Commission proposes a new framework for bank recovery and resolution: extracts from the press conference by Michel BARNIER, Member of the EC in charge of Internal Market and Services

Type: NEWS   Référence: 85837   Durée: 00:02:08   Première transmission: 06/06/2012  Lieu: Brussels, Belgium - EC
Fin de production: 06/06/2012
On 6 Juner, Michel Barnier, Member of the EC in charge of Internal Market and Services, presented new crisis management measures to avoid future bank bail-outs which was adopted today. The proposals ensure that in the future authorities will have the means to intervene decisively both before problems occur in the banking sector and early on in the process if they do. Furthermore, if the financial situation of a bank deteriorates beyond repair, the proposal ensures that a bank's critical functions can be rescued while the costs of restructuring and resolving failing banks fall upon the bank's owners and creditors and not on taxpayers. The proposed tools are divided into powers of "prevention", "early intervention" and "resolution", with intervention by the authorities becoming more intrusive as the situation deteriorates. The financial crisis highlighted that public authorities are ill-equipped to deal with ailing banks operating in today's global markets. In order to maintain essential financial services for citizens and businesses, governments have had to inject public money into banks and issue guarantees on an unprecedented scale: between October 2008 and October 2011, the European Commission approved €4.5 trillion (equivalent to 37% of EU GDP) of state aid measures to financial institutions. This averted massive banking failure and economic disruption, but has burdened taxpayers with deteriorating public finances and failed to settle the question of how to deal with large cross-border banks in trouble.

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00:00:00 Title 00:00:05
00:00:05 SOUNDBITE (in French) Michel Barnier, Member of the EC in charge of Internal Market and Services, saying: And we don't want tax payers to have to pay. The banks should pay for the banks. We are going to break the link between banking crisis and public budgets, the tax payer's money. We have to prepare for the future and deal with the short term issues as well. These are the two areas we have to address to establish confidence. 00:00:29
00:00:34 Cutaway of the audience 00:00:04
00:00:38 SOUNDBITE (in French) Michel Barnier saying that: We want to avoid in the future the banking crisis. Each Member States has to be equipped with the appropriate tools to be able to take action in time, not when it is too late, to take preventive actions, to stop a risk becoming a crisis, and a crisis becoming a disaster and asking tax payers to pay the bill. We don't want governments in the future to find themselves with their back to the wall and no other option that inject public money to avoid a catastrophe for the society as a whole. Shareholders and bankers must take all their responsibility. 00:00:55
00:01:33 Cutaway of the audience 00:00:05
00:01:38 SOUNDBITE (in French) Michel Barnier saying that: This will affect the Spanish banks. But basically, what we are trying to do is to avoid such a situation in the future both in Spain or elsewhere, by severing the link between banking crisis and public finances. In Spain at the moment what we need is to carry out a proper diagnosis which is what the Spanish authorities are doing with independent auditors at the moment. They are carrying out an audit with the Spanish banking sector at the moment. 00:00:30
00:02:08 Cutaway of the audience 00:00:00
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