The draft plans would have a requirement for EU authorities, including the European Central Bank, to give an early warning if there was a risk of a bank failure, the documents said.
The EU’s proposals come at a time of heightened sensitivity in the banking industry following UBS’ merger with Credit Suisse, and the collapse of several U.S. banks, including Silicon Valley Bank.
The EU is aiming to update rules to deal with failing banks that were introduced after the financial crisis more than a decade ago, when taxpayers picked up the bill for bank failures.
Since then the use of the EU’s bank “resolution” rules has been limited, and they need updating so they can be used to deal with any type of bank, the document said.
“To date, many failing banks of a smaller or medium size have been dealt with under national regimes often involving the use of taxpayer money (bail-outs) instead of the industry-funded safety nets, such as the Single Resolution…
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