Britain not to fund EU bank bailoutsJune 3rd, 2012 - 11:33 pm ICT by IANS
London, June 3 (IANS) Ahead of the European Commission revealing plans to rescue and winddown failing lenders on the ccontinent as the Spanish banking crisis mounts, Britain has ruled out participating in any European bank bailout or new fund.
Spain’s banking sector is in crisis due to a housing bubble that burst three years ago causing debts to pile up. Bankia, the fourth biggest bank has been bailed out.
European officials are working on two sets of plans to address the crisis facing the European banking system.
The first, due to be published Wednesday, is a new “crisis management framework” that would see the establishment of a Europe-wide resolution regime for banks. It would give officials powers to seize and wind up failing lenders.
The other plan, which officials are still working on, is for a European bailout fund to recapitalise the banks and restore market confidence. The scheme would be funded by a levy on banks. The full proposal will be put to EU leaders later this month.
However, Britain is opposed to this proposal, potentially putting it at odds with France and Spain. Germany is said to side with Britain.
A British government source said: “We have told our European partners that there is no chance of the UK contributing to a Greek or Spanish bank rescue. We will not help fund any bailout.
“The UK is against setting up a pre-funding for a bank bailout vehicle as it encourages moral hazard.”
The governemnt believes that setting up a bailout fund will just encourage banks to carry on with existing practices, rather than fixing their balance sheets, writing off bad debts and tightening up their lending practices.
- Eurozone agrees to bail out Spanish banks - Jun 10, 2012
- Europe agrees to 1 trillion euro fund for new bailout plan - Oct 27, 2011
- Spanish government takes controlling stake in ailing bank - May 10, 2012
- Moody's downgrades Spain's debt rating - Mar 11, 2011
- Fitch downgrades Spain's four largest banks - Feb 14, 2012
- Markets continue to hammer Spanish debt - Jul 24, 2012
- EC approves Spanish bank recapitalization programme - Jul 26, 2012
- Fitch downgrades Spain's two major banks - Jun 12, 2012
- Spain told to take decisive actions to cope with crisis - Jul 28, 2012
- No more cuts coming, says Spanish minister - Aug 06, 2012
- Spain to use $37 billion for bank restructuring - Jun 17, 2010
- Bank stress tests prove strength, says EU - Jul 24, 2010
- Spanish government approves `bad bank' for toxic assets - Sep 01, 2012
- Qatar pledges to invest $4 bn in Spain - Mar 01, 2011
- Spanish banks' bad loans ratio highest since 1994 - Feb 18, 2012
Tags: bad debts, balance sheets, bank bailout, banking crisis, banking sector, british government, crisis management, european banking system, european commission, european officials, european partners, government source, housing bubble, june 3, lenders, levy, management framework, market confidence, moral hazard, spanish bank