France and Italy want to set a limit on the reserves euro zone banks should be ready to wipe out if they need to be rescued, a joint document said, fuelling controversy over EU bail-in rules meant to reduce taxpayer costs.
The European Commission is preparing a proposal to adapt MREL requirements to internationally-agreed standards, known as Total Loss-Absorbing Capacity (TLAC), which will be applied from 2022 and would require banks to hold 6.75 percent of liabilities against the risk of failure - crucially, less than MREL requirements.
"The TLAC minimum requirement has been set (...) on the basis of quantitative impact assessment," the French-Italian paper said. "Additional requirement should therefore be exceptional," it added, warning that higher obligations for banks could be too costly and harmful.
"We are irritated over the moves by France and Italy. We see the 8 percent as appropriate and furthermore we adhere to the tenet of protecting the taxpayer with belt and braces," said Ralph Brinkhaus, deputy leader of Chancellor Angela Merkel's party in the German parliament.
Please read the full articles:
From Reuters : France, Italy urge cap on EU bank bail-in requirements - document
From the Financial Times: France and Italy move to counter EU push for tougher bank rules