Banking deal boosts EU leaders in fighting crisis

Thu Dec 13, 2012 1:45pm EST
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By John O'Donnell and Andreas Rinke

BRUSSELS (Reuters) - European governments clinched a landmark deal on bank supervision and approved long-delayed aid to Greece on Thursday, trumpeting the agreements as signs the bloc is getting a grip on its problems after three years of deep crisis.

Leaders meeting in Brussels for their sixth and final summit of 2012 faced warnings about complacency however, as they gear up for a tough new year that will see Italian and German voters go to the polls, and may bring a full bailout of Spain.

EU finance ministers agreed after marathon overnight talks to create a single banking supervisor for the euro zone and like-minded countries. The 27 leaders were set to give their stamp of approval at a summit that opened in a mood of optimism.

The release of nearly 50 billion euros in fresh aid for Greece, the heavily indebted state where the crisis began in 2009, averted a catastrophic default and the risk of a Greek exit from the currency zone.

"Since the summer, we have made a lot of progress in our efforts to overcome the immediate crisis in the euro zone," European Council President Herman Van Rompuy told the leaders as he opened the summit. "The worst is now behind us but of course much still needs to be done."

At the summit, held days after the EU received its Nobel Prize in Oslo, leaders were to discuss closer fiscal integration in the currency union, a drive that some officials worry has lost momentum since ECB President Mario Draghi calmed markets by pledging in July to do "whatever it takes" to save the euro.

European officials acknowledge privately that bolder steps towards closer integration of the single currency area will be on hold until after a German general election next September.

After a hectic year of crisis management, during which Greece had a close brush with the euro zone exit, the bloc appears to be heading into 2013 on a positive note.   Continued...

European Commission President President Jose Manuel Barroso poses with Italy's Prime Minister Mario Monti (L) ahead of a European Union leaders summit in Brussels December 13, 2012. REUTERS/Francois Lenoir