Brussels, 23/11/2015 (Agence Europe) - On Tuesday 24 November, the European Commission is to table a gradually pooled European deposit insurance scheme (EDIS), the third pillar of banking union in the eurozone to add to the 'supervision' and 'resolution' pillars (see EUROPE 11429).
The European institution is following exactly the same logic as for the 'resolution' pillar, in other words the gradual pooling of bank risks, to be total by 2024. It states that once the supervision and resolution competences have been transferred to the European level for the eurozone countries, it is logical that savers are provided with guarantees at European level, with savings of up to €100,000 protected under European law.
According to information we have received, the EDIS system, as put together by the services of the Commissioner for Financial Services, Jonathan Hill, is made up of three stages: - initially (2017-2020), a reinsurance mechanism will absorb only the losses which cannot be mopped up by national deposit guarantee scheme; - in the second phase (2020-2024), a co-insurance mechanism would be triggered from the first euro of losses suffered by a bank; - from 2024, the mechanism will be fully mutual, at 100%, following a gradual mutualisation phase.
It will also be the responsibility of the Single Resolution Board (SRB), the European authority tasked with managing the Single Resolution Fund (SRF) from January 2016 (see EUROPE 11420), to manage the future European bank deposit guarantee fund. The creation of this future fund will not lead to any additional costs for the banking sector on top of those already brought about by the creation of the national bank guarantee funds under the 'DGS' directive (2014/49), which has been in force since July 2015.
Giving Germany safeguards. In order to mollify Germany, which is reluctant to allow its banking sector to be called upon to absorb losses suffered by other eurozone banks, the Commission will also be presenting a communication in parallel, in which it will undertake to present (or reflect upon) measures to reduce the risks of the financial markets.
First and foremost, the aim will be to ensure that the existing European legislation is being applied correctly. This will cover the BRRD directive on the national bank restructuring and resolution schemes, which has been in force since January 2015, and the DGS directive. The question of the bridge financing for the SRF fund will also be resolved by the end of 2015 (see EUROPE 11428).
The Commission will be tackling the 146 options and matters for national discretion laid down in banking prudential legislation, which allow the member states to derogate from the joint rules (for instance deferred tax assets/credits). The ECB recently initiated a specific consultation on these options. Some of them will require a legislative revision, whilst others will stay in place in order to maintain differentiated capacity for action.
Lastly, a discussion is to be launched on how to reduce the exposure of the banks to the sovereign risk. As the time is not yet ripe for a debate on the subject at international level, however, the aim is not to bring in own funds requirements on the basis of the risk presented by sovereign debt. (Original version in French by Mathieu Bion)