Europe pushes ahead towards ECB bank supervision

Fri Oct 19, 2012 5:28am EDT
 
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By Jan Strupczewski and Luke Baker

BRUSSELS (Reuters) - European Union leaders agreed on Friday a single supervisor will take responsibility for overseeing euro zone banks from next year.

Details on the precise number of banks to be monitored and the powers the supervisor -- the European Central Bank -- will have, however, were left for later.

The decision opens the way for the euro zone's rescue fund to inject capital directly into ailing banks during the course of 2013, but whether that will allow Spain to transfer some of its banking liabilities off the government's books will also not be determined until later in the year.

"There was an agreement, a good agreement, on timing and about the banks as whole," French President Francois Hollande told reporters as he arrived for the second day of the summit following 10 hours of talks on Thursday that carried on into the early hours of Friday.

"There was a willingness to progressively put in place the (oversight) mechanism."

European Council President Herman Van Rompuy said the 27 leaders agreed to adopt a legal framework by the end of this year giving the European Central Bank overall responsibility for banking supervision, with national regulators consulted.

"Once this is agreed, the single supervisory mechanism could probably be effectively operational in the course of 2013," he told a 4 a.m. news conference.

French and EU officials said all 6,000 banks in the single currency area would gradually come under ECB supervision by 2014, starting with banks receiving state aid, then large cross-border institutions, even though a statement from EU leaders did not specify a number or the specifics of a timeline.   Continued...

 
European Commission President Jose Manuel Barroso (L) and European Council President Herman Van Rompuy hold a news conference at the end of the first session of a two-day European Union (EU) leaders summit in Brussels October 19, 2012. EU leaders met in Brussels for talks intended to try to bridge deep differences over plans for a banking union. REUTERS/Yves Herman