Irish officials will hold a series of high-level meetings in Brussels in the coming days in a bid to move towards common EU agreement on new banking resolution rules ahead of a key meeting of finance ministers on Wednesday evening.
EU finance ministers failed to reach agreement on the banking resolution and recovery directive – a key strand of banking union – in Luxembourg on Friday after 19 hours of negotiation, prompting Minister for Finance Michael Noonan to schedule a fresh meeting for Wednesday. As Ireland enters the final week of its presidency of the Council of the European Union, the pressure is now on to get agreement before a summit of EU leaders on Thursday and Friday.
Key role
Irish officials, including representatives from the Department of Finance and Central Bank, have played a central role in the drafting of the new EU rules on winding down banks over the past few months. Negotiations at an official and diplomatic level are likely to intensify in the coming days, with Mr Noonan expected to be in close contact with a number of his ministerial counterparts in a bid to secure agreement.
"There are still real issues, core issues outstanding," Mr Noonan said as he left the negotiations early on Saturday, warning that there was no guarantee that a conclusion would be reached this week. Minister of State Brian Hayes represented Ireland at the talks. Throughout the evening Mr Noonan held a series of bilateral discussions with finance ministers, and EU commissioners, in an effort to reach consensus, with a number of draft texts put before member states. However, ministers failed to reach an agreement, prompting Mr Noonan to close discussions and reschedule for Wednesday.
Flexibility
At issue is the degree of flexibility that will be afforded to member states in implementing new rules on winding down banks. The new directive on banking resolution sets out which class of creditors will be "bailed-in" in the event of a bank wind-down. But while the UK, Sweden and France are calling for greater freedom to implement the "bail-in" rules, a German-led group of countries favours a more strict adherence to a pan-European standard.
Non-euro zone countries, including UK and Sweden, also argue that different rules should apply to countries that are not in the euro zone and as a result don’t have access to any potential support from the European Central Bank or the European stability mechanism (ESM).
However, adherents of stricter rules argue that a more streamlined approach is necessary in order not to distort the single market. EU internal markets commissioner Michel Barnier warned against a situation whereby larger countries could be in a position to bail out their banks, while smaller countries would have no choice but to "bail-in" creditors.
