October 15, 2018 / 8:16 AM / 10 months ago

Euro zone bank rescue fund will hold nearly 33 bln euros in 2019, official says

BRUSSELS, Oct 15 (Reuters) - The euro zone’s fund to rescue failing banks intends to hold nearly 33 billion euros ($38.18 billion) in 2019, up from 25 billions this year, the head of the agency that manages the fund said on Monday.

The move is in line with plans to gradually increase the Single Resolution Fund to at least 1 percent of all covered deposits in euro zone banks by the end of 2023, which is estimated to be between 55 billion and 60 billion euros.

“The SRF will continue to grow to just short of 33 billion in 2019. The amounts will be invested to ensure value protection and high liquidity,” Elke Koenig, who chairs the Single Resolution Board, told a banking conference in Brussels.

The fund is financed by euro zone banks and is meant to help failing lenders, and reduce costs for taxpayers when banks fail.

Euro zone states are discussing establishing a safety net for the SRF that would allow the fund to intervene in a major crisis with more than one large bank in trouble.

Details of the so-called SRF backstop are due to be finalised in December.

EU leaders agreed in June to give the state rescue fund, the European Stability Mechanism, more powers to help the banking fund.

Once allowed to act as a backstop, the ESM could offer a revolving credit line of the same size as the bank fund. ($1 = 0.8642 euros) (Reporting by Francesco Guarascio, editing by Larry King)

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