BRUSSELS – European Union finance officials spent all day Tuesday roughing out key aspects of a new agency that would clean up broken banks and keep the costs of doing that from hitting taxpayers — but fell short of a firm and final agreement just days before a year-end deadline.
“We’ve covered 95 per cent of the distance,” Pierre Moscovici, France’s finance minister, told reporters early Wednesday, shortly after midnight. “I can’t imagine that there’d be a failure.”
Officials said the talks reached some general agreement on principles, after six months of haggling among their governments. Official comments afterward suggested those understandings point toward a compromise that could give national officials more say over what happens to troubled banks than under the original proposal, which put much of the power to decide an insolvent bank’s fate at the European Union level.
“We have no formal result on the table” but have made “a huge leap forward,” was how Lithuanian Finance Minister Rimantas Sadzius, who chaired Tuesday’s meeting, summarized what was accomplished. He said there was agreement on “general principles that seem to be acceptable to this or that extent to everyone.”
German Finance Minister Wolfgang Schaeuble said he and the other ministers hammered out “a general understanding” with many details to be worked out at another finance ministers meeting on Dec. 18. That’s the day before a summit of EU prime ministers and presidents is to seal the entire deal.
The European leaders say an agreement must be reached by the end of 2013 in order for the measures to be enacted before the current European Parliament’s term expires in May.
The ministers appeared to have moved closer to bridging a key dispute over whether the new banking agency would be backed up with a Europe-wide fund, filled from a financial assessment on banks themselves, or whether the pots of money would remain under national control. Officials indicated they found common ground on gradually phasing in a Europe-wide financial backstop. Schaeuble said that money would first flow into “national compartments” and would take 10 years for the full amount of 50-55 billion euros to be collected.
French officials said the proportion of funds in national “compartments” would drop as pooled funds able to be used anywhere increased.
The bailout fund would be set up through an “intergovernmental agreement” to be crafted among governments taking part in the effort.
The new banking rules will apply to the 17 EU countries that use the euro, and any other EU member that wants to subject its banks to them.
McHugh reported from Frankfurt, Germany.