Alessandro Profumo, UniCredit's chief executive, has received lukewarm reactions from other European banks to his proposal for a €20bn privately financed fund to support cross-border banks in distress. The continent's bankers are presumably more warmly united around the main purpose such a fund would serve - to dam a rising tide in favour of a bank levy.Some of the mixed feelings about Mr Profumo's idea, floated in an FT comment article yesterday, can be put down to confusion about exactly what the proposal entails. He explicitly says it is not a resolution or bail-out fund intended to cover the losses of insolvent banks. The idea, rather, seems to be for Europe's cross-border banks to voluntarily pay into a fund that, if wholesale markets were to freeze up as they have done in this crisis, would carry solvent banks through their dire straits until they could again raise funding in the markets.
Some of the mixed feelings about Mr Profumo's idea, floated in an FT comment article yesterday, can be put down to confusion about exactly what the proposal entails. He explicitly says it is not a resolution or bail-out fund intended to cover the losses of insolvent banks. The idea, rather, seems to be for Europe's cross-border banks to voluntarily pay into a fund that, if wholesale markets were to freeze up as they have done in this crisis, would carry solvent banks through their dire straits until they could again raise funding in the markets.
