Schauble signals German concession on EU bank rescue fund

Wolfgang Schauble, the German finance minister, has suggested Berlin is prepared to speed up the pooling of EU bank rescue funds if levies on banks to finance the system are also raised more swiftly.

Mr Schauble's concession, made during a meeting of EU finance ministers in Brussels, was the first signal he was prepared to compromise on the new bank rescue system in the face of strong criticism of Germany's stance from the European Central Bank.

Under a deal reached in December, the funds in the new system would only be fully mutualised after 10 years. In the interim, eurozone countries would contribute cash into national pots that would remain segregated within the broader European fund.

But the ECB argues the long "transition period" would lead to unnecessary uncertainty about how failing European banks would be bailed out or wound down.

Berlin has been reluctant to quickly hand control of common EU bank rescue funds to Brussels, even though a new EU supervisor will start overseeing eurozone banks within the next year. Germany is one of the only eurozone members with its own national bank resolution fund, and its banks have lobbied strongly to avoid ceding control of this to Brussels.

Mario Draghi, the ECB chief, said this month that finance ministers should consider "doubling the pace" so that the fund would be fully mutualised within five years. though he did not suggest any speeding up or increasing of levies to pay into the fund.

Mr Schauble made clear Berlin thought the two should be linked. "If 10 years is too long to build the fund, let's speed up - but not only the speed of mutualisation but the speed of paying in," he said during a public session of the ministers' deliberations on Tuesday.

Ahead of Tuesday's meeting, Pierre Moscovici, the French finance minister, said he wanted to go even further, with full pooling of cash from the start: "I want the single resolution fund to have a mutualised element from the start, and that element should grow as quickly as possible."

Mr Schauble was also resistant to proposals that would allow the fund to borrow money in cases where the embryonic system was short of funds. He said only national pots within the fund should be given such powers, and only then with the consent of national governments involved. Under such a plan, the new European system would not be able to borrow money for a bank rescue on its own.

"The borrowing must depend on the approval of the member state of the compartment that has to lend," Mr Schauble said.

Berlin seemed to be losing allies on that issue too. Jeroen Dijsselbleom, the Dutch finance minister, who has been a regular ally of Mr Schauble on such issues, said he was open to giving the fund the power to borrow, backed by national guarantees.

Mr Moscovici also broke from Mr Schauble by saying the fund should have "the capacity to borrow", independent of the speed at which individual countries paid into it.

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