* Panel of experts say new laws still leave loopholes
* Banking lobby: move is "important step" to banking union
* Urges simultaneous implementation of bail-in across bloc
(Adds details, reaction)
By Matthias Sobolewski
BERLIN, July 9 Germany's cabinet has approved
draft laws which effectively give the go-ahead to Europe's plans
for banking union - its main confidence-building response to the
financial sector crisis, a government source said on Wednesday.
With the laws, Germany is pressing ahead of EU requirements
in protecting German taxpayers from having to foot the bill when
a bank gets into trouble. Instead, in a process dubbed a
'bail-in', creditors and owners will have to take losses from
2015, a year before EU rules take effect.
But a panel of advisers to the government and parliament
immediately criticised the plan.
"Even the new rules have some loopholes," said Daniel
Zimmer, the head of the five-member monopoly commission that
advises on competition and regulation. "It must be ensured in
future that creditors' liability is implemented forcefully."
Once in place, the European plans will mean there is one
supervisor for euro zone banks, one set of rules to close or
restructure troubled banks and one pot of money to pay for
To minimise the expense to euro zone taxpayers, European
Union policymakers have drawn up rules under which shareholders,
creditors and very large depositors will lose money first in the
event of a bank failure.
Germany's private banking lobby BDB welcomed the laws in
principle as a step towards banking union, but added that "in
order to avoid distorting competitiveness ... bail-in
regulations (should) come into effect at the same time across
The European Central Bank will begin supervision of big
banks across the 18 countries that use the euro later this year
in a first step in banking union.
The next step will be a common approach to preventing banks
in trouble from dragging down governments in euro zone states,
as happened with Ireland. That is still a work in progress.
Another law in the package ensures Germany is in line with
EU rules that allow the European Stability Mechanism (ESM) to
recapitalise banks directly under certain strict circumstances.
Germany needs to pass the laws to implement Europe's banking
union plans. Its Bundestag lower house of parliament is due to
do so in November.
(Writing by Madeline Chambers and Annika Breidthardt; Editing
by Stephen Brown/Ruth Pitchford)