Germany sees EU bank deposit scheme plan as mutualising risks
BERLIN (Reuters) - Germany took aim at the European Commission's plans for a deposit guarantee scheme on Monday, saying the proposals were aimed at the mutualisation of banking sector risks and would set false incentives.
The EU executive wants to set up a European Deposit Insurance Scheme (EDIS) to increase guarantees for depositors in case of a banking crisis. The Commission is due to table proposals on Nov. 24 for an EU guarantee fund financed by banks.
The plan has long been opposed by Germany, which sees risks that money in its guarantee scheme would be used to rescue savers in other EU countries.
"The European Commission's proposals are aiming at complete mutualisation of risks in the banking sector," a government official in Berlin said on condition of anonymity.
EU states are obliged to protect bank deposits up to 100,000 euros (£70,158) but with several credit institutions underperforming and too exposed to national sovereign bonds, there are concerns some national funds may not be sufficient.
EU officials have said the overall costs to banks will not rise because the new EU scheme will use funds that credit institutions are obliged to set aside for the existing national deposit guarantee funds.
The enhanced protection comes from the shared resources available, in addition to national funds, in the event of a banking crisis in a given country, thus bolstering confidence.
Earlier on Monday, German Finance Ministry spokesman Martin Jaeger said Berlin wants risks in the sector to be reduced rather than mutualised.
"It is not a secret, that on the basis of the discussions thus far, we have some questions that are unanswered. These start with the legal basis ... we have a few big question marks there," Jaeger told a regular government news conference.
"The point must be that we minimise risks in the banking sector, and not that we share out and mutualise risks," he added.
(Reporting by Michael Nienaber; Writing by Paul Carrel; Editing by Janet Lawrence)
