press trust of india
BERLIN, 22 JUNE: European Union finance ministers today put off a decision on new bank resolution and recovery rules till next Wednesday after negotiations lasting around 20 hours failed to produce an agreement.
Their meeting in Luxembourg was intended to reach a deal on EU-wide bail-ins for failed banks forcing losses on shareholders, bondholders and large savers rather than on taxpayers.
Since the outbreak of the financial crisis in 2008, taxpayers have been shouldering a major part of the bailout costs when banks failed.
Bail-in was applied for the first time in the three-year Eurozone debt crisis when Cyprus had to close down Laiki Bank, the country’s second largest bank, in return for a 10 billion-euro financial rescue package, which was offered in March to avoid bankruptcy and to keep it within the single currency group. Ireland’s finance minister Mr Michael Noonan, who chaired the meeting in Luxembourg, said it broke up on differences between a group of countries calling for harmonised rules across the 27-nation EU and those demanding flexibility for member-nations to decide how to impose losses on their own terms.
The European Commission had proposed that the first to suffer should be shareholders of a failed bank, followed by bondholders and finally depositors holding more than 1,00,000 euros in their accounts.
The finance ministers made significant progress and differences over several key issues have been narrowed considerably, Mr Noonan said as he left the conference venue. “There are still core issues to be resolved. So we need a full meeting next week,” he said.