EU finance ministers have agreed to force investors and wealthy savers to share the costs of future bank failures.

Reuters says the draft agreement comes after 7 hours of talks overnight and contains a blueprint to close or salvage banks in trouble.

In the past, the rule of thumb in Europe has been that savers should never lose their deposits, no matter what trouble befalls their bank. But this draft agreement breaks that.

It stipulates that shareholders, bondholders and depositors with more than €100,000 should share the burden of saving a bank.

Commenting on the deal, the Dutch Finance Minister Jeroen Dijsselbloem has said "for the first time, we have agreed on a significant bail-in to shield taxpayers"

New 'bail in' agreement

The agreement will see "bail-out" replaced with "bail-in", and will now allow negotiations to start with the European Parliament.

The Minister for Finance Michael Noonan brokered agreement with Finance Ministers at the ECOFIN council on the rules for Banking Recovery and Resolution.

Speaking about the agreement, Minister Noonan said "We must break the vicious link between banks and sovereign and the Irish Presidency has prioritised files over the past six months that deliver on this objective and build a banking union".

"We have been successful in this area having reached agreements with the European Parliament on capital requirement for rules for banks - CRD IV - and the setting up of the Single Banking Supervisor - SSM" he added.

The meeting last night marked the end of Ireland's Presidency of the Ecofin Council.

Minister Noonan concluded "I would like to thank my team for all of their hard work throughout the Presidency. I am sure I speak for all of them when I saw it was a great honour to hold the Presidency of this important Council and I am very proud of what we have achieved over the past six months."

Going into the talks yesterday, Mr. Noonan said there were only a few issues to resolve.