Germany says further steps needed before banks tap ESM
By John O'Donnell and Annika Breidthardt
NICOSIA (Reuters) - Handing bank oversight to the European Central Bank is not in itself sufficient to allow the euro zone's rescue fund to directly assist banks, Germany's Finance Minister said, warning he expected no such deal on supervision in 2012.
Wolfgang Schaeuble made the comments after talks between EU finance ministers on Saturday exposed deep divisions about a proposed banking union. That may disappoint investors who had been pinning hopes on a pledge by euro zone leaders to agree sweeping new powers for the ECB in 2012.
This in turn had been expected to unlock the possibility of direct aid to banks from the euro zone's rescue fund, the European Stability Mechanism (ESM), for countries such as Spain or Ireland.
"We have the declaration of the heads of governments of the euro zone that European banking supervision is a necessary but not sufficient prerequisite," Schaeuble told reporters after the ministers' meeting in Cyprus. "The rules of the ESM remain."
He said any country that is home to troubled banks would still need to apply for an adjustment program through the ESM.
The remarks contrasted with those of French Finance Minister Pierre Moscovici, who called for quick action and underlined the commitment by euro zone leaders to reach a deal this year.
"There are many questions on all of its aspects: the calendar for implementation, the scope of supervision, the role of the European Central Bank, the mechanism for supervision," Moscovici told reporters.
"These differences do not appear insurmountable at all to me. I am convinced that we will get there before the end of 2012: both because it's our duty and we have the possibility to do so," he said. Continued...