Banks, total EP unity against the Member States’ proposal on the SRM

The European Parliament and the European Council still at odds on the SRM. Verhofstadt (ALDE): “We need to merge single funds into a single European fund and to require more contributions from banks.”

For Socialists it is a “bad solution,” for Liberals it is an “implausible and undemocratic proposal,” for the People’s Party the text it “way too watered-down.” With a cross-party unity across the political spectrum, the European Parliament has refused to back the Commission’s proposal on the SRM – which aims to wind up ailing banks ensuring without affecting Member States’ finances.

According to MEPs, the member states’ position – reached in December’s Ecofin – undermined the core aim of ensuring that taxpayers were not first in line to pay when banks ran into trouble. The sore spot is that the European Parliament would immediately implement a single fund backed by shareholders, which should intervene financially in case of troubled banks – while Member States has opted for a series of national states, which would obviously favour stronger States in spite of European solidarity.

Furthermore, the Parliament lamented its exclusion from the decisional process – with Member States extrapolating this item for the entire text, which needs to be approved by a plenary. Yet it was approved with an intergovernmental agreement, out of the Union usual mechanisms. The EU Commissioner for Financial Services, Michael Barnier, said that such an agreement seemed to be needed for technical reasons, but added it was clear that Parliament’s “very valid concerns” needed “to be taken on board”.

“With an intergovernmental agreement instead of a normal approval as foreseen in EU Treaties,” said Sylvie Goulard (ALDE), “the Council did not undermines democracy. The position is not credible or democratic.”

“We need to start merging national funds into a single European one,” said Guy Verhofstadt (ALDE). “Banks should be required to contribute more to the single fund, according to their risk profile.”