Germany’s Schäuble wants review of EU finance rules

Deutsche Welle
3 Min Read

At a meeting of European finance ministers, Germany warns that eurozone banking rules need reform amid new criticism that recent rescues of Italian banks failed to heed the lessons of the financial crisis.German Finance Minister Wolfgang Schäuble gave warning on Monday that banking rules in the eurozone need to be reexamined.

“In light of recent events, we need to look closely at whether our tools are sufficient, if they are effective and if we can do more,” said Schäuble, the eurozone’s most influential finance minister, as he arrived in Brussels for talks with his counterparts from the 19-country single currency bloc.

Schäuble said he regretted the disparity between national rules and the far tougher European rules that only apply to the eurozone’s biggest lenders.

“We must have a discussion on how we can change that in the future,” he said.

The latest cause of his concern was the use of taxpayer money to save two small Italian banks, Veneto Banca and Banca Popolare di Vicenza, which comes not long after the rescue of Italy’s third-largest and oldest bank, Monti dei Paschi di Siena.

The Italian job

European regulators have also come under fire for the EU-approved operation to save the two banks which could cost the Italian state up to 17 billion euros ($19 billion).

At the time Prime Minister Paolo Gentiloni defended his government’s swift action, saying that a “disorderly” failure of the banks could endanger Italy’s slow economic recovery. He also said the move was intended to help account holders and savers more than bank employees, some of which would lose their jobs.

In the bailout, the two failing lenders’ healthy assets are to be sold to Intesa Sanpaolo, Italy’s strongest bank, for the symbolic price of a single euro. Critics say the bailouts run against the spirit of EU rules that are meant to protect taxpayers from being left holding the bag when banks fail.

“We need a situation where everyone follows the rules,” said Austrian Finance Minister Hans Joerg Schelling before the ministers were to review the rescue with EU officials.

tr/nd (Reuters, AFP)

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