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EU Commission or ESM could wind down ailing banks: report

European Union (EU) Competition Commissioner Joaquin Almunia holds a news conference at the EU Commission headquarters in Brussels March 6,
European Union (EU) Competition Commissioner Joaquin Almunia holds a news conference at the EU Commission headquarters in Brussels March 6,

BERLIN (Reuters) - People involved in negotiating a European banking union are discussing entrusting the European Commission or the euro zone's bailout fund with winding down ailing banks rather than creating a separate authority, a German newspaper said.

That would help Europe make progress towards a banking union as it would not require EU treaties to be changed since treaties already mention the European Commission and European Stability Mechanism (ESM), Sueddeutsche Zeitung said in an article to appear on Wednesday.

The paper gave no further details regarding the identities of its sources.

The option would likely be more palatable to Germany, whose Finance Minister Wolfgang Schaeuble appeared to slam the brakes on a European banking union last month by saying the EU needed to consider treaty change due to the "doubtful legal basis" on which the project rested.

One scenario calls for the European Commission to take on the role of a banking resolution authority. Joaquin Almunia, the commissioner in charge of competition policy, already wields some of those powers in dealing with financial institutions receiving state aid.

However, not all member states are convinced the Commission could or should take on the extra responsibility, and question how its role would be coordinated with the single banking supervisor under the European Central Bank in Frankfurt.

(Reporting by Michelle Martin and Luke Baker; Editing by Michael Roddy)

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