Deal on failing banks prevents huge bills for the taxpayer

Failing banks in Europe can now be dismantled or restructured more quickly and effectively.

Agreement was reached early on Thursday morning after 16 hours of negotiations between the European Parliament and the EU Member States.

"This is very good for restoring confidence in European banks. This will also boost lending to our businesses and households", said EPP Group Vice-Chairwoman Corien Wortmann-Kool MEP, one of the lead negotiators.

Thanks to the efforts of Wortmann-Kool and the European Parliament, the procedure has been shortened: "Problem banks should be treated within a weekend. This is a big plus of this agreement; a year ago we clearly saw that the extensive talks on Cypriot banks raised the costs."

The agreement will reduce undue political interference in the procedure: "This ensures that banks are treated in the same way across Europe, in whichever country they are located. This is a guarantee that painful but necessary measures are really put into practice. This is much fairer."

Instead of the taxpayer, a fund (filled by banks) will now pay for failing and ailing banks. The structure of the fund was discussed in detail in the negotiations. The deal is that the national shares of the fund will be merged for 70% within 3 years. "This increases the firepower of the fund and will prevent huge bills for the taxpayer", concluded Wortmann-Kool.