An explicit date for paying back the money or selling the
bank will be required.
There is no attempt to revive a 2015 proposal for a pan-EU
deposit guarantee scheme, still languishing amid opposition from
countries like Germany. And there is also no change to the
protection of 100,000 euros ($109,450) per account.
($1 = 0.9137 euros)
(Reporting by Huw Jones in London; Editing by Alexander Smith)
By Huw Jones
April 18 (Reuters) - The European Union proposed on
Tuesday making it harder for governments to repeat pouring
billions of euros of state aid into a bank as Italy did with
Monte dei Paschi di Siena six years ago.
The proposals from the EU's executive seek to ensure that
banks hold enough resources, in particular debt that can be
written down to release cash in a crisis, to avoid taxpayer
handouts in the first place.
The recent failure of Silicon Valley Bank and Signature Bank
in the United States and forced takeover of Credit Suisse by UBS
last month were a reminder that bank failures still occur, the
European Commission said.
"Today's proposal will enable authorities to organise the
orderly market exit for a failing bank of any size and business
model, with a broad range of tools," the commission said.
The proposals update rules introduced after the global
financial crisis of 2007-09 to stop banks being
"too-big-to-fail", where taxpayers remain on the hook.
Under current rules, the failure of a large bank in the bloc
is dealt with by the Single Resolution Board, but winding down
the next tier down of lenders is subject to differing national
practices that can end up using taxpayer money.
The proposals seek to make it easier and more consistent to
apply EU resolution rules to this next tier down of lenders.
They also make it harder for governments to inject state aid
into struggling banks, known as precautionary capital, a
mechanism use by Italy for Monte dei Paschi di Siena in 2017.
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