EU: New guarantee would allow quicker withdrawals

European savers would be able to withdraw up to euro50,000 (US$68,760) of their money from troubled banks within three days _ instead of months _ under new EU rules proposed Wednesday.

The European Commission set out the new rules to formalize a deal struck by EU finance ministers last week that would increase the standard EU state guarantee for savings from euro20,000 to euro50,000.

Many EU nations have gone further on their own, guaranteeing all savings or funds up to euro100,000, to soothe worries that some European banks risked collapse during a financial crisis that froze lending between banks.

EU regulators said they intend to call for a hike in the EU minimum guarantee to euro100,000 (US$137,520) by the end of 2009. Some eastern European nations were unhappy about setting such a high level this year because they fear they could not fund it.

The new rules need the backing of the European Parliament and the EU government to become law.

Iceland _ not a member of the European Union _ would usually adopt EU rules as part of the European Economic Area but the EU executive said no decisions had yet been made on the new banking guarantee.

The Nordic island nation is trying to prevent its economy from collapsing as the financial crisis forced the government to take control of three Icelandic banks. Britain has acted to protect British customers of Icelandic banks not covered by a British guarantee by freezing bank assets.

The European Commission says the current guarantee covers 65 percent of bank savings and the new euro50,000 limit would raise that to 80 percent. A euro100,000 guarantee would cover 90 percent, it said.

It also reduces the waiting period for savers to withdraw their money to three days. Current rules allow banks to delay a payout for as long as nine months.

At the same time, regulators proposed reducing the fees for direct debits made in euros. That would require banks to charge the same rate for direct debits anywhere within the 15-nation eurozone as they charge for direct debits within their own country.

The EU executive is keen to knock down national barriers between euro nations to lower the cost of doing business between the countries that share a currency.

By November 2009, it wants euro credit transfers, ATM cash withdrawals and card payments to be charged the same as national rates.