EU leans on big banks to finance bailout fund 

France’s banks will foot the biggest bill for Europe’s banking union, paying up to €2bn more than Germany’s lenders towards a new €55bn bank rescue fund, according to a Brussels proposal.

The European Commission on Tuesday unveiled its plans to set contributions to the fund handling bank failures, which leaned heavily on France’s big banks and favoured the hundreds of small and medium sized lenders in Germany and Spain.

While the complex calculations are provisional and still subject to agreement, commission estimates seen by the Financial Times suggest France’s highly concentrated sector will contribute around €17bn over eight years, representing almost 30 per cent of the fund. Germany pays in around €15bn, or 27 per cent.

Diplomats have already spent months squabbling over whose banks should bear the cost of the eurozone’s march to banking union.

Under the commission plans 90 per cent of the €55bn would come from the eurozone’s large banks, which EU officials said accounted for 85 per cent of all banking assets.
Planned adjustments mean the French sector, including the likes of BNP Paribas and Société Générale, will pay 70 per cent more than required under the EU regime for national bank resolution funds. German banks pay in 9 per cent less and Spanish banks almost half.

European Commission officials justified making the eurozone’s largest banks pay more by arguing they were the most likely to need rescue cash from the bailout fund in a crisis. When the fund is complete in 2024, IT will amount to 1 per cent of deposits in countries participating in the EU banking union.

“The approach chosen is fair as each bank will contribute in proportion to its size and risk profile,” said Michel Barnier, the EU’s outgoing chief financial regulator. “It is also proportionate as the smallest banks have their own adjusted regime of contributions.”

 

Source: FT- EU leans on big banks to finance bailout fund

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