Eurozone banks are pumping billions of dollars a year into controversial EU funds meant to limit taxpayer bailouts, but even that may not be enough, a senior official said.
The EU's controversial banking crisis fund has reached its intended capacity of 78 billion euros, meaning lenders will no longer have to pay any more annual contributions, a senior official said today (13 February). Announced.
The Single Resolution Fund is designed to avoid a 2008-style taxpayer bailout of the financial system, and euro area banks must pool together each year until it reaches a level equivalent to 1% of bank deposits. It has set aside 10 billion euros.
Dominique Labouret, chairman of the Single Resolution Board (SRB) that manages the reserve, said at a meeting in Brussels that the fund had “reached its target level”. “The SRB does not plan to issue a contribution request for this year.”
The treaty, which aims to shore up private sector finance with an additional 68 billion euros in public funds, has not yet been ratified by Italy, which Laboure told reporters was “unfortunate”. .
But even those funds may prove to be too small.
“We can handle the vast majority of cases,” Laboure said. But megabanks such as Deutsche Bank and Santander are demanding “a little more” than the 145 billion euros available in the event of a crisis, because their failure could bring the global financial system to its knees. “It may be necessary to do this,” he said.
Last year, the Swiss central bank had to provide credit facilities of around 100 billion Swiss francs (106 billion euros) to the struggling Credit Suisse, and it had to extend a loan facility of around 100 billion Swiss francs (106 billion euros) to the struggling Spanish lender Banco Popular. At the time it was bailed out by the Swiss Central Bank, it had debts of around 150 billion euros. 2017 SRB.
Having to shell out money for EU funds has proven understandably unpopular with EU banks, many of which are seeking to challenge the funding requests in court.
But Rabelais said he was “very satisfied” with the EU court's December decision canceling the 2021 bill sent to Crédit Agricole and Société Générale, saying the decision was about form, not content. It pointed out.
“The court directed us to rephrase and better justify the same amount,” he said, adding there was no overall risk to the fund from the judicial decision. “This is not what the bankers wanted…there are no kickbacks for them.”