ROME--New European "bail-in" rules for troubled banks won't necessarily apply in the short term, Italian Economy Minister Fabrizio Saccomanni said Wednesday.
As part of the "bail-in", European Union leaders have agreed on a hierarchy of creditors who will be required to shoulder the costs of bank restructuring.
It is meant to flank the unified supervision and support of banks across the EU and make sure that investors rather than taxpayers fund the costly bank rescues like those governments incurred after the financial crisis.
"However, these norms won't be applied in the short run," Mr. Saccomanni said in a speech to a banking conference in Rome.
He said new European state-aid rules will be used in the immediate aftermath of the European Central Bank's bank asset quality review, which when completed next year is expected to identify capital shortfalls at some lenders.
He referred to a "transition period" between the ECB's review and the eventual adoption of the new bail-in rules.
Mr. Saccomanni's remarks echo views expressed in a letter ECB President Mario Draghi wrote to the European Commission, warning that the new rules could in the short run disturb financial stability by providing an unwelcome shock to senior bank bondholders and other creditors.
Europe needs a single resolution mechanism, rather than an array of national ones, to wind down troubled banks, backed by a single fund to manage the process, Mr. Saccomanni said.
"Intermediate solutions based on networks of regulators or of national funds do not represent valid alternatives," he said.
Common European resources need to be mustered for up to the 10 years it may take to fund the resolution scheme proposed by the commission, he said, adding that it should take into account national differences.
"It will be necessary for every decision regarding how the private and public sectors are involved in the recapitalization (of banks) to be geared towards the principle of financial stability, meaning national specificities will have to be taken into account," Mr. Saccomanni said.
European banking systems vary, with some heavily reliant on wholesale markets and others, notably Italy's, more traditionally focused on plain-vanilla loans.
Italian banks need to wean their business clients off of bank loans and help them tap capital markets directly, Bank of Italy Governor Ignazio Visco said earlier Wednesday at the same conference, repeating comments he aavend his predecessors h made for years.
Mr. Saccomanni said he was confident that Italian banks wouldn't be adversely affected by the ECB's asset review.
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As part of the "bail-in", European Union leaders have agreed on a hierarchy of creditors who will be required to shoulder the costs of bank restructuring.
It is meant to flank the unified supervision and support of banks across the EU and make sure that investors rather than taxpayers fund the costly bank rescues like those governments incurred after the financial crisis.
"However, these norms won't be applied in the short run," Mr. Saccomanni said in a speech to a banking conference in Rome.
He said new European state-aid rules will be used in the immediate aftermath of the European Central Bank's bank asset quality review, which when completed next year is expected to identify capital shortfalls at some lenders.
He referred to a "transition period" between the ECB's review and the eventual adoption of the new bail-in rules.
Mr. Saccomanni's remarks echo views expressed in a letter ECB President Mario Draghi wrote to the European Commission, warning that the new rules could in the short run disturb financial stability by providing an unwelcome shock to senior bank bondholders and other creditors.
Europe needs a single resolution mechanism, rather than an array of national ones, to wind down troubled banks, backed by a single fund to manage the process, Mr. Saccomanni said.
"Intermediate solutions based on networks of regulators or of national funds do not represent valid alternatives," he said.
Common European resources need to be mustered for up to the 10 years it may take to fund the resolution scheme proposed by the commission, he said, adding that it should take into account national differences.
"It will be necessary for every decision regarding how the private and public sectors are involved in the recapitalization (of banks) to be geared towards the principle of financial stability, meaning national specificities will have to be taken into account," Mr. Saccomanni said.
European banking systems vary, with some heavily reliant on wholesale markets and others, notably Italy's, more traditionally focused on plain-vanilla loans.
Italian banks need to wean their business clients off of bank loans and help them tap capital markets directly, Bank of Italy Governor Ignazio Visco said earlier Wednesday at the same conference, repeating comments he aavend his predecessors h made for years.
Mr. Saccomanni said he was confident that Italian banks wouldn't be adversely affected by the ECB's asset review.
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