Creditors and shareholders will be expected to pay up first, followed by savers with more than €100,000 (£85,000). Government help will be called upon last.
The BBC reports Dutch finance minister Jeroen Dikisselbloen to have said: “If a bank gets in trouble we will now, throughout Europe, have one set of rules on who pays the bill.
“The financial sector itself will now to a very, very large extent become responsible for dealing with its own problems.”
European taxpayers have provided around €1,600bn in support to banks since 2008.
A minimum bail-in of 8% of liabilities is mandatory, and once this has been implemented, countries will have the option to use either resolution funds or state resources to recapitalise the bank, and protect other creditors.
State intervention is capped at 5% of the bank’s total liabilities, and is subject to approval from Brussels.
The European Parliament need to approve the proposal before it will become law, and it is unlikely to be passed through until the end of the year.
A report yesterday found the majority of the UK public believe it will take at least five years for banks to regain their trust.
