Banking union a ‘credibility test’ for Europe, says Kenny

Taoiseach Enda Kenny yesterday called on EU member states to progress banking union, a year after EU leaders committed to breaking the link between sovereign and banking debt.

Speaking in Vienna at a meeting of the European People's Party (EPP), also attended by German chancellor Angela Merkel and European Commission president José Manuel Barosso, Mr Kenny said banking union was "a credibility test for the European Council".

His comments come ahead of today's meeting of European finance ministers in Luxembourg, chaired by Minister for Finance Michael Noonan, which aims to reach general agreement on bank resolution and recovery.

"Ireland as presidency is pressing strongly the need to agree a common EU-wide framework for the recovery and resolution of failing institutions," Mr Noonan said.

The gathering of all 27 EU finance ministers follows yesterday’s euro group meeting, which focused on the principles of European Stability Mechanism direct recapitalisation.

Elusive consensus
While agreement has been reached on the single supervisory mechanism, consensus on the bank resolution and recovery directive is proving more elusive , with strong differences between states on which class of creditors should be bailed-in in the event of a wind-down.

An EPP declaration after yesterday’s meeting said party leaders “support the creation of a banking union” as it was “in the interest of taxpayers and businesses in Europe”.

An alternative proposal by France and Germany seeks a greater role for national authorities in resolution and recovery of banks, in contrast to Brussels's central authority.