EU legislation

EU takes six countries to court over bank bailout scheme

The European Commission will refer six countries, including Luxembourg, to the European Court of Justice
Photo: Shutterstock

(AFP) The EU on Thursday said it would take six member states to court for failing to implement a European-wide plan designed to avoid taxpayers having to help bail out failed banks.

The Bank Recovery and Resolution Directive (BRRD) was meant to ensure that shareholders and large depositors pay to stabilise, or if need be, wind up a bank before any public money is used.

At the height of the eurozone debt crisis, European taxpayers forked out billions of euros to prop up troubled lenders such as Commerzbank in Germany, Bankia in Spain or Dexia in Belgium.

"The European Commission has decided to refer the Czech Republic, Luxembourg, the Netherlands, Poland, Romania and Sweden to the Court of Justice of the EU over failure to transpose legislation on Bank Recovery and Resolution (BRRD)," the Commission said in a statement.

The deadline to pass the legislation was December 31, 2014, with the official launch of BRRD set for January 1, 2016.

Taking the countries to court means they could face daily fines until their national legislation is put in order.

The BRRD is a key part of what is known as the EU's banking union, a new regulatory system meant to prevent any repeat of the debt crisis when failing banks nearly wrecked the European economy.

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