People with big deposits could suffer a ‘haircut’ under planned European Union law if a bank fails, the EU's economic affairs chief Olli Rehn said.
Plans from Brussels put the onus on bank depositors, rather than the taxpayer, to bear the costs of bank failures.
"Cyprus was a special case ... but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down," Mr Rehn, the European Economic and Monetary Affairs Commissioner.
"But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of €100,000 (£85,000) is sacred, deposits smaller than that are always safe."
Mr Rehn was referring to a directive being drafted by the European Commission on bank safety which would set out investor liability in the law of member states.
He was speaking in an interview with Finnish TV after Cyprus last month forced richer depositors to suffer heavy losses in order to secure a €10bn bail-out from the EU and the International Monetary Fund.
Cyprus had initially planned to make people with deposits under the crucial €100,000 mark to take a cut also, before backtracking in the face of an outcry.
Smaller deposits are supposed to be protected by state guarantees.
Mats Persson, director of think-tank Open Europe said: "Rehn was only re-stating what's in an EU proposal tabled in 2012, which quite sensibly suggests a mechanism whereby first, investors and secondly, large depositors - rather than taxpayers - foot the bill when a bank goes bust.
“However, there's so much uncertainty around the precedent set by the Cyprus bail-out that his comments may still cause some jitters." Mr Rehn also said that the European Central Bank should launch fresh action to help boost the recession-hit euro zone economy.
telegraph.co.uk
Plans from Brussels put the onus on bank depositors, rather than the taxpayer, to bear the costs of bank failures.
"Cyprus was a special case ... but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down," Mr Rehn, the European Economic and Monetary Affairs Commissioner.
"But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of €100,000 (£85,000) is sacred, deposits smaller than that are always safe."
Mr Rehn was referring to a directive being drafted by the European Commission on bank safety which would set out investor liability in the law of member states.
He was speaking in an interview with Finnish TV after Cyprus last month forced richer depositors to suffer heavy losses in order to secure a €10bn bail-out from the EU and the International Monetary Fund.
Cyprus had initially planned to make people with deposits under the crucial €100,000 mark to take a cut also, before backtracking in the face of an outcry.
Smaller deposits are supposed to be protected by state guarantees.
Mats Persson, director of think-tank Open Europe said: "Rehn was only re-stating what's in an EU proposal tabled in 2012, which quite sensibly suggests a mechanism whereby first, investors and secondly, large depositors - rather than taxpayers - foot the bill when a bank goes bust.
“However, there's so much uncertainty around the precedent set by the Cyprus bail-out that his comments may still cause some jitters." Mr Rehn also said that the European Central Bank should launch fresh action to help boost the recession-hit euro zone economy.
telegraph.co.uk
No comments:
Post a Comment