MNI BRIEF: Eurogroup Head: Banking Union Deal By Summer Viable

Eurogroup Chief Paschal Donohoe told European leaders Monday that consensus on Banking Union is within reach by this summer. In a letter ahead of the European Council this week, Donohoe says his proposed new approach to securing agreement in the long negotiations is a phased approach, which will be underpinned by extensive monitoring of progress and will provide for a “political checkpoint” to decide on activation of phase 2.

The four main topics or modules of the talks cover: deposit insurance (EDIS), crisis management, cross-border supervision and diversification of sovereign exposures.

An EU official told MNI that Donohoe’s plan is to have only a liquidity-providing EDIS in the first phase, combined with risk-based contributions by banks based on their sovereign exposure, also noting that states still had the same reservations as before, the two most important being: German reluctance to embrace EU-wide deposit insurance and Italian objections to the diversification of its banks’ sovereign exposures.