It took a year of squabbling and two all-night negotiating sessions for EU finance ministers to finally agree common rules to wind up troubled banks. But for the next five years when lenders hit the rocks, EU leaders will forced to do what they know best: improvise.

Under Thursday’s deal, the stricter regime to force creditors to foot the bill of bank failure instead of taxpayers will only come into force from 2018.

It opens up a long, uncertain transition where the eurozone aims for potentially conflicting goals: clean up balance sheets, breathe life into bank funding markets and keep a lid taxpayer costs – not least in Germany.

All this will be attempted against the backdrop of an incomplete banking union, with the Europan Central Bank as single supervisor trying to find its feet, no imminent prospect of a central resolution authority to call time on failed lenders, patchy national rules on how to cope with bank failure, and just a handful of countries boasting standalone resolution funds.

The big challenge looming on the horizon is the ECB-led bank stress tests next spring on around 140 lenders that the ECB will directly oversee. According to Jörg Asmussen, an ECB board member, its goal is “to start with a clean slate and to restore credibility in the European banking sector after two previous stress tests failed to do so.”

Yet a stress test can only be as strong as the tools available to address any weaknesses or capital shortfalls that it exposes and that cannot be filled in the market. “They can be tough, sure, but what is the point of being tough if you reveal a hole that can’t be filled?” said one senior eurozone official. “What do they do then?”

Here the answer is partly provided by Thursday’s agreement on so-called “bail-in” rules for creditors. Although it will not carry legal force until 2018, three years after Germany and the ECB wanted it in place, its influence will nevertheless be felt.

The template may not be followed in full – particularly with regard to writing down senior creditors – but the broad principles “will be hard to breach”, said a eurozone official. In the words of Michael Noonan, the Irish finance minister who brokered the resolution deal, “bail-in is now the rule”.

Framing any decision will also be stricter European Commission conditions on approving state support, which will require countries to impose losses on shareholders and junior bondholders before any taxpayer funds can be granted to banks. “It is a big change that people are only slowly factoring in,” said one senior EU official.

Public support of some kind, for the weakest institutions, will nevertheless be almost inevitable. Benoît Cœuré, another senior ECB official, has said “a credible backstop facility needs to be in place” before stress tests begin.

That backstop is available in economically strong member states, but for the weak the situation is more uncertain. Loans would be available from the eurozone’s €500bn bailout fund, the European Stability Mechanism, but those come with stringent conditions for the already debt laden government.

The start date for direct recapitalisation of banks by the ESM, meanwhile, is still contested. Language calling for the instrument to be ready in time for the stress test fallout was removed from some drafts of the EU leader’s summit statement. Some ECB board members say it is unlikely to be available in time.

Encouraging investors once again to buy bank bonds would help mitigate state interventions. But some banks fear that the deal on bail-in – which gives member states wide discretion to exempt some creditors from losses – still leaves too much uncertainty for investors, putting further pressure on funding costs.

Oliver Moullin of the Association for Financial Markets in Europe, said: “It is important that any flexibility in the application of the bail-in tool is clearly framed to minimise uncertainty, unpredictability and ‘level playing field’ issues.”

Investors may handle this risk by again opting for banks in rich countries, rather than those that cannot afford to spare creditors from bail-in – reinforcing exactly the problem banking union was designed to fix. The market reaction to the bail-in deal on Thursday gave a clue: shares in banks in weak countries fell more than those in strong ones.

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