Failing banks’ senior unsecured creditors may be forced to take losses and lenders may be made to pay levies under European Union proposals to deal with crisis-hit banks that will be published tomorrow.
Michel Barnier, the bloc’s financial services chief, will argue that the measures, which would also require governments to lend to each other as a last resort in a banking crisis, are needed to take taxpayers off the hook for rescuing distressed lenders, EU officials said in Brussels today.
Barnier said last week that the plans may serve as a stepping stone to a “banking union” in the 27-nation bloc, with a single EU-level fund to deal with stressed lenders, and more unified supervision of banks, as lawmakers seek to bolster confidence damaged by debt turmoil.
The draft law is “too little, too late, like all the authorities’ crisis actions so far,” Richard Portes, professor of economics at the London Business School, said in an e-mail. The EU has “very little time to stop bank runs and the resulting disintegration of monetary union.”
EU leaders, including European Central Bank President Mario Draghi and European Commission President Jose Barroso, have called for a banking union with more coordination of regulation, at least by governments in the 17-nation euro area. EU President Herman Van Rompuy plans to report on proposed “building blocks” for deeper integration in the euro area to the next summit of EU leaders on June 28-29 in Brussels.
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(Reuters) – Finance chiefs of the Group of Seven leading industrialized powers will hold emergency talks on the 
