January 13, 2014 / 8:31 PM / 4 years ago

EU must be able to wind up a bank in a weekend - German ECB candidate

BRUSSELS, Jan 13 (Reuters) - The euro zone should be able to agree how to restructure and finance a troubled bank in the space of a single weekend, Sabine Lautenschlaeger, Germany’s candidate for a vacant seat on the European Central Bank’s board, said on Monday.

After more than a year of talks, ministers from across the European Union agreed in December a scheme to close failing banks - a vital step towards completion of the bloc’s banking union - but the process will be complex and politicised.

“I don’t have a better solution for you with respect to the structure of decision-making,” Lautenschlaeger told a European parliament committee in Strasbourg.

Lautenschlaeger, who is also Germany’s Bundesbank vice president, said having a European Resolution Mechanism and a common fund was very important, stressing the necessity of being able to wind up a troubled bank over a weekend.

“We need to have a structure where it is possible to start a resolution on Friday night and to finish it on Monday morning at 1 o’clock because then Japan, Tokyo opens. That is a really important requirement,” she said.

Ways to achieve such a swift outcome were up for discussion, Lautenschlaeger said.

Despite progress, central elements of the banking union project are still missing. For one, Germany continues to stand firm against the use of euro zone money to back a scheme for tackling troubled banks.

Completion of a joint, mutualised resolution fund of roughly 55 billion euros ($75 billion) is expected only in 2026.

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