EU finance ministers are set to clash this week over the public safety net for the bloc’s financial system amid fresh proposals to allow the eurozone’s bailout fund to support ailing banks without onerous conditions being imposed on their home states.

The issue of public backstops for troubled lenders is one of the most contentious on the EU’s reform agenda, testing German resistance to sharing the costs of banks’ past excesses and to lumping Berlin with the bill for future failures under a banking union.

New options presented to finance ministers, who are meeting today and tomorrow, include backing national resolution funds with guarantees, a credit line or direct loans from the European Stability Mechanism, the eurozone’s €500bn bailout fund, according a confidential papers seen by the Financial Times.