Banking union approved at EU

European lawmakers on Tuesday signed off on the creation of a central authority with the power to unwind or restructure failing lenders. The vote was overwhelming, with 570 parliamentarians in favor and 88 against.

They agreed it would have a 55-billion-euro ($76-billion) fund at its disposal, enabling it to handle cross-border bank resolution procedures, with the fund to be financed by bank levies.

Legislators said the measure would put an end to massive bailouts at the cost of taxpayers across the bloc, with the latter no longer automatically footing the bill when lenders faced difficulties.

European Parliament spokesman John Schranz explained that in the case of a major bank like Britain's Barclays, creditors would be hit to the tune of 140 billion euros, before government help would be needed.

Heeding past mistakes

Legislators also voted for a bill under which clients' bank deposits of up to 100,000 euros would be fully protected in case of a lender's failure.

Starting in November, the European Central Bank will directly supervise the eurozone's largest banks with binding powers over national authorities.

Tuesday's votes brought to a close an ambitious reform program necessitated by the global financial crisis, which had seen European governments pumping some 600 billion euros of taxpayers' money into rescuing banks considered "too big to fail."

hg/msh (AFP, AP)