(Bloomberg) -- The European Union is nearing a deal on measures that would make it easier to wind down smaller lenders that run into trouble, according to people familiar with the matter.

Governments may reach a deal on the crisis management and deposit insurance framework next month after addressing some concerns of countries including Germany, said one of the people, who asked to remain anonymous as an agreement has yet to be reached. Talks to hammer out the details together with other European authorities will probably continue into next year, they said.

Such a move would be a key step to regain momentum in deadlocked talks over forging closer banking ties in the region and ultimately facilitate cross-border bank mergers. 

European banking fractured along national lines after the 2008 credit crunch and efforts to put in place the architecture needed for a truly unified market ran out of steam in recent years. The package that governments are set to agree on is commonly-viewed as a key step toward deeper and even thornier reforms such as a system of joint deposit insurance like the one that exists in the US.

France and Germany have recently sought to revive the issue of banking ties. The two countries’ leaders — Emmanuel Macron and Olaf Scholz — are discussing the matter during a state visit this week.

Last year, the EU’s executive arm suggested tapping national deposit protection funds to bridge gaps at failing banks that don’t have sufficient reserves of their own. Germany’s mass of smaller savings and cooperative banks slammed the plan, saying it would undermine the systems they have in place to protect savers.

Germany still has reservations on the use of such funds because it could weaken rules on forcing losses on a failed bank’s investors, said one of the people. Still, a deal is likely because negotiators are set to agree on strict conditions for when a bank that runs into trouble is sent into resolution, rather than being wound down under national insolvency laws, they said.

While the talks have been cumbersome, discussions on pooling deposit insurance are likely to be even more difficult. A related plan approved by a committee of European lawmakers in April drew swift criticism from German bank lobbyists. 

German officials say the banking union isn’t just about deposit insurance and that work is needed in other areas, such as rules that would address banks’ large holdings of bonds issued by governments in their home markets.

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