European Union moves towards banking union with blueprint for failing lenders
European finance ministers have agreed on a broad blueprint for a banking union to close failing banks, before they can damage the wider economy.
The agreement gives the EU new supervisory powers to shut down problem banks as soon as the European Central Bank starts to police them next year.
The project’s aim is to prevent a repeat of the turmoil when failing banks in countries from Ireland to Cyprus brought their states to the brink of bankruptcy.
The deal lays the groundwork for the banking sector to pay into funds for the closure of failed lenders, amassing roughly €55bn over ten years.
It involves input from a new agency empowered to shut banks, the European Commission and up to 18 eurozone countries.
Taoiseach Enda Kenny will join his European counterparts in Brussels today, to sign off on the agreement.
The final touches will be made during negotiations with the European Parliament next year.
Minister for Finance Michael Noonan welcomed the successful conclusion of the long-running negotiations.
He said: “The funding of the ultimate backstop is the banking industry across Europe – not the sovereign taxpayer or the European taxpayer that picks up the tab in the end.”
German Finance Minister Wolfgang Schaeuble told journalists: “The final pillar for the banking union has been achieved.”
Mr Schaeuble, however, emphasised that new rules to impose losses “first and foremost” on a failing bank’s investors and creditors reduced the need for governments to step in.