Euro zone agrees on bank closure funding

After the build-up phase in 2025, when the Single Resolution Fund (SRF) is full, additional money for emergency financing could be raised by the SRF itself through borrowing, the draft euro zone ministers' agreement said.

"A common backstop will be developed during the transition period. Such a backstop will facilitate the borrowings by the SRF. The banking sector will ultimately be liable for repayment by means of levies in all participating Member States, including ex-post," the statement said.

Ministers have already agreed on another plank of a banking union, making the ECB supervisor of the region's largest banks from the end of 2014.

An agency for winding up problem banks remains to be sorted out. There is a question mark over the new procedure for closing a bank. Documents circulating among diplomats and seen by Reuters show an increasingly complicated structure emerging.

"The proposal on governance looks very complicated," said Michael Noonan, finance minister for Ireland, which saw its economy almost collapse after its banking crisis.

"In resolving a bank, one would want to be able to do it over a single weekend at the maximum. So anything that is too cumbersome, with various layers to it, won't be effective."

A general agreement among the ministers on Wednesday on how to do that is all that is needed to start negotiations with the European parliament on the legislation.

On Wednesday, EU ministers will discuss who will have the power to close down a laggard bank in the euro zone.