REUTERS SUMMIT-Europe's east asks: do we have a place in banking union?
* States outside euro zone struggle to influence debate
* Concerns that union will be skewed towards euro zone banks
* East European banks took fewer risks before debt crisis
By Christian Lowe
WARSAW, Sept 26 (Reuters) - Eastern European countries outside the euro zone are worried they will not have a say in shaping the planned European banking union, and the result will be a new regulatory system skewed towards euro zone banks.
Debate about the banking union - which was conceived as a way to prevent a repeat of the EU's sovereign debt crisis - has centred on European Union institutions and big euro zone economies such as Germany.
But bank executives and policymakers who spoke at a Reuters Eastern Europe Investment Summit this week said they had their own view on the future structure and were anxious for their voices to be heard.
"It makes sense within the euro zone, but I have doubts when it comes to countries outside the euro zone," said Pavel Cejka, the chief operating officer of Komercni Banka, the Czech Republic's third-biggest lender.
Some of the most weighty discussions about banking union are taking place within the European Central Bank and the Eurogroup of euro zone finance ministers, from which most of eastern Europe is excluded.
The region has eight EU member states, including Europe's sixth biggest economy in Poland. Only Slovenia and Slovakia, among the region's smallest countries, are in the euro zone, and there is no prospect of any others joining soon.
The struggle to get a seat at the table is a worry for Zbigniew Jagiello, chief executive of Poland's biggest lender, PKO BP.
Once the banking union is in place his bank, as one of the EU's "systemically important" lenders, would come under the direct supervision of the ECB.
"We are not in the euro zone and that is good and bad," Jagiello told the Reuters summit. "Regarding the banking union this is not good.
"We would like to participate in the process of creating the laws, creating procedures, but we cannot now participate in these decisions regarding the banking union because we are not euro zone (members)," he said.
Many in Europe believe the continent badly needs a banking union to restore lending, regain confidence and boost growth. European Commissioner Olli Rehn said this week it was essential to maintain momentum.
The project has hit repeated obstacles because of the complexity of harmonising different sets of banking regulations, and worries about giving up national sovereignty. Coalition jockeying after Germany's election could cause further delays.
Eastern Europeans have many of the same misgivings as their counterparts in the euro zone, but there are also issues specific to their region.
Among those is the question of why countries in eastern Europe should be subjected to extra banking regulation when, in many cases, their own banks pursued conservative lending policies and avoided the bad debts of their peers elsewhere.
There are technical questions about how a single system of banking regulation can work in a country with its own currency and interest rates policy.
Another concern is that the banking union will involve fiscal funding for banks in trouble. Some in eastern Europe question the moral case for taxpayers having to bail out banks in countries that are substantially wealthier.
Gabor Orban, Secretary of State at Hungary's Economy Ministry, said his country's priority in banking union talks was to ensure a "fair" balance between rights and responsibilities. He said Hungary has not decided whether to be part of the union or to opt out.
Bulgarian Finance Minister Petar Chobanov said his country was building ad hoc alliances with other EU members not in the euro zone to try to help defend their interests.
"We have our position that up to now the banking union will be better for the countries that are part of the euro zone itself," said Chobanov.
"But designing regulation, it is very important to see that ... the whole design of the system will fit also the needs of the countries that are outside the main instrument," he told Reuters. (Reporting by Jan Lopatka in PRAGUE, Krisztina Than in BUDAPEST, Marcin Goclowski and Adrian Krajewski in WARSAW, and Tsvetelia Tsolova in SOFIA. Editing by Mike Peacock)
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