EU Finance Ministers Claim Progress on Bank-Failure Fund - Bloomberg

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Information about EU Finance Ministers Claim Progress on Bank-Failure Fund - Bloomberg

Published on March 12, 2014

Author: childlikeegg1000

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EU Finance Ministers Claim Progress on Bank-Failure Fund - BloombergEuropean Union finance ministers...

EU Finance Ministers Claim Progress on Bank-Failure Fund - Bloomberg EU Finance Ministers Claim Progress on Bank-Failure Fund - Bloomberg European Union finance ministersclaimed "good progress" after talks in Brussels as they workedto break a deadlock on a euro-area bank-failure law urgentlysought by the European Central Bank. The EU is searching for a compromise on the SingleResolution Mechanism and an accompanying common fund to coverthe cost of saving or closing banks. ECB President Mario Draghilast week warned that failure to reach a deal before May'sEuropean Parliament elections would have severe consequences forthe euro zone and its fledgling banking union. Dutch Finance Minister Jeroen Dijsselbloem said noconclusions were reached on rules for decision making by theproposed bank-failure authority. The questions of how quickly tobuild up the fund, and when and how it could tap financialmarkets, also remain open. Ministers resume talks today. "We will have to look for further strengthening ofproposals" concerning the proposed fund's liquidity, saidDijsselbloem, who leads the group of euro-area financeministers. EU member states and the European Parliament want adeal by the end of March, he told reporters after the meeting. German Finance Minister Wolfgang Schaeuble, whose nationhas led resistance to the parliament's demands, declined tocomment after the meeting. French Finance Minister Pierre Moscovici said Germany wasn't far from accepting a proposedeight-year timetable for building up the new fund. 'Critical' Week The SRM is part of an EU effort to prevent future financialcrises by pooling responsibility for euro- area banks. Ablueprint put forward last year by Michel Barnier, the bloc'sfinancial-services chief, would create a central agency backedby a 55 billion-euro ($76 billion) fund financed from industrylevies. "This week is critical," Barnier said in a statementafter the meeting. "I believe that a compromise is within reachon the great majority of topics under discussion." Dijsselbloem said ministers were able to agree on someelements of the plan, such as how to assign burden-sharingfairly in cross-border failures that involve a bank's homecountry and nations that host its subsidiaries. He saidministers also worked out a compromise on how the new plan willincorporate EU rules on when regulators can force bank creditorsto take losses.

Ministers also debated how to handle national compartmentsthat will exist within the fund during its start-up period,which could be as long as 10 years. 'Board's Discretion' "There is the possibility of lending or borrowing betweenthe compartments," Dijsselbloem said. "That is a decision tobe taken by the fund. Member states can object during thetransitional period, but only under a limited number ofconditions. Otherwise it's simply at the board's discretion." Negotiators for the European Parliament and EU memberstates have made scant progress on a compromise text of the SRMbill, with time running out before the assembly adjourns forelections in May. The two sides made proposals late last year,and both must approve any final legislation for it to enter intoforce. The next round of negotiations between parliament andGreece, which holds the EU's rotating presidency and representsthe interests of member states, will be held on March 12. The ECB assumes full oversight of euro-zone banks inNovember, and Draghi made clear that the central bank wants towork with a single resolution agency when lenders get intotrouble. The SRM is part of an EU effort to prevent futurefinancial crises by pooling responsibility for euro-area banks. Rotating Presidency "If we do not have one SRM, the responsibilities forresolution will remain national, and so we will have amisalignment of responsibilities," Draghi said on March 6. Parliament negotiators said last week that they would makea "last attempt" to broker a deal with Greece, which holds theEU's rotating presidency and represents the interests of memberstates in the talks. Greece has set a March 26 deadline for anagreement. "We cannot sign off on a deal which establishes amechanism which is unfit for purpose," Elisa Ferreira, theparliament's chief negotiator on the SRM, said on March 5. "Apotentially unworkable resolution system will jeopardize bankingunion and leave taxpayers exposed." To contact the reporters on this story:Rebecca Christie in Brussels at

rchristie4@bloomberg.net;Corina Ruhe in Brussels at cruhe@bloomberg.net;Ian Wishart in Brussels at iwishart@bloomberg.net To contact the editors responsible for this story:Alan Crawford at acrawford6@bloomberg.netPatrick Henry, Ben Sills http://www.bloomberg.com/news/2014-03-10/eu-bank-crisis-talks-resume-as-draghi-watches-attentiv ely.html

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