union. Arriving at the Eurogroup meeting, de Guindos said the contents of the intergovernmental deal had to be “minimised” and focus on the key aspects, in other words, allocation of the industry's contributions to the national compartments and the gradual pooling of the compartments.
On Germany's request, the European finance ministers decided to set up an SRF using an intergovernmental agreement, a view rejected by the European Parliament. After a ten-year transition phase, the fund would be pooled and be covered by the Community method, by which time it would have funding of €55-60 billion (contributions from banks, see EUROPE 11019).
De Guindos said the decision-making process for deciding when a bank is to be wound up, a process being discussed by the ministers at the moment, could be made faster and simpler. The final say would be in the hands of the member states, something that the European Parliament opposes.
German Finance Minister Wolfgang Schäuble stressed the need to stick to the ministerial compromise structure. He said there was room for manoeuvre for talks with the EP but the treaty setting up the European stability mechanism (ESM) must not be amended. After the European summit in late December, Germany refused to countenance changes to the ESM treaty, thus closing the door to the option of the ESM serving as a backstop for the SRF during its transition phase.
Several ministers said it was important to achieve a final agreement before the European elections in May. The head of the Eurogroup, Jeroen Dijsselbloem, said he was sure an agreement would be reached because it is very important for banks in Europe that agreement is achieved ahead of the European elections. He said the ministers would have to show willingness to compromise and there was room for manoeuvre on the SRF question. Irish Finance Minister Michael Noonan hoped agreement would be reached at the Ecofin Council in March, commenting: “More rapid mutualisation? Draghi suggestion interesting, I supported it. But the contributions by the industry in ten years rather than five”.
The EU28 finance ministers will discuss the draft EU regulation to introduce a bank resolution mechanism (SRM) on Tuesday. The Greek Presidency will be quizzing the delegations about the likelihood of getting a changed negotiating mandate for trialogue talks with the European Parliament on Wednesday. Like Spain, Greece says that the mandate has to change on the scope of the intergovernmental deal to set up a single resolution fund (SRF); restricting the number of areas where the Council of Ministers can object to the winding up of a failed bank decided upon by the single resolution committee; reducing the likelihood of the decision to use the SRF being taken by the bank resolution board; and boosting the ECB's powers as the future eurozone bank supervisory body when it comes to deciding when a bank is on the brink of collapse. The Greek Presidency will also ask member states about how the SRF can be given enough cash to be credible from the start (see EUROPE 11018). (MB/transl.fl)