European Union set to fast-track rules hitting bank creditors
BRUSSELS (Reuters) - Bondholders and large depositors in a failing European bank face taking losses from the start of 2016, European Union negotiators agreed on Wednesday, in a provisional deal on rules to spare taxpayers from further bailouts.
The law, if approved by EU ministers, will make losses for senior bondholders and large savers a permanent feature of the bloc's response to banking crises and mark another milestone in the reform of an industry that triggered economic turmoil.
It signals a hardening of approach and follows in the vein of the tough treatment earlier this year of big depositors in Cyprus. That country's bailout broke a taboo that savers should be spared when a bank is in trouble.
The agreement to accelerate the introduction of the regime by two years to January 1 2016 was reached between lawmakers from the European Parliament and negotiators representing EU countries. It now goes to EU ministers for approval next week.
Michel Barnier, the European commissioner in charge of writing the law, said it was a "big step" to ensure that "taxpayers are no longer in the front line to pay for banks' mistakes".
If given the green light, it will lay down clear rules for closing a bank in any of the 28 countries in the EU, ensuring that it is not only shareholders and governments who have to foot the bill.
It provides an important building block for a wider reform dubbed banking union in the smaller 17-member euro zone, which will see the European Central Bank police the sector in tandem with a new agency to shut weak lenders. (Reporting by John O'Donnell; Editing by Paul Simao)
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Nitin Gadkari, former president of the Bharatiya Janata Party and a member of the BJP’s manifesto committee, speaks to Reuters. Here are the edited excerpts. Full Article