The ECB, which regulates the euro zone's biggest lenders,
and national regulators in the 27 EU states which regulate
smaller banks, would have an obligation to notify the SRB
"sufficiently early" if there is material risk of a bank failing
or likely to fail, the documents said.
Regulators would have powers to withdraw the licence of a
bank in such a situation, it added.
The EU's European Banking Authority would be given a new
role to help check that banks can be wound down smoothly in a
crisis, and coordinate EU-wide exercises to test and compare how
resolution rules are being applied across member states.
The proposals set common requirements to improve and
harmonise the level of depositor protection, but do not regulate
the differing models countries use, such as institutional
protection schemes or industry-funded safety net (IPS).
Germany has warned the EU not to tamper with IPS rules.
The European Commission, which drafted the proposals, has
said the package is balanced and reflects extensive public
consultation.
(Reporting by Huw Jones. Editing by Jane Merriman)
By Huw Jones
LONDON, April 12 (Reuters) - European Union plans, due
next week, will seek to speed up handling of failing banks to
ensure they are not bailed out by taxpayers but "bailed in"
using their own resources, EU documents seen by Reuters showed.
The draft plans would have a requirement for EU authorities,
including the European Central Bank, to give an early warning if
there was a risk of a bank failure, the documents said.
The EU's proposals come at a time of heightened sensitivity
in the banking industry following UBS' merger with
Credit Suisse, and the collapse of several U.S. banks, including
Silicon Valley Bank.
The EU is aiming to update rules to deal with failing banks
that were introduced after the financial crisis more than a
decade ago, when taxpayers picked up the bill for bank failures.
Since then the use of the EU's bank "resolution" rules has
been limited, and they need updating so they can be used to deal
with any type of bank, the document said.
"To date, many failing banks of a smaller or medium size
have been dealt with under national regimes often involving the
use of taxpayer money (bail-outs) instead of the industry-funded
safety nets, such as the Single Resolution Fund (SRF) in the
Banking Union, that so far has been unused in resolution," it
said.
Banks contribute to the SRF, administered by the EU's Single
Resolution Board, which takes the lead on closing down failing
banks.
The proposals would make the rules "fit for its purpose for
all banks in the EU irrespective of their size, business model
and liability structure, even smaller and medium-sized banks, if
required by prevailing circumstances."
EU states and the European Parliament will have the final
say on the proposals which are due on April 18. They are draft
proposals and could be subject to change before publication.
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