Brussels, 07/03/2014 (Agence Europe) - European finance ministers will be pulling out the stops on 10-11 March to try to conclude the bank resolution (SRM) talks in time for inter-institutional talks with the European Parliament on Wednesday. The Greek Presidency hopes to be given a new negotiating mandate.
After the Eurogroup on Monday evening, the finance ministers of the eurozone and other countries wishing to participate will meet to discuss the intergovernmental agreement (IGA) which is due to decide on pooling details for the future bank resolution fund (SRF) and its backstop. Provisional agreement is expected to be possible, because all the main obstacles have been ironed out - provisional because the Council of Ministers has promised not to conclude the IGA until after trilogue talks. The final hurdle, how the IGA was to intermesh with the regulation, has now been settled. If a country challenges application of the IGA, then the matter will go to the European Court of Justice. There is also agreement on lending capacity (as opposed to the backstop). At this stage, ministers are not likely to decide in any detail on how the fund would be used, but will simply note that it will have a potential lending capacity.
All the EU28 finance ministers will meet together on Tuesday to discuss the single bank resolution mechanism (SRM), but a source says that they are not as close to agreement on this. How voting would operate at the SRM remains to be settled. The Presidency recommends one man one vote and that a two-thirds majority be required. For the most important decisions, votes in favour would have to represent between 30% and 50% of representation at the SRF. The biggest contributors do not want to find themselves in a corner if one of their banks goes under and small countries unite to refuse to let the SRF fork out to save their bank. The ministers are far from agreement on this point, but they all agree that the decision-making process should be simplified and the Council's role restricted. The Greek Presidency has done a lot of work here and should be able to come forward with proposals.
The third tricky issue is the question of contributions to the SRF. Ministers do not want to make a leap into the unknown because the “cake costs €55 billion and the bill is going to be split”. They will not agree on a fixed formula to enable banks to know how much they will have to pay, but will try to reach agreement on the basic principles. By the “end of 2016” at the latest, banks will need to know exactly how much they will need to pay in each year, especially since many support the idea of speeding up the process of getting the fund fully paid up. As we went to press, the Greek Presidency was still working on a document to be submitted to the finance ministers with a view to getting the ECOFIN Council to come up with a new negotiating mandate that is acceptable to the European Parliament representatives, with whom it is due to hold talks on Wednesday 12 March.
Other points on the agenda. The EU28 finance minister will discuss the review of the savings tax directive, where progress now seems possible (see EUROPE 11033). They will then be briefed by the European Commission on the recent G20 summit, but there is rarely a discussion after a briefing of this sort. The debate on prior coordination of economic reforms will be postponed until April or, “more likely”, May, but the EU28 ministers will discuss the European Commission's economic forecasts and its detailed assessment of macroeconomic imbalances. (EL)