EU agreement on bank resolution ‘essential’

Banking union will be thrown off-track, if EU countries cannot agree on bank resolution later this week, Finance Minister Michael Noonan has warned.

EU agreement on bank resolution ‘essential’

He intends to work through Wednesday night if necessary to get the agreement that eluded him and his fellow finance ministers earlier this week on this pivotal piece of legislation.

He and the Irish presidency received lots of praise from members of the European Parliament’s budget committee as they work through the final few days of the presidency.

Getting agreement on banking recovery and resolution is one of three major issues facing Irish negotiators, with serious problems to be overcome to get agreement on the EU seven-year €960bn budget and on reform of the Common Agriculture Policy.

Lithuania takes over the presidency from Ireland on Monday and Mr Noonan believes it would be November before they could return to the issue: “If we don’t get it done on Wednesday, then the time line for banking union goes out of kilter, so it is important for the bigger project that we get agreement.”

The main dividing lines are between countries in the euro zone and those outside, with non-eurozone members wanting greater flexibility on deciding who should pay when a bank is in crisis. Germany especially wants a uniform set of rules that would ensure a bail-in with investors rather than taxpayers and the EU rescue fund, the European Stability Mechanism, paying.

He expected, however, that Wednesday would be a long night, but he would try to find a compromise where after a certain amount of bail-in has been exhausted there will be flexibility to use own resources in addition. “I will probably have agreement in principle, but its a matter of arithmetic. It will be a long night but I am optimistic.”

Mr Noonan admitted it was with difficulty that the issue of the ESM retroactively recapitalising banks was kept in the agreement where it will be dealt with on a case-by-case basis. But how exactly it will work in practice will not be clear until it comes to that point.

Banks had caused a lot of misery for a lot of people in the EU and the US where light touch regulation was the norm. That was a failure and he would support more regulation, he said.

Asked about taking action against aggressive tax planning and evasion and progress in the common corporate consolidated tax basis, Mr Noonan said that much of this needed to be done at a global level, and work was progressing with the OECD.

The Irish presidency had hoped to have a full discussion on the common corporate consolidated tax basis in May but it was not ready and there were a lot of different opinions. This is aimed at establishing a cross-EU set of rules for how cross-border companies would pay taxes, and to where. Ireland has not been enthusiastic, but agreed to cooperate as part of the bail-out deal.

“Ireland would be anxious to see progress made in this, as every country is losing revenue as a result of these matters”, he told the economic affairs committee of the European Parliament.

Tánaiste Eamon Gilmore will hold talks with his fellow ministers and members of the European Parliament to get agreement on the EU’s budget for 2014-2020.

It has run into trouble with the Socialists and the Liberal groups in the parliament despite the agreement reached last week being recommended by their lead negotiator.

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