Tuesday 24 April 2018

EU leaders remain split over bank-failure plan

Jim Brunsden

EUROPEAN Union nations remain split over whether a planned euro-area system for handling failing lenders should cover all banks in the currency bloc and whether it should be backed by a central fund, with less than two months until their deadline for reaching a common position.

Governments are also divided over whether the European Commission should play a decisive role in the Single Resolution Mechanism (SRM), according to a draft document prepared by Lithuania, which now holds the EU's rotating presidency.

"A number of delegations consider that a potential conflict of interest is inherent in the commission if it is granted discretionary powers in the SRM context, as now foreseen," according to the note, prepared for a meeting tomorrow of national ambassadors.

"Further political guidance is necessary on the key open issues."

The bank-failure plan is part of a euro-area effort to break the financial links between sovereigns and banks by centralising oversight and crisis management of failing lenders.

The blueprint, presented in July by Michel Barnier, the EU's financial services chief, has met with a barrage of complaints from governments, with Germany among those to have expressed the strongest concerns.

Still, EU leaders re-affirmed last month that nations should agree on a common stance on the plans by year-end.

The SRM is designed to complement the European Central Bank's supervision of euro-area lenders, which begins in full in one year. Policy makers are racing to reach a deal before European Parliament elections in May. The assembly's approval is needed for the bill to become law.

European finance ministers will discuss Mr Barnier's proposal during talks in Brussels starting on November 14.

"We are in a race against the clock to complete the banking union project before April," Olivier Guersent, Mr Barnier's chief of staff, said at a conference in Brussels yesterday. "It is doable and we are very confident it will be done, because usually in life when you have no choice you succeed. And we think there is no choice."

While Mr Barnier proposed that the SRM should cover all euro-area banks, as well as those in other nations that voluntarily sign up, he said in September that the remit could be restricted to lenders with cross-border operations. (Bloomberg)

Irish Independent

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