The European Commission has proposed watered-down measures to help guard European Union banks against future crises, after two years of fruitless talks among the 28 EU states on more ambitious plans.
The new proposals were designed to win over Germany, the EU's largest economy and the staunchest opponent of sharing banking risks among EU states, but the German banking lobby quickly dismissed them.
The proposals could also slow the European Central Bank's plans to reduce the exposure of banks to bad loans. Shares of Italian banks rose, since they would face big losses if the EU mandated they quickly unload bad debts.
The Commission proposal would reduce the sharing of banking risks and set strict conditions that states must meet before their banks gain access to safety nets funded at the EU level.
Those changes were intended to placate Germany, whose departing finance minister,Wolfgang Schaeuble, repeatedly argued that sharing risks meant richer German banks would prop up weaker banks in other EU countries. His successor may be equally dubious.
The plan, discards earlier proposals for full-fledged European insurance of savers if banks fail, leaving the burden largely with individual member states.
EU rules guarantee deposits up to €100,000, a provision meant to strengthen confidence in the region's banks after a decade-long crisis that has seen the bailout of several top banks.
But existing national schemes to insure depositors are considered insufficient to cope with a major banking crisis.
An EU backstop, funded by all banks in the bloc, is considered the best guarantee to protect savers and increase market confidence.