| LONDON/PARIS, June 7
LONDON/PARIS, June 7 The UK, France and Sweden
are leading a final push for countries to have some national
discretion over which creditors are forced to foot the bill for
bank rescues, three sources with knowledge of the negotiations
Policy-makers are in the final throes of agreeing an
EU-wide package on how people owed money by the banks would
share losses in a bank failure, negotiations that came into
sharp focus after Cypriot depositors suffered heavy losses when
two of the island's banks imploded in March.
Officials hope to reach agreement ahead of a meeting of
European finance ministers on June 20.
Depositors with less than 100,000 euros will have absolute
protection, since they are covered by government guarantee
schemes, and larger unguaranteed deposits of SMEs are also
likely to be shielded.
Three sources with knowledge of the discussions said there
was broad agreement on most of the measures, but that the UK,
Sweden and France were arguing for more national flexibility so
that countries could safeguard their financial stability by
choosing which creditors got hit on a case-by-case basis.
A source familiar with the UK position said the country was
broadly happy with an initial European Union blueprint for
resolution measures discussed by commissioners earlier this
But the source said the UK continues to argue for
"constrained flexibility" allowing national authorities to avoid
bailing in some liabilities on a case-by-case basis if including
them would pose a significant threat to financial stability.
The liabilities likely to be involved are market-related
liabilities such as interbank deposits and derivatives, the
The flexibility would be "constrained" because the rules
would make clear the basis on which case-by-case decisions would
be made, and any undue use of discretion would be examined by
the EU and policed by state aid rules after the fact.
French Finance Ministry sources confirmed they shared the
UK's views, with one saying that those countries which had
already dealt with banking crises themselves tended to favour
"There are some states which don't have good financial
backing who say that if we introduce flexibility that could give
an advantage to those banks located in big countries that want
to be able to provide arbitrary aid to their banks," one French
"They aren't against flexibility itself, but they say be
careful, you have to oversee it, which is understandable."
(Additional reporting by Yan Le Guernigou and Christian Plumb
in Paris; Editing by Bernadette Baum)