As with so many hot-button topics, it all comes down to Germany and France.
A long-running dispute between Europe’s two biggest economies over who should pay for future bank failures may be coming to a head, with both countries fighting to shield their own very different banking systems from shouldering the burden.
Big and small financial institutions are on opposite sides in the battle over how governments should collect a new tax on European banks, which is designed to prevent taxpayers from footing the bill of the next financial crisis. The European Commission’s compromise proposal, seen by Handelsblatt, will be presented next week.
Germany’s finance minister, Wolfgang Schäuble, who presides over a country with nearly 2,000 banks, many of them smaller savings and cooperative banks, would like to leave the minor financial institutions out of the financing equation. He has argued that those banks that pose the highest risk to the entire system should pay the highest price.
His French counterpart, Michel Sapin, who presides over a country with about a third as many banks and many more large institutions, wants to share the burden more evenly. France has argued that smaller banks also profit from a safer European financial system.
After some delays, the European Union’s executive branch plans to present a compromise proposal next week. Michel Barnier, the European commissioner for internal markets and services, informed E.U. finance ministers of his plans during a gathering in Brussels on Tuesday, according to participants.