Brussels, 11/03/2014 (Agence Europe) - As we were going to press on Tuesday 11 March, the Greek Presidency of the Council of the EU was still hoping to win round the member states to give it a new negotiating mandate for talks with the European Parliament on the bank resolution mechanism (ESM) on Wednesday.
Greek finance minister Yannis Stournaras said it was time for the Council to draw up a constructive position. An expert attending the negotiations said that talks were ongoing but no great changes had yet been made to member states' initial position, drawn up last December. Irish finance minister Michael Noonan said as he left Brussels that the talks were leading towards a solution. It is hard to say at this stage exactly how the member states might have changed their negotiating line, but if no real changes are made, then the Greek Presidency will have nothing much to unveil to MEPs on Wednesday. Time is pressing ahead because an inter-institutional agreement needs to be reached by the end of the month if the European Parliament is to be able to endorse the deal during the current European Parliament (in April, in other words). The decision about whether to convene a special ECOFIN Council before the European summit next week will be decided once the outcome of the talk with the European Parliament on Wednesday becomes known.
EU Internal Market Commissioner Michel Barnier said he was aware that time was running out and that the Parliament is taking a constructive and committed line. On Tuesday, MEPs discussed Monday's intergovernmental conference that they had attended on the bank resolution fund (ESF, see EUROPE 11035).
At a public hearing, national delegations reacted to the compromise proposals drawn up by Greece for six key areas in an attempt to move closer to the Parliament's position. The proposals cover the governance of the new resolution mechanism and who would have the power to decide when a bank has failed. Who would have the final say in a resolution process launched by the resolution board? What division of labour should there be between the board's plenary sittings and executive sittings?
Germany, the Netherlands and Spain made it clear that the resolution board (comprising representatives of member states' resolution authorities) should be allowed to identify failed and failing banks. Spanish finance minister Luis De Guindos said the board should have the power to trigger proceedings and said he would rather have two bodies pulling the alarm cord rather than just one. The European Parliament says the European Central Bank alone should have the power to identify failing banks (in November the ECB takes over responsibility for bank supervision in the eurozone).
The member states say the Council should have the power under certain conditions to rubberstamp the winding up of a failing bank in the manner drawn up by the resolution board. Barnier welcomed Finland's suggestion in this connection. Barnier said that the Finnish idea would give the Council veto rights when the Commission decides in the public interest to use more of the resolution fund than suggested by the board in order to exempt various people or bodies from bail-in rules. If the Council and Commission disagree, then the Council will have the final say, he added.
SRF. The member states want the resolution fund, which will eventually have €55 billion in cash provided by the financial industry, to be based on an intergovernmental agreement - a legislative route still opposed by the European Parliament. The intergovernmental agreement would cover the way countries collect contributions from the financial industry and transfer the cash to national compartments at the SRF, which will be gradually pooled over a certain transition period.
At the IGC on Monday evening, the head of Eurogroup, Jeroen Dijsselbloem, said the politicians had looked into the option of having a shorter and speedier mutualisation period. Of the four options on the table (see EUROPE 11029), the idea of mutualisation of the SRF over eight years, and expanding its budget by €6.2 billion seems to be the favourite at this stage. The mutualisation would not be linear, but would be faster in the early years, with 50% of the cash provided in the first three years (by the end of 2018).
Barnier said this was a good compromise because the fund needed to have enough cash at its fingertips from day one. He said this would require the SRF to be able to borrow money from the money markets, which could be facilitated through national guarantees. Failing which, either a credit line from a European institution or organ (the European Stability Mechanism, for example) would be required, or the SRF would need to be funded directly by the member states, an idea described as a non-starter by German finance minister Wolfgang Schäuble. (MB)