* Talks to form united front behind banks reach climax
* EU parliament flag concerns over watered-down scheme
* System for failed banks key pillar for banking union
BRUSSELS, Feb 6 EU lawmakers called on Thursday
for a strengthening of plans to tackle failed banks in the euro
zone, as tensions mounted in talks to seal the important reform.
The call from the European Parliament comes as efforts to
form a united front behind euro zone banks, known as banking
union, reach a climax.
The Thursday vote is intended to underscore lawmakers'
concern that the blueprint, watered down by Germany and others
to prevent any sharing of bank problems, will fail to restore
confidence and prove flimsy should another crisis strike.
The European Parliament wants euro zone countries to
promptly establish a shared fund to cover the costs of bank
failure. It also wants faster decision making when it comes to
closing or saving a bank, without meddling by politicians.
If the dispute worsens and the parliament refuses to approve
the system to close or salvage failed lenders, it could delay
'banking union', denting faith in the euro currency and its
Sharon Bowles, who heads the parliament's influential
economic and monetary affairs committee, said the vote would
"send a strong message" to countries that they needed to show
willingness to compromise.
More than two thirds of lawmakers who voted gave their
"This is sabre rattling. It's a signal that the countries
must change the deal considerably," said Sven Giegold, a German
lawmaker. "If they don't do it, then things won't work out."
Late last year, countries from across the European Union
agreed a scheme to close failing banks, but the process will be
complex and politicised. They also stopped short of an ambitious
plan for euro zone countries to help each other financially in
tackling problem lenders.
This agency and fund to wind down bad banks, working in
tandem with the European Central Bank as the new watchdog, is an
important step towards banking union, but lawmakers fear that
loose ends could lead to the complete unravelling of the
Some officials fear missing elements in the scheme could
restrain the European Central Bank from revealing the true
extent of banks' problems in health checks if this would
overburden weak countries with a costly bill for their repair.
Separately, lawmakers are also sceptical of a German drive
to enshrine part of the framework in a deal among a circle of
governments rather than for the entire European Union.
(Reporting By John O'Donnell)