Eurozone banking supervision deal boosts EU summit

 
UK PM David Cameron (left) meeting other EU leaders in Brussels, 13 Dec 12 PM David Cameron (left) says the UK has won safeguards for banking sovereignty

EU leaders have gone into a Brussels summit buoyed by a landmark deal on centralised supervision of eurozone banks, seen as a key integration step.

The European Commission said the leaders must "keep the same sense of urgency" despite an easing of market pressure on the eurozone recently.

The UK government says the new agreement does not threaten the City of London, the EU's main financial centre.

The leaders will discuss a far-reaching roadmap for eurozone integration.

UK Prime Minister David Cameron said the deal reached by EU finance ministers after all-night talks "protected our interests in the single market". He praised UK Chancellor George Osborne for "an excellent job".

The UK, along with Denmark, has a formal opt-out from joining the euro, and will not be part of the new banking union. But the UK's banking pre-eminence in Europe means it is taking an intense interest in the negotiations.

Mr Cameron said "this change does give us a chance to get a better deal in Europe".

Start Quote

This deal is a further example of how the eurozone crisis is carving out a new Europe less from choice but more by the need to survive”

End Quote

Sweden is also outside the euro, and its prime minister, Fredrik Reinfeldt, said the deal would still enable non-eurozone countries to have influence in European banking decisions.

"To start with Sweden will stay outside... Swedish taxpayers don't want to cover losses in other countries," he told reporters on arrival at the summit.

Around 200 of the biggest banks will come under the direct oversight of the European Central Bank, which will act as chief supervisor of eurozone banks.

New rules on prudent banking are seen as vital to bolster the euro, as bank failures triggered the financial crash.

The measures are also aimed at preventing banking failures, of the type that happened in Greece and Spain, ending up on the books of eurozone governments.

Eurozone finance ministers also agreed formally to release a long-delayed instalment of 34bn euros (£27bn; $44bn) to Greece over the next few days, with a further 15bn later on. Athens has been waiting for the bailout funding since June.

Heavily indebted Italy has also been a worry for investors, and political uncertainty has increased since former Prime Minister Silvio Berlusconi confirmed that he would run again in a general election expected in February.

At a pre-summit meeting in Brussels conservative leaders voiced support for Italy's Prime Minister Mario Monti, some urging him to run for election against Mr Berlusconi, sources who were there said.

Mr Monti, an unelected technocrat, has pushed through some unpopular but long-delayed reforms, including big public service cuts, since taking over from Mr Berlusconi a year ago with the EU's approval.

'Core demands'

EU finance ministers finally clinched the banking deal just before dawn on Thursday after 14 hours of talks.

Eurozone banking deal

  • ECB to act as chief supervisor of eurozone banks and lenders
  • ECB to co-operate closely with national supervisory authorities
  • Direct oversight of banks with assets greater than 30bn euros ($39bn; £24bn) or with 20% of national GDP
  • National supervisors to remain in charge of other tasks
  • Non-eurozone countries that wish to take part can make close co-operation arrangements

German Chancellor Angela Merkel welcomed the agreement, telling the Bundestag (lower house of parliament) that Germany's "core demands" had been secured. "It cannot be praised too highly."

She has previously warned against rushing into banking union out of concern that Germany would face further financial demands.

Significantly, a large number of French banks will be supervised by the ECB but rather few institutions in Germany will, because of its fragmented banking industry, says the BBC's Business Editor, Robert Peston.

European Commission President Jose Manuel Barroso hailed the deal as "a crucial and very substantive step towards completion of the banking union".

'Significant transfer'

For months, the threshold at which the ECB would act as chief supervisor has been the subject of strained negotiations.

Under the deal expected to take effect in March 2014, banks with more than 30bn euros ($39bn; £24bn) in assets will be placed under the oversight of the European Central Bank.

The ECB would also be able to intervene with smaller lenders and borrowers at the first sign of trouble, the BBC's Europe Editor Gavin Hewitt says.

Europe's finance ministers have taken another major step towards closer integration, with a significant transfer of authority from national governments to the ECB, he says.

The deal gives the ECB powers to close down eurozone banks that do not follow the rules. It also paves the way for the EU's main rescue fund to come to the direct aid of struggling banks.

It represents the first stage of a banking union - known as a Single Supervisory Mechanism (SSM) - which EU leaders believe can be put in place without having to change EU treaties.

 

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  • rate this
    0

    Comment number 70.

    @65 check out EUprisoner209456731.

    @EUprisoner209456731, no intention of responding to my asking for evidence that we'd be better off outside the EU?

  • rate this
    -3

    Comment number 69.

    The EU is quite clearly following an almost identical path to the USA i for one welcome a federal Europe whether Britain is in it or not. If created a federal Europe would be the 1st/2nd largest power on earth, giving Europe much more clout in international bodies along side the US.

  • rate this
    -1

    Comment number 68.

    "EUprisoner209456731
    EUp: None of that is relevant to the "EU". We can have all of that without the "EU"."

    Not so. If we left the EU, it would be back to the 1lt of spirits "duty free"; import duty would be imposed on cars; the low cost air fares etc would not be available with the same consumer protections; and we'd lose the right to live and work in the EU. Still be able to play in UEFA tho'

  • rate this
    0

    Comment number 67.

    The crisis we currently enjoy was directly caused by two groups of people whose competence was questionable.
    Now it seems that one group wishes to forget the inconvenient part it played in the debacle and control the other.
    Once the European politicians get their pinkies on bank funds (under the auspices of control) god knows what sort of shambles will result.

  • rate this
    -1

    Comment number 66.

    Nice,The EU who can't get their own budgets singed off are going to regulate the banks.Maybe they will be better at it than Tory Dave and his city chums destroying our economy and printing money for themselves.It is genuinely charming the way he gives our Tax to them for QE and then cuts everything else to pay for it.

  • rate this
    -1

    Comment number 65.

    I don't think anyone's suggesting that we'd be better off if the Eurozone collapses. I think an increasing number of people are simply realising that our destiny does not have to be the same as theirs.

  • rate this
    +1

    Comment number 64.

    As my mate said to me in the pub when someone spilled my pint - 'If you tolerate this, then your children will be next'

  • rate this
    +2

    Comment number 63.

    Forget 'supervision', 'rules', 'guidelines' and all that nonsense. These banks control economies! There needs to be laws backed up with custodial sentences and asset stripping powers to reel in these financial institutions. Governments need to govern and banks need to be either broken up or closed to destroy their cartels. No economic growth while banks run (ruin) economies, guaranteed!

  • rate this
    +1

    Comment number 62.

    NWO.....one step closer to .....one group controlling all the worlds money...and all that goes with it......

  • rate this
    +9

    Comment number 61.

    I think before the EU "supervises" the banks, it ought to get its own finances in order, deceitful hypocrites!

  • rate this
    -3

    Comment number 60.

    As soon as this government say they have agreed something i always worry as they never get it right, Now is the time to leave europe as when it goes wrong which it surely will, we will get dragged down with it.

  • rate this
    0

    Comment number 59.

    56.stoneburner
    2 Minutes ago
    Hands up all the people who take holidays in Europe, drive german cars , drink european wine and beer, enjoy the champions and europa leaguie football to name but a few examples of the success of european integration.


    EUp: None of that is relevant to the "EU". We can have all of that without the "EU".

  • rate this
    0

    Comment number 58.

    @57 uhuh. Have you wondered what happens to the free trade zone etc in those conditions?

    What happens when, as so often happens in extreme circumstances, countries choose extremist gvts that opt for high levels of protectionism, working against each other etc?

    I keep hearing how the EZ collapse would be the best thing since sliced bread, but people can never cough up the evidence.

  • rate this
    0

    Comment number 57.

    Nobody really needs the Euro.

    If the eurozone falls apart it will be like losing our chains.

    Hopefully the "EU" will follow.

  • rate this
    0

    Comment number 56.

    Hands up all the people who take holidays in Europe, drive german cars , drink european wine and beer, enjoy the champions and europa leaguie football to name but a few examples of the success of european integration. Wake up the EU is not perfect but it would be a lot worse if the little englanders have their way.

  • rate this
    +9

    Comment number 55.

    There is a core of European nations that are willing to become a Federation (and have been for some time). We in the UK have to decide if we want to be a part of it or increasingly distant. We should have a referendum so we can decide, when. Any reason why not now?

  • rate this
    0

    Comment number 54.

    7.Francis power
    This is not a 'banking union' but an aggressive take-over by Berlin. Which will most likely lead to war in Europe and terrorism as group fight for the freedom of their ex-countries from German control.
    It seems that the idea of the EU is for Germany to takeover Europe without the need for messy wars and invasions. Just control the purse strings and their yours.

  • rate this
    +1

    Comment number 53.

    I hope the euro zone holds together I dread to think of the turmoil if it falls apart. It will affect countries like the UK and the US if it falls apart.

  • rate this
    +3

    Comment number 52.

    @17. Francis power
    The only boat we are 'missing' is the one that is CLEARLY sinking!

  • rate this
    -1

    Comment number 51.

    If i were a carpenter and you were a lady would you marry me anyway would you be my baby.
    that was my rendition of an old classic.
    Where is my 2.5 million?
    I promise that I will give some of it to the Eu in order that the upcoming summit will be boosted, better class of canopies all round for the hungry participants.

 

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