Saturday

23rd Mar 2019

EU bank supervision to come to life next year

  • The deal is a mere re-affirming of an earlier agreement reached in June (Photo: The Council of the European Union)

EU leaders in the early hours of Friday (19 October) agreed that a eurozone banking supervisor should come into life next year, opening the way for troubled banks to access bailout money directly.

The deal is little more than a reaffirmation of an earlier agreement reached in June.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The EU countries set an "objective" of drafting a legal blueprint for the new structure, which is to be embedded in the European central Bank (ECB), by 1 January 2013 and of launching the body "in the course of 2013," the EU Council conclusions say.

EU diplomats are sceptical the timeline can be kept to however, especially since the European Parliament also needs to give its approval.

"It's like saying earlier than never, but later than now," one source said.

The marathon EU meeting, which ended at 3am local time, was held up by protests from non-euro countries whose banks can opt-into the supervisory mechanism, but whose decision-making powers are to be limited.

Germany and France entered the meeting at loggerheads.

But divisions during the talks were primarily between the euro "ins" and "outs," French President Francois Hollande told press after the event.

"We [France and Germany] were on the same page, to ensure that the legal framework can be adopted by the end of the year," he said.

"An EU deal is always a compromise ... Some said we want it quick, Germans want quality. The compromise is both and we have a good deal tonight."

Speaking in a neighbouring press room, German Chancellor Angela Merkel said the new supervisor would take just "a few months" to get up and running after the 1 January law is in place.

She noted that the possibility for banks to tap bailout money can be considered only then.

Thursday's deal reflects a change of mind on Spain's funding problems.

Back in June, Germany said the supervisor is a precondition for rescuing Spain's banks using the bailout fund, the ESM.

EU officials at the time explained that once the new architecture is in place, Spain's €100 billion bank bailout could be taken off the government's books and transferred to the ESM fund.

But over the summer the ECB found another solution when it agreed to buy bonds from countries under market pressure if they sign up to a reform programme.

"It is not a defeat for Spain," Hollande said.

He added that Spain's banks will be able to tap the bailout fund "in future" but that this need is taken care of for now by the €100 billion bailout agreed in June and that there is always the possibility to ask for further assistance which would trigger the ECB bond-buying scheme.

"It's up to Spain to ask for it and there would be no reason for extra conditions, to impose more austerity on austerity," Hollande said.

Spanish Prime Minister Mariano Rajoy on his way out noted that there was "nothing at all" during the summit about a Spanish state bailout request.

Bilateral contracts

The summit also tackled more long-term ideas for eurozone integration.

A timeline for the reforms, mooted in a paper by EU Council chief Herman Van Rompuy ahead of Thursday's meeting, is to be agreed in December.

But EU leaders already said that if there is to be a separate EU budget for eurozone states it should not be to the detriment of the EU27 budget.

They added that discussions on the new fund should be completely insulated from talks on the next EU budget for 2014-2020.

In exchange for German support for this "solidarity facility" - as German Chancellor Angela Merkel called it - leaders also tasked Van Rompuy to further explore the idea of making reform promises more binding.

They said he should look into "individual arrangements of contractual nature with the EU institutions."

But for Hollande, the current set-up of budgetary surveillance and discipline is sufficient.

He said no further steps need to be taken unless leaders agree to introduce eurobonds - a common pooling of debt.

Hollande added that Merkel's idea of creating a super-commissioner for eurozone fiscal affairs is "totally respectable."

But he said it would require EU treaty change, juts like the eurobond move.

Analysis

Germany out on top after late-night summit

EU leaders left Brussels Friday after having spent the best part of the meeting tweaking wording on a banking union that was supposed to have been clear in June. But the German slower timetable prevailed.

Analysis

Parliament bares teeth on ECB

The ECB should not make an enemy of the EU parliament as the power of both institutions grows.

Ministers at odds on banking supervision

Ministers remained at odds on how to include non-euro countries in a planned banking supervision scheme, threatening a 1 January deadline.

News in Brief

  1. EU leaders at summit demand more effort on disinformation
  2. Report: Corbyn to meet May on Monday for Brexit talks
  3. Petition against Brexit attracts 2.4m signatures
  4. Study: Brexit to cost EU citizens up to €40bn annually
  5. NGOs demand France halt Saudi arm sales
  6. Report: Germany against EU net-zero emissions target
  7. Former top EU official takes job at law firm
  8. Draft text of EU summit has Brexit extension until 22 May

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Italy takes China's new Silk Road to the heart of Europe
  2. What EU leaders agreed on climate - and what they mean
  3. Copyright and (another) new Brexit vote This WEEK
  4. EU avoids Brexit crash, sets new date for 12 April
  5. Campaigning commissioners blur the lines
  6. Slovakia puts squeeze on free press ahead of election
  7. EPP suspends Orban's Fidesz party
  8. Macron is confusing rigidity with strength

Stakeholders' Highlights

  1. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  2. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  3. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  4. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  5. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  6. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  7. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  8. Nordic Council of MinistersSeminar on disability and user involvement
  9. Nordic Council of MinistersInternational appetite for Nordic food policies
  10. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  11. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  12. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”

Join EUobserver

Support quality EU news

Join us