EU bank levy plans have to retain national scope: UK
Plans for an EU-wide levy on banks, due to be unveiled on Wednesday, will be resisted if they seek to deliver a continental bailout fund, Britain's new business minister said on Tuesday.
European Commission chief Jose Manuel Barroso said earlier this month that he wanted the Group of 20 major and industrialising economies to agree on a levy to prevent future financial crises, at their June 26-27 summit in Toronto, Canada.
New commission proposals to tax banks in their territories in order to come up with a kind of insurance fund will be tabled on Wednesday in Brussels by EU financial services commissioner Michel Barnier and are to be debated first by national leaders at a European Union summit on June 17-18.
The commission is expected to leave precise levels for the levy and uses of the monies fairly open.
"The commission will adopt (Wednesday) a communication on banks resolution funds," Barroso said on Tuesday, calling for "national resolution funds financed by the banks themselves."
He said the purpose of the fund would be "to minimise the cost to taxpayers in the event of an orderly resolution of insolvent banks."
However, Britain's business secretary Vince Cable, echoing the eurosceptic tone of finance minister George Osborne last week, said if the plans were extended to create "a kind of insurance fund for future bailouts (that) ... would cause some alarm in London.
"That's not the way we saw the levy operating in London but the principle of a banking levy we're fully signed up to."
Legislation for a banking levy, which the new British government included in its coalition agreement, did not appear in Tuesday's formal programme read out in parliament by the Queen but it will be explored by a special commission on the banking industry over the next year.
"How precisely we apply it when it's introduced, those are issues we've still got to work through," Cable said.
"We have an open mind as to how far this is a British-only initiative or a joint one. (But) clearly the more countries that join the better."
In the immediate aftermath of the 2008 global financial crisis, there were calls to reform the banking system, especially to tighten up regulation and prevent a repetition of the excessive risk-taking blamed for the debacle.
Since then, however, the drive for reform has slowed in the face of strong resistance by the major banks and financial markets, with some countries such as the United States and Britain seen as favouring less regulation.
© 2010 AFP