There was ultimately no significant breakthrough on the banking risk reduction legislative package at the meeting of the Economic and Financial Affairs Council of the EU on Tuesday 13 March. On Tuesday morning, the ministers decided to remove this point from their agenda and postpone any possible agreement until the next formal meeting of the Ecofin Council in May.
The subject was, however, debated behind closed doors over breakfast, allowing discussions to be “freer”, according to one European source, than had the package officially remained on the agenda of the public session.
“We were hoping to reach a compromise on this very important package (…). The Presidency has worked very hard with the delegations to find a compromise which is satisfactory to all member states, but some more time is needed”, the Bulgarian Minister, Vladislav Goranov, told a press conference.
The European Commissioner for Financial Services, Valdis Dombrovskis, said that “it cannot take forever” and that the Council's position would have to be reached before the June summit, when the heads of state or government hope to make concrete results on deepening Economic and Monetary Union, including Banking Union, he said.
All member states but Austria reportedly took the floor. Most of them agreed not to reopen the matters that have already been put to bed, Goranov reported, adding that this was in itself an excellent starting point.
In particular, there is reported to be a major clash between France and Germany over the market confidence buffer, in other words the share of the minimum capital requirement (MREL) used to allow the bank in question to continue its activities and maintain sufficient market confidence following resolution (see EUROPE 11979).
On this point, the Bulgarian Presidency proposed that when it sets the MREL requirement, the resolution authority also be required to take account of the rule of 8% of total commitments and capital governing access to the resolution fund. To compensate for these higher requirements, the resolution authorities would be given circumscribed flexibility over the restrictions they can impose on discretionary distributions should the MREL levels not be respected.
Germany wants the 8% rule to be a minimum and is calling for greater flexibility for the resolution authorities, whilst France wants it to be an upper limit and for the flexibility to be circumscribed.
Some consider the clash a major issue, but others feel that the reason for the postponement lies mainly in a desire to conclude after the new German government is fully operational, so as to avoid having to revisit the compromise at a later date.
Upon arrival at the meeting, the French finance minister, Bruno Le Maire, said that “unfortunately, the political conditions had not been met in certain countries to allow us to adopt the banking package this morning”, but still expressed optimism over an agreement in the coming weeks.
Goranov also referred to bilateral meetings with some of the “bigger member states playing a leading role in the EU”, which he says pledged to continue making all necessary efforts to move the dossier forward. According to our information, he may have been referring to Germany, Italy or Spain. (Original version in French by Marion Fontana)