Europe inches closer to deal on bank resolution, more talks ahead

Mon Mar 10, 2014 6:51pm EDT
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By Jan Strupczewski and Martin Santa

BRUSSELS (Reuters) - Euro zone governments edged closer on Monday towards a deal on how to wind down failing banks, but reached no conclusions and more negotiations will take place on Tuesday to address demands of the European Parliament.

Negotiations are set to last until Wednesday and may be the final step in a European banking union that would mean one supervisor for euro zone banks, one set of rules to close or restructure those in trouble and one pot of money to pay for it.

The role of euro zone bank supervisor has already been assigned to the European Central Bank, which will take up its new duties in November.

Talks on a new European agency to shut down failing banks, and on a fund to pay for such closures which together are to form a Single Resolution Mechanism (SRM), need to be agreed before the last sitting of the European Parliament in mid-April.

Failure to do so would delay the law by at least seven months, and probably more.

"Most importantly, tonight's meeting confirmed that all participants, including the European Parliament representatives, all of us want to reach a final agreement on the SRM package by the end of March, in time for the end of the current term of the parliament," Jeroen Dijsselbloem, who was chairing Monday's meeting of euro zone ministers said.

Dijsselbloem said finance minister from the 18 countries sharing the euro discussed various details of the resolution mechanism but reached no conclusions as all the key issues would be addressed again when all of the EU's 28 ministers sit down for negotiations on Tuesday.

The banking union, and the clean-up of banks' books that will accompany it, is intended to restore banks' confidence in one another and boost lending across the currency bloc, helping foster growth in the 18 economies that use the euro.   Continued...

A teller counts euro banknotes inside a National Bank of Greece branch in Athens February 10, 2010. REUTERS/John Kolesidis