EU finance ministers were seeking to cobble together a deal to head off a renewed eurozone bank crisis last night, ahead of a two-day Brussels summit. Officials announced a "crucial breakthrough" on a backstop for rescuing or winding up failing banks in the eurozone. But the details were inconclusive and were still being haggled over by all 28 EU finance ministers in Brussels last night, with the summit due to start today. Germany has balked at the notion of pooled taxpayer liability for the eurozone banking sector under a banking union. The key issues were: who pays to wind up or recapitalise a failing eurozone bank, and who decides when a bank should be closed down. EU officials said the breakthrough meant a "common" or pooled eurozone backstop would be available for troubled banks. The common backstop would not be available until 2025 at the earliest and would consist of a euros 55bn (pounds 46bn) pot of money raised by the banks via a levy over the decade from 2015. In the meantime, Germany conceded that the eurozone's euros 500bn bailout fund, the European stability mechanism, could be a last resort for rescuing failed banks if governments did not have enough money. But the agreement looked fragile, hedged with caveats, and was attacked as inadequate by the European Central Bank , whose credibility is at stake as the new supervisor of most of the eurozone banking sector under the new regime. EU leaders need to agree on the banking wind-up arrangements, known as the single resolution mechanism and the single resolution fund, at their summit today and tomorrow if the deadlines for getting the new system operational are to be met. Two weeks of late-night meetings in Brussels and Berlin have pushed issues to the brink. There will be big problems with getting the deals agreed with the European parliament, and with national ratifications of a new treaty between governments on the funding of banking resolution. The French-led group of southern countries, the European commission and the ECB opposed this. "It's a choice between a banking union that's not perfect, or nothing," said a senior EU official. In the transitional decade, from 2015, the issue is what happens in a banking crisis. On German insistence, there will be no European response except as a last resort; nor will there be any escape from adding to national debt burdens to fund a bailout. The original aim of the scheme was to break the link between bad banks and sovereign debt levels. National authorities will be responsible for bailing out banks if funds from the bank levy, as well as contributions from bank creditors, investors, and shareholders, are insufficient. euros 500bn The amount in the European stability mechanism, which Germany conceded could be used as a last resort to rescue failed banks
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