EU banking bail-out deal protects UK red lines

20-Mar-2014 @ 16:0

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Anthea McIntyre Anthea McIntyre

Anthea McIntyre Anthea McIntyre

All-night bargaining over the proposed single resolutionmechanism (SRM) for banks has produced an agreement which will do the job whilestill protecting the interest of euro "out" nations which choose notto participate.

The deal, struck at breakfast-time today after 12 hoursof talks, will also protect the integrity of the single market, UK Conservativenegotiator Vicky Ford MEP said.

It avoids setting one set of rules for banks in the SRMand another for those outside, but also gives protection to non-participatingstates such as the UK. They will not pay any costs and will be reimbursedin full, on time and with interest, for their share of any cost or liabilitythat may fall on the EU budget.

There is a further commitment to introduce a treatychange within 10 years to clarify this position.

For the first time this creates a legal mechanism toallow for orderly management of a bank failure. The only options previouslyhave been a taxpayer-funded bailout or collapse.

Mrs Ford said: "The new EU and internationalrules on recovery and resolution will make the financial world a safer pace.

"Taxpayers won't have to fund bailouts, as creditorscan be bailed in and depositors are given preferential treatment to protectthem.

"It would have been wholly irresponsible for theEurozone's SRM negotiations to hold up the Introduction of bail-in anddepositor-preference laws."

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