Schäuble defends Dijsselbloem over Cyprus bailout ’precedent’

German finance minister says it is not ’the task of taxpayers’ to save indebted banks

 

German finance minister Wolfgang Schäuble has defended Dutch euro group head Jeroen Dijsselbloem, saying it is “not the task of taxpayers to step in when banks get into difficulty”.

Luxembourg prime minister Jean-Claude Juncker criticised his Dutch euro group successor for implying that last weekend’s Cyprus deal, imposing losses on deposits above €100,000 at two banks, set a precedent for future euro rescue packages.

After criticism from EU partners and the European Central Bank, the euro group chief and Dutch finance minister corrected his comments. Mr Schäuble insisted yesterday that Cyprus was a “very particular case, for which we found the right solution”.

“I believe Dijsselbloem really was misunderstood,” said Mr Schäuble. “He said what we’ve always said . . . that whenever banks get into difficulty, then it is not, in the first instance, the taxpayers’ task to step in.”

No blueprint
He was speaking after Mr Juncker told German television he was “bothered” by the impression created by Mr Dijsselbloem that the solution found for Cyprus “could serve as a blueprint for future rescue plans”.

“It is not a blueprint. We cannot give the impression that, in future, savings in Europe were not safe,” said Mr Juncker. “We cannot give the impression that investors should not put their money in Europe.”

Tensions have arisen between Luxembourg and Germany since the Cyprus deal, geared to reduce the size of a banking sector eight times the size of the island's economy.

Calls from Berlin to tackle other oversized banking centres in Europe have raised hackles in Luxembourg, where the banking sector is about 20 times the size of its annual economic output.

Luxembourg’s foreign minister Jean Asselborn accused Berlin of “striving for hegemony” in Europe and warned Germany not to “choke” other countries’ business models “under the cover of financially technical issues”.Mr Juncker moved yesterday to calm relations saying he “did not feel directly attacked by Germany”.