MEPs likely to back plan for soaking richer depositors in bank rescues
THE European Parliament is likely to back plans to impose losses on wealthier depositors in failed banks while shielding smaller savers, its lead negotiator on the rules said yesterday.
Talks are under way to finalise EU rules on crisis-hit banks following the bailout of Cyprus, in which both large and small depositors were originally going to be hit before the plan was changed to charge only the former.
The European Parliament's backing is needed for any proposals to become law.
Gunnar Hokmark, a Swedish conservative in the European Parliament, said most categories of deposits would not be protected under proposals likely to be agreed.
"There is a very clear exception for all deposits below €100,000," Mr Hokmark, who will lead negotiations with European Union member states, told a news conference.
Bigger depositors would only suffer losses once bondholders and shareholders had been hit.
The European Parliament has an equal say alongside countries when deciding who among a bank's creditors – bondholders or depositors, for example – must bear the brunt of failures such as those in Cyprus.
Jeroen Dijsselbloem, who chairs meetings of eurozone finance ministers, has said that in future the bloc should ask banks to recapitalise themselves, then look to shareholders and bondholders and then uninsured depositors.
The European Commission has written the first draft of the law about how to share out losses when banks run into trouble, designed to prevent EU countries taking a variety of approaches to deal with struggling banks and bondholders.
It is now up to member countries and the parliament to decide whether and when savers should face losses when a failing bank is being salvaged or shuttered. (Reuters)