* Says work on Europe's banking union on schedule
* Debate on resolution fund to accelerate after Sept. 22
By Andrius Sytas
VILNIUS, Sept 14 Work will pick up after
Germany's elections to set up a European agency that can order
the restructuring or closure of any euro zone bank, the head of
group's finance ministers Jeroen Dijsselbloem said on Saturday.
The agency, called the Single Resolution Mechanism (SRM), is
to complement the European Central Bank as part of a banking
union that will break the vicious circle between weak banks and
The ECB is to take up its new responsibilities in autumn of
2014 and EU policymakers are now planning to have the resolution
body - which would also have a fund - ready on Jan. 1, 2015.
Until then, bank resolution would be governed by a set of
common rules for all national authorities called the Bank
Recovery and Resolution Directive.
But the timetable appears optimistic because Germany is
adamant that to create a true resolution agency, the European
Union needs to change its fundamental law, the EU treaty. This
would be a lengthy and politically risky process.
Germany holds elections on September 22 and officials say
Berlin is unlikely to be ready to seek a compromise before.
Dijsselbloem appeared to share that view.
"There hasn't actually been a debate on how it can be
solved. As of next month, I think we should have that debate and
have it in depth and work on solutions," Dijsselbloem told
reporters on entering talks of EU finance ministers.
"We're still on schedule. There was always the plan that the
SRM proposal would come this summer. It did. And it was always
the plan that we would finalise the discussions at the end of
this year and we will," he said.
"In a week and a half the world might look different
already," he said in a clear reference to the vote in Germany.
To avoid a change of the EU treaty, the European Commission
proposed in July that it could become the resolution agency
itself. But Germany and several other countries oppose that
because it would mean the transfer of great new powers to the EU
executive arm, which is already overseeing competition issues.
Elke Koenig, president of the German financial watchdog
Bafin, criticised the Commission proposal in an article due to
be published in German magazine WirtschaftsWoche on Monday.
"Brussels' plan, under which the ECB will in future make
proposals for restructuring banks, the EU Commission will decide
on whether to wind them down and the individual state must bear
the consequences, is half-baked," she said.
"It encroaches on ownership rights, which could burden
taxpayers. That lacks a solid legal basis," she said.
Legal work on the first pillar of the banking union, the ECB
supervision of around 130 euro zone banking groups or about 80
percent of the banking sector in Europe, was completed last
week, allowing the ECB to start technical preparations.