EU hints might indulge Norway on bank account guarantees

(OSLO) - The European Union on Friday took a step towards resolving a tiff with Norway over the bloc's aim to harmonise the level of bank account guarantees across Europe.

Norway, which is not an EU-member but cooperates closely with the bloc through the European Economic Area (EEA), has asked to be exempt from the proposed Europe-wide limit of 100,000 euros ($139,500) for bank account guarantees.

The Scandinavian country wants to maintain its state-backed guarantee of up to two million kroner (257,000 euros, $358,400) per bank account in cases where banks fail.

"We need to find a way to preserve the high-level guarantee that is provided to Norwegians," European Commissioner for Internal Market and Services Michel Barnier said during a visit to Oslo.

This statement hints the EU, which until now has been opposed to any exceptions to its proposed harmonised guarantee limit, may be softening its stance.

Having drawn lessons from the global financial crisis, the EU wants the bank guarantees across Europe to be set at the same level to avoid competitive distortions between countries that could entice account holders to move their savings to countries offering the best guarantees.

"We will adopt a constructive and pragmatic attitude," Barnier said, adding he needed another "few weeks to work" on the issue.

The hinted concession was welcomed in Norway, which has been contemplating officially opposing the upcoming EU directive.

"This is very good news and a big step in the right direction. I think that Barnier has a positive approach to the case, but there is still work to be done," Finance Minister Sigbjoern Johnsen told reporters.

"We will keep all options open, but I have always been confident that we could find a deal with the EU and what has happened now is very positive," he added.