* EU ministers meet after earlier talks fail
* New law could impose losses on big savers of sickly banks
* France demands leeway, Germany wants strict rules
By John O'Donnell and Robin Emmott
BRUSSELS, June 26 The European Union will make a
fresh attempt on Wednesday to share out the costs of future bank
failures, starting a regime to spare taxpayers further bailouts
and maintain momentum to integrate the bloc's crisis response.
Finance ministers from the bloc's 27 countries will gather
on Wednesday evening for what will be tough talks, after the
all-night negotiations in Luxembourg last weekend that broke
down over a Franco-German split on how to impose losses.
France and Germany are split over how much leeway
governments should have when applying EU rules that set out how
shareholders, bondholders and depositors with more than 100,000
euros ($132,000) should share the burden of bank collapses.
Although there is no deadline for an agreement, ministers
are meeting on the eve of an EU leaders' summit in Brussels and
are under pressure to show they are tackling Europe's banking
and public debt crisis.
Forcing losses on big savers, first done in Cyprus's bailout
in March, would mark a dramatic change in how Europe deals with
troubled banks, having previously relied on taxpayer money for
"Those who make risk-bearing investments in the financial
sector also should face those risks if it goes wrong," Dutch
Finance Minister Jeroen Dijsselbloem told local television
before the talks.
The European Union spent the equivalent of a third of its
economic output on saving its banks between 2008 and 2011, using
taxpayer cash but struggling to contain the crisis and - in the
case of Ireland - almost bankrupting the country.
Unlike the United States, which moved swiftly to deal with
its sickly banks after the 2008/2009 financial crisis, Europe
has been reluctant to close banks whose credit is crucial to the
economy and with whom governments have close political ties.
"Europe hasn't covered itself in glory," said Karl Whelan,
an economist with University College Dublin. "The scale of
banking problems was more quickly accepted in the United States.
But in Europe they swept it under the carpet."
However, things could change for the 17-nation euro zone
under a new system of supervision led by the European Central
Bank, which will run checks on banks under its watch next year.
If agreed in time, the new EU law under discussion could be used
as the blueprint for closing or salvaging banks found to be
ailing or bankrupt in the ECB's tests.
The ECB's new supervisory role is part of a project called
banking union which aims to supervise, control and support banks
to rebuild confidence in the euro zone.
Binding the euro zone more tightly together to underpin the
currency union is tortuous, however.
France is arguing that the new EU rules should allow
countries more leeway to decide how banks' creditors are dealt
with. Germany is pushing for stricter rules in which everyone
has to follow an agreed, EU standard.
"For France, this is about allowing the euro zone's bailout
fund to be used when banks fail," said one EU diplomat involved
in the discussions. "That is not the way Germany sees it."
Whatever deal they strike will be critical in determining
how Europe copes with the billions of euros of bank loans that
may go unpaid if the bloc fails to end economic stagnation.
"This is not just theoretical," said one EU official with
knowledge of the issue. "Everyone knows there is a black hole in