Europe tries to cut deal to close failing banks
By Jan Strupczewski and Annika Breidthardt
BRUSSELS (Reuters) - European countries are seeking to agree before year-end on how to close failing lenders, part of an ambitious plan to create a single banking framework and fix broken banks whose problems have festered since the financial crisis.
The main issues are: Who decides and who pays?
Under pressure to strike a deal by the time European Union leaders hold a summit next week, finance ministers will try to resolve ongoing differences during two days of talks. Euro zone ministers gather on Monday and they will be joined by EU counterparts outside the currency bloc on Tuesday.
Creating an agency to close euro zone banks, as well as a fund to pay for the clean-up, would mark a deepening of integration of the 17 nations sharing the euro. But it raises complex questions of sovereignty and who will foot the bill.
Banking union, involving a single bank supervisor and an 'executioner' to close banks, is the most ambitious project launched since the region's debt crisis and is designed to provide a stronger underpinning to the single currency.
"There's a chance (of a deal). It will be a lot of work," said Germany's Finance Minister Wolfgang Schaeuble, adding that ministers may need to meet again to clinch an agreement. Ireland's Michael Noonan, arriving in Brussels, said there were still "wide differences".
After more than three years of financial market turmoil following the bailouts of Greece, Ireland, Portugal and Cyprus, establishing a more unified banking system in the euro zone is seen as critical to defend against future crises.
But France and Germany have different visions of how a banking union would work in practice, with Berlin concerned about an over-centralization of powers in a bank agency. Continued...