European Bank Overhaul Meets Opposition From Finance Ministers
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Version 0 of 1. NICOSIA, Cyprus — A plan by the European Union to overhaul bank supervision and help troubled lenders directly ran into a wall of opposition on Saturday as finance ministers from major nations like Germany, Poland and Sweden raised objections. The stalemate was a reminder that pushing 27 member states to cooperate remains a challenge, even when they have already pledged reforms aimed at ending their three-year debt crisis. The scale of the opposition could be a blow to Spain, which is in most immediate need of the banking aid that the program could provide. The proposals, drafted over the summer by the European Commission and formally introduced last Wednesday, would give the European Central Bank the task of regulating all 6,000 banks in the euro area by Jan. 1, 2014. Ministers and European Union officials said negotiations on the proposals would continue in the coming months. The proposals would also give the central bank powers to take away banking licenses, to require lenders to increase their capital and to levy fines on lenders that break the rules. During the two-day meeting here, France, Italy and Spain strongly supported phasing in the plan on Jan. 1, 2013, as the commission recommended. But Wolfgang Schäuble, the German finance minister, said at a news conference on Saturday that meeting that deadline “will not be possible.” German officials have warned that the proposals as currently drafted would strain the central bank’s resources and could create regulatory black holes. Earlier on Saturday, Mr. Schäuble criticized the plan for creating expectations that such a big change in regulation could be implemented so rapidly, according to two European Union officials who spoke on the condition of anonymity because the discussion among ministers was private. Michel Barnier, the European commissioner for financial services who drafted the plan, said at a separate news conference on Saturday that it was both “possible” and “necessary” to implement the plan by the start of next year. Any delays might be felt most directly in Spain, which is already reeling from a wave of street protests this weekend against belt-tightening reforms. The government in Madrid needs the banking rules in place before it can apply to recapitalize its banks directly from a new European bailout fund to avoid piling on more debt, which would increase its borrowing costs still further. “We need to stick to the timetable,” Spain’s economy minister, Luis de Guindos, told reporters on Saturday. The finance ministers were at loggerheads a day after top officials from the central bank and the International Monetary Fund warned European governments not to squander the current period of relative calm in markets by backsliding on promised reforms. Yet some ministers believe that a pledge by the central bank this month to buy short-term debt of vulnerable countries gave countries like Spain the relief they needed because borrowing costs had already fallen to more manageable levels. The Polish finance minister, Jacek Rostowski, said in an interview on Saturday that the European Union could now take more time to modify the banking proposals to preserve the interests of countries like Poland outside the euro area. “We should be grateful to Mario Draghi not only for taking the catastrophic risk off the table, but also giving us the time to get the banking union right,” Mr. Rostowski said, referring the president of the central bank. |