Reuters: Regulatory News: EU's Barnier says bailout era must end-report

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EU's Barnier says bailout era must end-report Jun 6th 2012, 00:53 LONDON, June 6 | Tue Jun 5, 2012 8:53pm EDT LONDON, June 6 (Reuters) - Decisive reforms are needed to strengthen Europe's banking system and avoid future mistakes of taxpayer funded bailouts, the European Union's top regulatory official Michel Barnier said. There is a pressing need to move away from the "current situation whereby the fate of public finances is excessively tied to that of banks," he said in an opinion piece in the Times newspaper on Wednesday. "To exit the crisis and regain confidence and growth, it is vital that we take decisive steps to strengthen our banking system and put it at the service of consumers of the real economy." A solution to the reliance on taxpayer bailouts, Barnier said, is outlined in a new European Commission proposal giving public authorities in all EU countries the power to restructure or dismantle any bank whose failure could impact financial stability. "Banks and authorities will need to draw up plans in advance to cope with possible stress scenarios and overcome difficulties on their own," Barnier said. "If, despite this, a bank should run into problems, authorities must act swiftly." Possible intervention could include replacing managers or convening shareholders to urgently adopt reforms, or in severe cases, measures could be taken to sell an ailing bank to a viable competitor. "We have a responsibility to prepare for the future, and to make sure we avoid the mistake of having banks being bailed out by taxpayers, or allowed to remain in the market as hapless zombie banks," Barnier said. Link this Share this Digg this Email Reprints

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