On Friday, Luxembourg finance minister Pierre Gramegna participated in Ecofin Council (the EU council of economy and finance ministers) discussions concerning two regulations and two directives related to the capital requirements of banks and the recovery and resolutions for banks in difficulty.

“I am pleased that in the course of long negotiations Luxembourg, together with its partners, has managed to change the original Commission proposal to fully take into account the interests of both of origin than host States,” Gramegna was quoted as saying in a government press release.

The banking package, which is a response to the 2007-2008 financial crisis, aims to strengthen the resilience of banks to external shocks to avoid the taxpayer picking up the tab.

Specifically, it safeguards the balance of interests of member states in which the parent companies are established (states of origin) and those in which subsidiaries of banking groups are hosted (host states). The latter is particularly important for Luxembourg, which hosts over 140 banks. The agreement guarantees an adequate allocation of equity and minimum capital requirement and eligible liabilities between parent companies and banking subsidiaries, as well as appropriate liquidity management within groups.

“The package takes into account the principle of proportionality, with some relief for smaller banks in terms of the reporting requirements and the resulting administrative burden,” the ministry reports.

According to the government, the agreement is supported by 19 European countries and is open to member states wishing to join.