Mixed reactions to EU bank plans in Austria

VIENNA - Mixed reactions followed the proposal from the European Commission that reforms be made to bank supervision, bank restructuring and protection of savings in Austria in particular with deposit guarantees.

The Social Democratic Party of Austria (SPOe) and the Austrian Chamber of Labor (AK) insisted on a uniform Austrian solution, the Austrian Press Agency reported on Wednesday.

The AK also preferred bank supervision not to be based at the European Central Bank (ECB), while banks do not want important financial centers such as the United Kingdom left out.

Raiffeisen Zentralbank Chairman Walter Rothensteiner told the APA he had "no problem with new European supervision if it is practical," but "what bothers me is that London is not there yet again."

He said supervision should apply to the entire European Union, and that it would be an advantage for the larger banks conducting activities in many regions as the ECB would supervise that the same rules were being followed in each.

The AK welcomed the strengthening of banking supervision saying bailouts had already cost Austrian and European taxpayers a lot of money.

"If the EU is now creating a strong banking union, it is an important step that ensures the general public does not pay any more for the mistakes of the banks," said AK Director Werner Muhm.

Muhm added he saw a risk of conflicting objectives if the ECB were to control large banks while also needing to bail them out, which could lead to influencing the degree of control.

He said a single bank insolvency law and a uniform deposit insurance scheme were "overdue".