Europeans trying to complete deal on bad banks
BRUSSELS (AP) - European finance ministers are taking another crack at an issue that's bedeviled them: how to handle failing banks at an EU level.
At a meeting in Brussels, German Finance Minister Wolfgang Schaeuble said Monday that he's "optimistic" a deal on creating a new European Union agency to deal with bad banks can be reached this month.
"There is a lot of work to do," he said. "I don't know if we will do it in one meeting or if we will need an additional meeting."
Dutch Finance Minister Jeroen Dijsselbloem, who chairs the group of finance ministers from the countries that use the euro, declined to sketch out any possible compromise on disputed points of the proposal to form a central agency to wind down, or "resolve" broken banks. EU officials have said they want to reach agreement before the end of the year so the agency can be passed by the current EU parliament before its term expires in May.
Ministers from euro countries talked about the knotty issue on Monday but did not offer a solution publicly, ahead of a meeting Tuesday of ministers from the full 28-member European Union. It is the larger group that will seek a deal on the bank surveillance agency, and officials said the Tuesday meeting could be a drawn-out affair as some highly technical matters are chewed over.
"There are some ideas being floated," Dijsselbloem told a news conference. "Whether they will be successful we will find out tomorrow."
One sticking point preventing agreement has been Germany's opposition to letting the EU's executive arm be the decision maker on whether to close or restructure a bank. Schaeuble didn't say Monday if Germany is ready to drop its opposition, but said "there are solutions" to the issue.
Another point of contention has been who should pay if a troubled bank needs taxpayer funds so that its failure does not hurt the overall economy. First in line to take losses should be bank shareholders, and a troubled bank could also be sold to new owners. If more money is needed, the proposed Europe-wide agency would have a rescue fund financed through a levy on banks.
The idea is to have the fund at the EU level, and spread bailout costs throughout European banks, so that bank failures can't wipe out individual countries' finances- and also so that banks, and not taxpayers, pay the bill. Germany has said such an arrangement would require a change in the basic EU treaty, which could take years. It proposes instead a network of national financial safety nets until the treaty can be amended.
Negotiations were expected to continue Monday evening. Dijsselbloem said he had been invited to an evening meeting by the finance minister of Lithuania, which now holds the revolving EU chairmanship.
McHugh reported from Frankfurt, Germany.
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