EU ministers inch towards 'banking union'

European Union (EU) Finance Ministers on Tuesday edged closer towards an agreement on a "banking union" designed to close down failed banks in order to prevent banking crises. "We have no formal result in our pocket or on the table, but we made a huge leap forward in defining the concrete directions and schemes," said Lithuanian Finance Minister Rimantas Sadzius, referring to the so-called Single Resolution Mechanism (SRM), which would step in to close a bank at risk before it could do too much damage to the wider economy. According to a draft paper discussed at the meeting, the policy makers detailed resolutions on dealing with stricken banks in the EU, including the sale of business, establishment of a bridge institution, asset separation and bail-in measures. However, the draft paper did not provide information about who decides to launch the measures and where the bail-in funds would come from, casting a shadow over finalization of the SRM. The talks left more details to be worked out at the next finance ministers meeting on Dec. 18, before a summit of EU prime ministers and presidents, which is supposed to seal the entire deal.