EU mulls extending bank levy to other financial firms

* Finance ministers prepare message for G20 on reform

* Report says levy could be applied to non-banks

* Change of tack likely to worry insurers

By John O’Donnell

LUXEMBOURG, June 7 (BestGrowthStock) – The European Union could
extend a planned levy beyond banks to others financial services
firms, according to a report outlining the bloc’s message to G20
leaders who meet soon to tackle reform of the industry.

The statement is likely to worry insurers who risk being
caught up in a levy originally designed to target the profits of
banks that are blamed for triggering the worst economic crash in
a generation.

“A levy should be applied to all banks, and possibly to
other categories of financial institutions on the grounds that
their failure would pose risks to financial stability and/or
because they would profit from financial stability,” officials
write in the report.

On Tuesday, EU finance ministers meet to mull how to charge
banks for an emergency fund.

They hope to present a common position at a meeting of G20
countries this month, bolstering Europe’s influence in a debate
about charging banks for financial crises.

“The financial sector should contribute to the cost of
crisis,” officials write of the levy, which would be used to
wind down stricken financial groups.

“A levy should be designed … to ensure that financial
institutions internalise at least part of the risks their
activities pose to the wider economy.”

Although it is mainly banks which are linked to the
financial crisis, triggered when bad debt fears froze lending,
insurers such as AIG or to a lesser degree Swiss Re (RUKN.S: )
were also affected.
Analysts have also cited Europe’s biggest insurer and
capital markets heavyweight Allianz (ALVG.DE: ) as a little-known
beneficiary of government rescues, including that of Germany’s
Hypo Real Estate.

As G20 countries prepare to meet in Canada, there is growing
consensus on the need to call banks to account and demand they
put aside funds to prevent or cover any future banking failures.
Canada and Australia, however, whose banks rode out the
financial crisis well, are sceptical about the idea of imposing
levies on the industry.

Stock Today

(Editing by Noah Barkin)
(Reporting by John O’Donnell, +32 2 287 6817 or +32 473 92 48
90; [email protected]))

EU mulls extending bank levy to other financial firms