Voorstellen van EU om bankdeposito's te beschermen (en)
EUOBSERVER / BRUSSELS - In an attempt to boost consumer confidence and end "bank runs" - destabilising mass withdrawals that once again raised their head during the recent financial crisis - the European Commission i has come forward with proposals to step up the protection of bank deposits.
The package of plans presented on Monday (12 July) by European commissioner i for internal market and financial services, Michel Barnier, also aims to protect investors from Bernie-Madoff-style fraud events, by reforming current EU i legislation in the area.
Bernard Madoff was a US stockbroker jailed for defrauding clients of billions of dollars.
If approved by member states i and the European Parliament i, the new measures would see account holders receive up to €100,000 of their savings returned to them in the case of a bank failure, with payment times reduced from three months to one week.
As major European banks started to wobble in late 2008, one after another of the EU governments implemented temporary guarantee schemes in a desperate bid to shore up confidence.
The ad hoc procedure resulted in decidedly uneven protection across the union. "We have 40 different guarantee schemes in Europe," said Mr Barnier. "We aim to harmonise those."
Under the plans to amend the existing 1994 directive in the area, the commission says that banks should be forced to set aside regular funding to cover roughly 75 percent of the guaranteed deposits.
The EU executive body is also proposing greater protection for regular investors. For those who lose out due to fraud such as pyramid schemes or administrative malpractice, the new rules would increase compensation from €20,000 to €50,000.
The new rules could take effect as soon as 2012.
A third component to Monday's initiative saw the commission publish a white paper on insurance guarantee schemes, designed to provide last-resort protection to consumers when insurers are unable to fulfill their commitment.
"European consumers deserve better," said Mr Barnier. "They need reassurance that their savings, investments or insurance policies are protected no matter where in Europe they area based."
Banks propose private sector bail-out fund
The new proposals make up part of Europe's legislative efforts to prevent a repeat of the financial crisis that subsequently had a devastating effect on the region's wider economy, causing millions of job losses.
The ensuing bank recapitalisations and stimulus programmes left a gaping hole in government coffers, propelling the region into a new debt crisis as investors started to question whether government bonds would ever be paid back.
An EU plan for a global levy on banks to pay for future bank bail-outs failed to win support at last month's G20 i meeting in Canada, although European officials have vowed to push ahead regardless.
On Monday however, the head of Italian bank UniCredit said several European banks are considering the establishment of a €20 billion private-sector recovery fund that could bail out financial institutions.
"With voluntary contributions from the large European cross-border banks - say, the top 20 - a European recovery fund could accumulate a significant amount of risk capital [€20 billion] over a few years," Alessandro Profumo wrote in an opinion piece in the Financial Times.
"The fund would not require a contribution from member states or European authorities," he added.
Reacting to the proposal for a private sector solution, Mr Barnier said it was encouraging that banks agreed there was a need for an "ex-ante" fund so that banks set aside money before crises happened.
But he insisted that such a scheme would not preclude a wider fund system, such as a European bank levy, that would be applicable to all of the region's banks.