Michel Barnier will present a plan next year to create an authority to shore up or wind down failing banks as a second stage of the European Union’s bank- rule overhaul.
Establishing a European body for ailing banks will follow completion of the EU’s first priority, which is creating a single bank supervisor, Barnier, the bloc’s financial regulation chief, said at a press conference in Vienna. The common supervisor will be set up this year and implemented through 2014, as decided by European leaders last week, he said at the briefing in the Austrian capital.
“The second stage is that I will, in the course of 2013, present the European Commission a proposal for a European bank resolution authority,” Barnier said. “If we have a single supervisor, there’s a need for a single resolution authority, which has a certain amount of legal power.”
He said the plan was “that banks pay for banks, not the taxpayer.”
Barnier, as well as European Central Bank President Mario Draghi, have called for the supervisor to be the first step in building a so-called banking union. EU leaders in June embarked on plans to build a common supervisor as a step toward offering direct bank bailouts from the firewall fund for the countries that share the euro.
Barnier offered, as part of a draft law on failing lenders that he proposed in June, a plan to provide for national backstops that could to borrow from each other as a last resort, and require them to join forces to stabilize a struggling cross- border bank.
He described the measure as an interim step, yet even this incremental move has proved highly controversial. While Italy and France supported the proposals, Germany and Sweden, two EU nations that already have pre-financed funds to stablize failing banks, have both called for the plan to be scrapped.
To contact the reporter on this story: Boris Groendahl in Vienna at email@example.com
To contact the editor responsible for this story: Frank Connelly at firstname.lastname@example.org