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Clock ticks on EU failing bank plan

Monday, June 24, 2013 - 02:08

June 24 - Europe couldn't agree at the weekend on how to share the cost of bank collapses and have announced more talks this week. But with Germany resisting attempts by France to water down rules designed to spare taxpayers Sonia Legg aks if there is any hope a long-awaited deal will ever be reached.

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TV AND WEB RESTRICTIONS~**NONE** Spain has spent more than 75 billion euros over the past four years helping 14 banks. Last year it took 41 billion euros from Brussels to help deal with the crisis. How to share the cost of bank collapses in future continues to divide Europe. Leaders failed to come up with a strategy last week - they will try again on Wednesday They discussed making shareholders and bondholders suffer first, followed by depositors with more than 100,000 euros. The principal - first adopted with Cyprus - is largely accepted. But the amount of leeway countries should have over the "bail-in" process isn't. And Germany wants stricter rules than France (SOUNDBITE) (French) FRENCH FINANCE MINISTER PIERRE MOSCOVICI, SAYING BEFORE LEAVING: "We need flexibility, we agree on that. We need to define the scale of this flexibility and its limits and that's what we've almost done, that's what we'll complete on Wednesday." Investors are increasingly used to protracted EU meetings. But while some are looking on with a sense of deja vu others are alarmed. IG's Brenda Kelly. (SOUNDBITE) (English) BRENDA KELLY, MARKET ANALYST, IG, SAYING: "When you have a certain amount of different rules and flexibility in dIfferent countries it doesn't give you a banking union - it still creates a degree of segregation and when you have that segregation you may well see the inter bank lending within the European countries start to stagger once again. Until we get fiscal union I think banking union is a complete waste of time." France - along with Britain and Sweden - fears forcing losses on depositors could cause a bank run or rattle confidence. But Germany argues giving countries wide-ranging freedom could put some banks at a competitive disadvantage. (SOUNDBITE) (German) GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE, SAYING: "It is crucial that we have a pecking order. That there is a clear rule and the principle that shareholders and creditors take the risk and not the state - we have to be serious with that principle." The aim is to create a common front across the euro zone when it comes to tackling failed banks and ultimately form a banking union. But the time it's taking to achieve that aim is becoming a concern. The leaders may well be held to account if they break their promise of a deal on Wednesday.

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Clock ticks on EU failing bank plan

Monday, June 24, 2013 - 02:08