TURKU, Finland (Reuters) – The European Union’s top economic official said decisions on how to recapitalize struggling European banks should be decided on a case-by-case basis that policymakers will eventually agree on how to deal with bank debts despite their current differences.
EU Economic and Monetary Affairs Commissioner Olli Rehn told Reuters that a June agreement among EU leaders made it possible to recapitalize banks separately after the European Stability Mechanism is established.
“In other words, it is not an automatic decision, but it always requires a case-by-case decision,” he said in an interview on Friday. “When the time is ripe, I’m sure there will be a thorough discussion over the issue and joint decisions will be done together with 17 euro states.”
Europe’s creditor countries including Germany, the Netherlands and Finland believe the ESM’s recapitalization of banks should apply only for future bad debts, and not for “legacy” loans.
They issued a joint statement on Tuesday that appeared to be at odds with those who see it as crucial that current debts are shifted off the central government books in order to stem the risk of banking sector troubles turning into national crises.
Rehn played down the apparent rift.
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“It is normal that member states hold discussions with each other, and give joint statements also in smaller groups than the euro group of 17 states,” he said.
(Reporting by Jussi Rosendahl; editing by Ron Askew)