European Parliament negotiators have reached a deal with their member state counterparts to create a single agency to handle failing euro-area banks after marathon 16 hours of talks.
The deal has now also won the seal of approval of Parliament’s political group leaders and will now be tabled for a vote at the second plenary session in April, the last of this legislature.
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Under the deal reached, a 55 billion fund made up by levies on banks will be built up over eight years. 40% of the fund will be shared among countries from the start, and 70% after three years.
The shared fund will also be able to borrow on the financial markets to raise extra money if needed.
The legislation also envisages giving the ECB the primary role in triggering the closure of a bank, limiting the scope for country ministers to challenge such a move.
The deal completes the second leg of banking union that is due to start this year when the European Central Bank (ECB) takes over as watchdog.
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By GlobalData"This will strengthen confidence and stability in the financial markets and help restore lending to the economy," said EU Commission president Jose Manuel Barroso.
Corien Wortmann-Kool, a lead negotiator for parliament, said that "this is very good for restoring confidence in European banks."
