Financial Regulatory Forum

EU finance chiefs to discuss bank levy this week

April 13, 2010

   By John O’Donnell
   BRUSSELS, April 13 (Reuters) – European finance ministers will attempt to settle differences over how best to impose extra taxes on banks at a meeting in Madrid this week, sources familiar with the talks said.
   In what will be a test of Europe’s ability to speak with one voice on financial services reform, ministers will try to agree a common approach on imposing additional levies on banks in the 27-member European Union.
   Most countries support such a tax, which would be popular with voters who blame banks for the recession, but disagree over how the money should be spent.
   Some want it to repair public finances. Others would channel it into an emergency fund for winding down struggling banks.
   “There are different views,” said a senior European diplomat. “Countries are coming up with different instruments. It is a bit chaotic. Do you make everybody pay for something which has just been used by certain banks?”
   “We need to define what we are talking about. There hasn’t been a full discussion yet at ministers’ level. That’s what we expect to have in Madrid.”
   At the meeting on Friday, EU financial services chief Michel Barnier will present his plan for how such rescue funds could work in Europe.
   Pressure is building as the International Monetary Fund prepares to present bank levy recommendations to finance ministers of the Group of 20 nations when they meet next week in Washington.
   The European Commission, the EU executive, said last week the bloc could pioneer an extra tax on banks that could raise up to 50 billion euros annually.
   Britain’s opposition Conservative party, which leads in opinion polls before a parliamentary election in May, has also said it would press ahead with a levy even if there is no deal at the G20.
   But although European Commission President Jose Manuel Barroso wants the levy to pay the cost of winding down struggling banks, British Conservative leader David Cameron has said he would use the bank levy to fund a tax break for married couples.
   Failure to reach agreement among finance ministers this week in Madrid would leave them just one scheduled meeting to forge a common European position before the G20 leaders gather in June.
   One diplomat said a recent Commission report on the subject highlighted the confusion on the subject.
   “The Commission talks about raising money for climate change, for banks. It is a paper that opens up a lot of things but doesn’t give a solution to anything,” the envoy said. (Editing by Susan Fenton) ((john.odonnell@thomsonreuters.com +32 2 287 6817 or +32 473 92 48 90))
 Keywords: EU BANKLEVY/
  
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 Tuesday, 13 April 2010 12:55:40RTRS [nLDE63B1MJ] {EN}ENDS

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