Stability at risk as leaders fail to reach a deal

Tim Wallace
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EUROPE’S financial stability could be at risk after leaders failed over the weekend to make progress towards a deal on how the banking union will work, analysts warned yesterday.

Finance ministers had hoped to come to an agreement on bank recovery and resolution mechanisms, governing how to wind up or save failing lenders.

But a row over how household and SME deposits are treated held up the talks, and there is still no agreement on how the European Central Bank will take over the sector’s supervision.

The aim had been to restore confidence in banking supervision after the series of collapses since the financial crisis.

The European Commission wants to present its final plans to ministers early next month, but that timetable is looking unlikely to be met.

“Failure to comply with this agenda would cast serious doubt on the ability of European member states to implement the banking union on time, and would undermine its credibility, with possible adverse impacts on bank funding costs,” warned Barclays’ Philippe Gudin.