(Adds Liikanen comment, background)
HELSINKI, Sept 20 Finnish Prime Minister Jyrki
Katainen has cast doubt on the creation of a European banking
union this year, insisting any such group needs a clean slate so
healthy banks do not suffer.
Finland has supported the idea of forming a united front
among euro zone nations to protect their lenders but the
proposal has divided opinion in the eurozone and worried
neighbouring states who fear their banks may be affected.
Germany is pushing for only a small number of
systemically-important banks to be subject to supervision by the
European Central Bank (ECB).
Helsinki has been wary of increasing the burden on its
relatively healthy financial institutions after its banks
experienced a financial crisis in the 1990s.
Finnish voters have been critical of European bailouts as an
easy way out for heavily indebted banks and governments.
Katainen said any banking union needed to s tart afresh so
h ealthy banks d id not s houlder the burden for troubled banks.
"Rather large fundamental issues are still under
consideration, so the target will be challenging if it is to be
ready by the end of the year," he told a seminar on the euro
crisis on Thursday.
B ank of Finland G overnor Erkki Liikanen, a member of the
European central Bank's Governing Council, took a similar view
in Finland's De mokraatti newspaper o n Thursday.
"The cooperation does not mean that those who have taken care
of their business should take care of others' untreated matters.
Here we have to be very careful," Liikanen wa s quoted as saying.
Under the plan, the ECB would be at the head of the
currently fragmented system of national regulators, with the
power to police, penalise and even close banks.
It would also gain powers to monitor banks' liquidity and
demand they hold more capital to protect themselves against
Katainen said he saw no point in issuing common euro zone
bonds and added that any bailout package would be better if
decided unanimously rather than by majority vote.
(Reporting by Jussi Rosendahl, Editing by Belinda Goldsmith)