The European Parliament has asked the Greek EU Council Presidency to justify the member states' decision to set up a common bank resolution fund based on an intergovernmental agreement. This was one of the main items of discussion at the first three-way talks on the Single Resolution Mechanism (SRM) for failing banks, held on 8 January. MEPs are very critical of this position, which partially takes the tool out of the European Union sphere and consequently excludes them from decision making concerning creation of the fund.
The two institutions' positions also diverge on other key aspects of bank resolution, so the negotiations will doubtless be particularly difficult. The parties are also working against the clock since they have to agree before the end of the current legislature (end of May).
For the EP, all options are open. Will it be prepared to stand in the way of adoption if the Council remains inflexible? "Between a bad deal and no deal, we will choose the lesser evil: no deal," said S&D Chair Hannes Swoboda (Austria). According to a well-informed source, many MEPs take the same approach.
"All banks must be treated equally, irrespective of the country where they are established, and the system must be credible and efficient. These core principles are endangered by the Council's general approach on the SRM regulation, including an intergovernmental agreement," commented, after the meeting, the Chair of the Committee on Economic and Monetary Affairs (ECON), Sharon Bowles (ALDE, UK), rapporteur Elisa Ferreira (S&D, Portugal) and the shadow rapporteurs. Parliament's negotiators also expressed this view at the first meeting of member states on this intergovernmental agreement, on 9 January (see box), attending as observers. Their presence at the meeting "does not signal support for this intergovernmental process," added the MEPs.
EP seeks justifications
In July 2013, the Commission proposed a regulation to create an SRM comprising a resolution authority in charge of restructuring failing banks in the eurozone and in other member states deciding to participate. The text also provides for setting up a single resolution fund to be capitalised progressively by banks, for the purpose of ensuring financial support for restructuring operations.
After heated negotiations, the finance ministers adopted their common position in December 2013 (see Europolitics 4776). They decided that the fund would be established by means of an intergovernmental agreement...