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Following the discussion, the presidency concluded that to reach an agreement, a balance would have to be struck between establishing a harmonised approach to bail-in and allowing for limited national flexibility in its application. The presidency stated its intention to re-submit the dossier to the Council at its meeting on 21 June, with the aim of reaching an agreement on the Directive.
In summarising the discussion, the presidency noted convergence along the following points:
The presidency also recognised that some country-specific concerns should be addressed, in particular as regards euro area vs non-euro area issues. The proposed Directive is aimed at providing national authorities with common powers and instruments to pre-empt bank crises and to resolve any financial institution in an orderly manner in the event of failure, whilst preserving essential bank operations and minimising taxpayers' exposure to losses. It establishes a range of instruments to tackle potential bank crises at three stages: preparatory and preventative, early intervention, and resolution.
The bail-in tool, at the resolution stage, would enable resolution authorities to write down or convert into equity the claims of the shareholders and creditors of institutions that are failing or are likely to fail. The Directive would also require Member States to set up ex-ante resolution funds to ensure that the resolution instruments can be applied effectively.
The proposal is aimed at transposing into EU law commitments made at the G20 summit in Washington DC in November 2008, when leaders called for a review of resolution regimes and bankruptcy laws "to ensure that they permit an orderly wind-down of large complex cross-border financial institutions."
Based on article 114 of the Treaty on the Functioning of the European Union, the Directive requires a qualified majority for adoption by the Council, in agreement with the European Parliament.
Remarks by Commissioner Barnier (French)
Irish Presidency press release
Background from the Commission website
Rules for Bank Recovery and Resolution
The Commission's proposal on recovery and resolution tools for banks in crisis is a key pillar of the new financial regulatory framework that we are building for all banks of the European Union. It was presented on 6 June 2012 (see IP/12/570 and MEMO/12/416) and it would implement the European Union's commitment as part of the G20 to set up crisis prevention and crisis management frameworks.
To ensure the taxpayer does not always end up bailing out banks, the EU has proposed a common framework of rules and powers to deal with banks in difficulty by 2015. Repeated bailouts of banks have increased public debt and imposed a very heavy burden on taxpayers.
This EU-wide resolution framework for the managed resolution of banks and investment firms would give us all the tools:
This file is a priority as confirmed by Heads of State and Government on numerous occasions, including in the European Council Conclusions of December 2012. The recent developments in Cyprus highlighted once again how important it is for the EU to have mechanisms in place to deal with failing banks. The Commission hopes the discussion at EU's Council of Economic and Finance Ministers can make real progress on outstanding points in this negotiation, especially on the design of the bail-in tool, and Commissioner Barnier will reiterate his full support to the Irish Presidency in reaching an agreement on this important proposal by end of June.
Rapid agreement among Member States will enable compromise discussions to start with the European Parliament, and allow the co-legislators to adopt the proposal in the coming months.
Furthermore, the architecture of the banking union will build on the foundations of this Directive in order to establish an integrated European resolution system for all countries participating in Single Supervisor System. The Commission intends to make a proposal on the Single Resolution Mechanism this summer.
Proposal, 15.3.13