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Contributions to the common fund for bank failures have proved an emotive and numbingly complex point of dispute among eurozone finance minister, who have squabbled over whose banks should foot the biggest bill.
Initial proposals from the European Commission appeared to lean heavily on France’s big banks and favoured the hundreds of small and medium sized lenders in Germany and Spain.
The final deal agreed by finance ministers meeting in Brussels December 9 makes good a political pact between Paris and Berlin last month, which aimed to ensure that French and German banks each contributed about €15bn to the fund.
French banks had been pencilled in to pay about €2bn more than German lenders.
Although the effect on individual lenders is still unclear, the relative Franco-German contributions are levelled through adjustments to reduce upfront pain for big banks, offer additional exemptions for certain German lenders and allow some collateral to be used instead of cash.
“This is a zero sum game and finding a deal is a messy, dirty business,” said one official involved in the talks.
Under the terms, as the €55bn fund is built up over eight years, the transition from national to European level contribution rules will be phased in.