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".

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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”

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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

    Comment number 90.

    The Eurocrats are, in political terms, the same as UKIP & the Tory right, the only difference is the former don't want national borders interfering with free-market-ism & the latter want free-market-ism done by countries, the difference between them & Tory left & Labour & LibDems is small. People aren't likely to be very worried by politicians essentially the same as those they voted for

  • rate this

    Comment number 89.

    No doubt this will spark a wave of referendums throughout Europe and their respective electorates will decide if they want it or not....

    On a side note i wish people would stop suggesting Europe would stop trading with us , they trade with us because we offer them something that they want at a price they are willing to pay for it, not because we're in 'the club'. WTO.

  • rate this

    Comment number 88.

    An absolute disaster for the less industrialised poorer members of the EU whose leaders have signed away the national autonomy of their financal sectors. I don't have a problem with higher standards in banking practice but lets face it, this meltdown was instigated by the US who are intent to punish European banks & business with swinging fines & protectionism!The EU must get redress from the US!

  • rate this

    Comment number 87.

    WW1 was between Empires, but not about the creation of a single Empire of Europe.

    WW2 was stopping two Empires (NAZI Germany and Japan) from creating their 'ethnically cleansed' imperial domains.

    What's happening in Europe may well be moving towards a super-state, but it will be a far cry from what our heroes fought to prevent.

    Get the feeling history is not everyone's strong suit.

  • rate this

    Comment number 86.

    Brainwashed by who? The Daily Mail, Telegraph and Murdoch's parers?

  • rate this

    Comment number 85.

    66. Poisoned Chalice
    Nice,The EU who can't get their own budgets singed off are going to regulate the banks.
    Singed? Probably not. I presume you mean signed off? That's a myth, as repeatedly has been proven on the other HYS topic, so give it a rest and find some real arguments.

  • rate this

    Comment number 84.

    just waiting for the governments u turn

  • rate this

    Comment number 83.

    Remind me again the point of the First and Second World wars was ??"

    Well, you might want to read AJP Taylor's "The Struggle for Mastery in Europe 1848-1918" as background reading to that question. However,whatever the answer, the EEC and then the EU were put in place to prevent the recurrence of the preconditions for those conflicts. 67 years of peace is unparalleled in modern history.

  • rate this

    Comment number 82.

    The good thing about this agreement seems to be mainly that they all have an agreement to agree on.

    And it might, just possibly, make a few banks a tiny bit more careful, but probably not.

  • rate this

    Comment number 81.

    Millions of people died to stop a one state totalitarian Europe, 70 years later and it's happening again yet barely anyone is noticing. How sad most people are too engrossed in debt or brainwashed by trash tv to even care and the BBC do nothing to report the truth. We have stabbed our war heroes in the back.

  • rate this

    Comment number 80.

    first steps to one world gov banking/army/religion danger new world order planned for years and the sheeple just accept it

  • rate this

    Comment number 79.

    Reading for weeks EU Commission wants ALL European banks covered by Bank Union, not just 200 big ones, as many problems started in small 'lightly regulated' banks.
    Merkel not want myriad small German banks covered- pushed for union for just big ones.
    Commentators said did not address problem.
    So celebrations wholly inappropriate-but 'big announcement' should give every one NICE WARM GLOW.

  • rate this

    Comment number 78.

    54 Steve

    " most likely lead to war in Europe and terrorism as group fight for the freedom from German control"

    You mean like when the British empire collapsed a few decades ago and the people fought to get rid of British control?

    I hope not. After our experiences in WWl and WWll we in Europe have learned that modern weapons are just too awful to contemplate.

  • rate this

    Comment number 77.

    With power comes less control. I hope those in Europe can trust those that wield it.

  • rate this

    Comment number 76.

    WW1 was fought due to Empire and the desire for land and power.
    WW2 could be argued as beingstarted because the Treaty of Versailles, created by Wilson, Lloyd George and Clémenceau crippled the German people creating a hot bed which allowed the fascists to control the anger of the German population. War was then fought to defeat fascism. Churchill actually called for a United Europe in Zurich

  • rate this

    Comment number 75.

    Remind me again the point of the First and Second World wars was ??

  • rate this

    Comment number 74.

    How childish, just because someone disagrees with your opinion, you shouldn't ignore their argument. You should take it on board and logically process it then if it doesn't stand up to your arguments, then throw it out. It's called debate, healthy debate is how things are solved not simply hurling rubbish one liners. However you are entitled to do so.

  • rate this

    Comment number 73.

    #69 good so you can emigrate then .

  • rate this

    Comment number 72.

    This is good news, and hopefully soon we will see why USA, as a federal state is "strong". Hopefully too, China and USA will stop pummeling the eurozone financially and accept the inevitable 3rd World Power. The UK is irrelevant now and soon will be impotent....

  • rate this

    Comment number 71.

    Banks created complicated calculated Investment vehicles sell to investors
    The fact that these were created with complicated calculations that are based on nothing is what is at the core of the problem
    Hedge Funds bought Credit Default Swaps that are NOT based on anything
    Insurance is based on "holdings" owned by the Insurance Company
    CDS's have nothing backing them



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