Representatives from the European Parliament and EU governments were reported to have reached a preliminary deal Thursday on what's meant to be another crucial element of the bloc's banking union to emerge in heeding a lesson form the global financial crisis.

After 16 hours of talks in Brussels, negotiators said there had been a breakthrough, but details were not immediately available with the heads of the political factions in parliament overwhelmingly supporting the deal.

The EU's Market Commissioner, Michel Barnier, said the bank-wind down scheme "might not be a perfect construction" but would help to "put an end to the era of massive bailouts."

German Finance Minister Wolfgang Schäuble described the compromise as a mechanism to effectively control rescue funding and to minimize the risk to taxpayers. Schäuble also said that the participation of stakeholders in a bank rescue, known as bail-in, as well as completion of a bank rescue fund within 8 rather than 10 years were the most important issues.

Clear-cut modalities of how to wind down failing banks had been seen as a vital contribution to shielding taxpayers from the financial consequences of lenders' bailouts in future and an important instrument to restore trust in the single-currency system.

Who will foot the bill?

A major bone of contention had been determining who would have the power to close or restructure troubled banks and who would have to pay how much into a joint pot to pay for any winding-down procedures. The common fund was expected to swell to 55 billion euros ($76 billion) within the next eight years.

Negotiators had been under pressure to reach an agreement before European elections in May or else risk delaying the matter until 2015. The final opportunity for parliament to approve any accord is at its three-day session starting April 14.

A common bank wind-down mechanism is widely considered as important as the upcoming banking supervision by the European Central Bank (ECB) from November of this year, following a thorough check of the eurozone lenders' health and core capital.

hg/kms (dpa, AFP)