In future banks across Europe should not be able to rely on tax-payers’ money to protect them from the consequences of their risky behaviour. Future losses will only be made good at the expense of owners and creditors or from a bank rescue fund funded by the banks themselves. This is good news for the stability of financial markets and for tax-payers who should never again have to pay for the risky behaviour of the banks.
However, the latest proposals by the European Commission, being put forward during the summer break, suggest that the contributions to the bank rescue funds should be calculated mainly by the size of banks' balance-sheets rather than according to riskiness of banks' behaviour. Bread-and-butter banks, building societies and credit unions, who are unlikely to ever make demands on the fund, will be required to subsidize the casino activities of investment banks. With the building societies bailing out Barclays and its ilk we really will see the world turned upside down!
Greens in the European Parliament initiated a successful campaign so that contributions to the rescue fund should be proportional to risk: banks with high systemic risk are now legally required to pay additional fees and prior membership of an institutional guarantee system will be considered when premiums are calculated. But in a sleight of hand this clear intention of lawmakers is about to be disregarded in the fine print of a so called 'delegated legal act' of the European Commission detailing the EU’s Bank Resolution Directive. In particular the Italian and Dutch governments, the European Central Bank and the European Commission are exerting pressure in the wrong direction, to protect exactly those banks whose risk-taking caused the crisis.
This website is a resource created by Greens in the European Parliament to publicise important papers making clear what is being stitched up in technical language and during the summer holiday.
We call on you to send polite but determined e-mails to the Commissioner for the
Internal Market Michel Barnier to protest against these unfair subsidies for risky
Please, do also send a copy of your e-mail to us:
'Greens in the European Parliament have been working in committee to build agreement to end the moral hazard where banks can take risks at citizens' expense. We are deeply disappointed that the Commission is seeking to undermine this work in an undemocratic way. We also deplore their attempt to force small and mutual banks to subsidise the commercial banks when restructuring the terms of the rescue fund.'
'Subsidies for high risk Investment banks paid for by conservative commercial banks would be a perversion of a social market economy. The EU-Commission has to fundamentally revise its plans.'
Papers of the expert group of the member states and the EU Commission preparing the „delegated legal act”. Those papers circulate in lobby circles in Brussels:Download
Our Green analysis of the papers:Download
Lobby papers, e.g. of the major bank lobby AFME who also pleads in favour of an unjust contribution configuration:Download