More NewsBarnier Report Due to Impose Bank Levy Against Future Failure

Barnier Report Due to Impose Bank Levy Against Future Failure

In the recently released Barnier report, European Union (EU) member nations will be required to impose an upfront levy on banks. The proceeds of the levy will be used to insure against future financial failures, in an attempt to prevent bank failures from destabilising the financial system. The plan, announced by Michel Barnier, EU internal market commissioner, aims to become legislation by 2011.

In a response to the Barnier report on bank resolution funds, Angela Knight, chief executive officer (CEO) of the British Bankers’ Association (BBA) said: “There is universal agreement on the principle that if a bank gets into trouble it is not the taxpayer who should pay. Instead all countries must have arrangements in place so that their national authority can intervene, in good time, with the banking industry bearing the cost. This is what was put in place in the UK by last year’s Banking Act.

“At the moment we cannot support to idea of an EU-wide tax or levy to pay into a pan-European fund leaves. It many too many important questions unanswered. Why should the banks in one country pay for the problems of banks in another? As has been seen by the Greece crisis, what is essential is that each country must take its own actions and early. How could a large sum of money sitting dormant somewhere in Europe make economic sense? And how would it do anything other than help facilitate the next crisis? It would surely increase moral hazard by curtailing the consequences of a bank failure.

“There are more constructive steps the EU should be considering. Each country should strengthen its regulation and supervision. Each country creates an intervention authority (in the UK this is the Bank of England). And each country needs to put in place arrangements so that if intervention is required, then this is paid for by the industry and depositors are protected.

“Crucially, more work is required on options such as that proposed by the Institute for International Finance earlier this week on bank recovery plans and resolution plans which would protect even further both economies and taxpayers.”

Related Articles

Preparing for GDPR? Here’s four things to consider

More News Preparing for GDPR? Here’s four things to consider

2m Elliott Wiseman
Cash flow in focus for investors

Cash Management Cash flow in focus for investors

3m Conor Deegan
Treasury TV: Karen Pugsley, Domino's Pizza Group

More News Treasury TV: Karen Pugsley, Domino's Pizza Group

3m Victoria Beckett
Treasury TV: Yeng Butler compares US and European MMF reforms

Compliance Treasury TV: Yeng Butler compares US and European MMF reforms

3m Victoria Beckett
Treasury TV: Tim de Knegt, The Port of Rotterdam

10 Minutes With The Treasury Treasury TV: Tim de Knegt, The Port of Rotterdam

4m Victoria Beckett
Banks are selling clients short with short dated cash deposit U-turns

Banking Banks are selling clients short with short dated cash deposit U-turns

4m Victoria Beckett
What does sterling’s Brexit boost mean for UK manufacturers?

More News What does sterling’s Brexit boost mean for UK manufacturers?

4m Tasja Botha
FX for corporates: 5 best practices for treasurers

Economy FX for corporates: 5 best practices for treasurers

4m Mateo Graziosi