Europe edges toward plan to close failing banks

Euro zone countries edged toward agreeing a plan to tackle ailing banks on Tuesday but divisions remain about key parts of the reform that is needed to underpin confidence in the bloc’s lenders. After a financial storm that toppled banks and dragged down states from Ireland to Spain, countries are considering a fresh blueprint outlining what to do when a bank fails, a critical second pillar of a wider reform dubbed banking union. Sealing a deal ahead of next week’s meeting of EU leaders will allow Germany’s Chancellor Angela Merkel and her peers to trumpet an important overhaul of banking although their readiness to share the costs of failed lenders, a central tenet of banking union, may fall short of what was hoped. A draft plan, circulated among EU ministers at a meeting in Brussels, spells out how a new agency may close failing banks chiefly in the euro zone and, crucially, how the cost can be shared out among different national funds in the scheme.

    

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