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UPDATE 1-Germany, France seek to reassure on bank backstop deal
December 19, 2013 / 11:31 AM / 4 years ago

UPDATE 1-Germany, France seek to reassure on bank backstop deal

PARIS, Dec 19 (Reuters) - The French and German finance ministers sought on Thursday to reassure that a European plan to deal with failed banks would be sufficient, hours after a deal was reached in Brussels.

After difficult negotiations, EU finance ministers drafted a blueprint for winding down failed banks which stops short of a more ambitious plan to tackle troubled lenders jointly at the euro zone level.

Eager to keep its taxpayers from being left on the hook for bank failures elsewhere in Europe, Germany has stood firm against the use of euro zone money while France has sought a robust joint backstop to contain a crisis.

Asked at a news conference in Paris if the backstop was sufficient to assure savers and markets, German Finance Minister Schaeuble said: “We have reached a result which is convincing.”

Speaking at the same news conference after talks between the two, French Finance Minister Pierre Moscovici said the deal would yield a credible joint backstop after a long transition period.

“There is no reason to doubt from the start decisions that are solid and politically extremely firm,” he said.

Under the agreement, Europe will eventually have a joint fund of about 55 billion euros ($75.69 billion) financed by banks to cover the cost of winding down a collapsed lender.

Schaeuble dismissed a recent suggestion from the International Monetary Fund that at least 100 billion euros would be needed to handle a crisis with several medium sized banks failing at the same time.

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