(Adds news briefing, reaction)
By Huw Jones
April 18 (Reuters) - The European Union on Tuesday
proposed making it harder for states to pour billions of euros
of aid into an ailing bank, as Italy did with Monte dei Paschi
di Siena six years ago.
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.
The recent collapses in the United States of Silicon Valley
Bank and Signature Bank and the forced takeover of Credit Suisse
by UBS last month were a reminder that failures still occur.
The European Commission said its proposals "will enable
authorities to organise the orderly market exit for a failing
bank of any size and business model".
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 instead of national practices to this
lower tier of lenders, on a case-by-case basis, European
Commission Vice President Valdis Dombrovskis told reporters.
NO EASY DEBATE
European Parliament member Markus Ferber of Germany, which
wants a carve out from some proposed rules, said not every
ailing small bank needs to go into resolution.
The proposal to allow the use of deposit guarantee funds
while closing or selling parts of a failed bank must not prop up
un-viable lenders, markets body AFME added.
"We are not expecting easy debate on these questions,"
Dombrovskis said.
EU states and the European Parliament have the final say on
the proposals, which 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 in 2017.
An explicit date for paying back the money or selling the
bank will be required.
The proposals do not attempt to revive a 2015 proposal for a
pan-EU deposit guarantee scheme, and there is 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)
Messaging: huw.jones.thomsonreuters.com@reuters.net))
